Do I pay tax on my pension contributions?
Do I pay tax on the pension I receive?
What is the annual tax allowance?
What is the lifetime tax allowance?
What is the lump sum allowance?
Pensioner's Employers Tax Reference
Do I pay tax on my pension contributions?
No, your pension contributions are deducted from your pay before tax is calculated.
Do I pay tax on the pension I receive?
Your pension is taxable.
Initially when we set up your pension payment HMRC require us to put you on 0T tax code, which means that tax will be deducted at 20%.
We advise the Tax Office that your pension has started and in turn they advise us of the correct tax code for you, taking into account your personal tax position.
What is the annual tax allowance?
The Annual Allowance (AA) is the amount by which the value of your pension benefits may increase in any one year without you having to pay a tax charge. This is in addition to any income tax you pay on your pension once it's in payment. Read more on the LGPS Member website
What is the lifetime tax allowance?
The lifetime allowance is the total value of all pension benefits you can have. The Government announced that no-one will pay a lifetime allowance tax charge from 6 April 2023. From 6 April 2024, the lifetime allowance has been abolished and whilst pensions are no longer tested, tax-free lump sums continue to be. Read more on the LGPS Member website
What is the lump sum allowance?
Two lump sum limits were introduced from 6 April 2024 to replace the lifetime allowance. If the total of all lump sums you take from UK pensions is more than one of these limits, you will have to pay extra tax. Tax on any excess is charged at your marginal rate. Read more on the LGPS Member website
Pensioner's Employers Tax Reference
The Employers Tax Reference is shown in the top right section of your pension payslip.
This is the Authority’s tax reference for all pensioners, and you should quote it on all correspondence with HMRC (Tax Office).
If you are not yet in receiving your pension you will need to refer to your employer for their tax reference.
