Short answer: No — your State Pension is paid to you gross (with no tax deducted at source). However, it is taxable income: HM Revenue & Customs (HMRC) will work out whether you owe income tax on your State Pension as part of your total taxable income and collect any tax due using PAYE adjustments, Simple Assessment/PA302, or Self Assessment depending on your circumstances.

This article explains, in practical detail, how State Pension taxation works in the UK, why tax is usually not deducted at source, how HMRC collects tax that is due, typical scenarios and worked examples, what steps you should take if HMRC contacts you, how to check and change your tax code, and what to do if you live abroad or have mixed sources of income. The content below draws on official HM Government guidance and reputable specialist sources. Key sources are cited where they support major statements.

1. Introduction: taxable but paid gross

The State Pension is taxable income under UK tax law — it counts towards your total taxable income for the tax year. However, the Department for Work and Pensions (DWP), the agency that pays the State Pension, does not operate Pay As You Earn (PAYE) for State Pension payments. This means the pension is paid to you without income tax deducted at source. If tax is due, HMRC will collect it by adjusting tax codes on other PAYE income (for example, a private pension or employment earnings), or by issuing a tax calculation after the year if no PAYE route is available.

Implication: receiving the State Pension will not automatically reduce the amount you receive each week or month for tax purposes — instead, the amount you receive will normally be the full gross payment. If tax is due, you will be notified or see an adjustment elsewhere (e.g., smaller private pension payments after your tax code is updated).

2. Why State Pension isn’t taxed at source (DWP and PAYE)

PAYE is the employer/pension-provider mechanism that deducts tax from salaries and many occupational/private pensions before the money reaches the recipient. DWP does not run PAYE on State Pension payments; the State Pension is therefore paid gross. HMRC relies on alternative collection mechanisms to ensure tax is paid where due. The consequence is that tax on the State Pension is usually collected against other taxable income you have or via a tax calculation after the tax year.

Why that matters:

• If you also have PAYE income (employment or private pension), HMRC can change your tax code so PAYE deducts the tax due on your State Pension from your other PAYE income during the year.
• If you have no other PAYE income, HMRC will issue a Simple Assessment (PA302) or a Self Assessment requirement and bill you after the end of the tax year. This can create timing/delay issues — you may receive a tax bill after the tax year ends rather than having payments taken as you receive income.

3. The rules: when the State Pension becomes taxable

Principal points:

• Taxable income: The State Pension counts as part of your taxable income for the year. Whether you pay tax depends on whether your total taxable income exceeds your available allowances (most importantly, the Personal Allowance).
• Personal Allowance (illustrative figure): For the 2025–2026 tax year the standard Personal Allowance is £12,570. If your total income (State Pension plus all other taxable income) is below your Personal Allowance, you normally won’t pay income tax. If it exceeds the allowance, the excess is taxable at the marginal rate(s) that apply to your income band(s). (Personal allowance and tax bands may differ in Scotland.)
• Timing: HMRC calculates tax across the entire tax year (6 April–5 April). If you have no appropriate PAYE route to collect tax due during the year, you may receive a tax calculation after the tax year (Simple Assessment).
• Interaction with other allowances: Other allowances — Married Couple’s Allowance (if born before 6 April 1935), Blind Person’s Allowance, Marriage Allowance transfer, personal savings allowance, dividend allowance — interact with taxable income and can affect whether you pay tax on the State Pension. Use an official or professional tool to calculate your complete position.

4. How HMRC collects tax on the State Pension (methods explained)

HMRC has several ways to collect income tax due on the State Pension. The method used depends on what other incomes you have and whether they’re collected via PAYE.

A. Tax-code adjustments on other PAYE income (common)

If you have another source of PAYE income (for example, an employer salary or a private/personal pension paid by a provider that operates PAYE), HMRC will usually change the tax code for that income so PAYE collects the tax due on your State Pension. This spreads the tax liability across the tax year and avoids an end-of-year bill.

Example: HMRC may increase the amount of your taxable income shown in the tax code. If your private pension provider receives the updated tax code, it deducts more tax each pay period to cover the State Pension liability.

B. Simple Assessment (PA302) — after the tax year

If you don’t have a viable PAYE route (no other PAYE income or insufficient PAYE income), HMRC may use Simple Assessment. Simple Assessment is a post-year calculation where HMRC sends a PA302 (Simple Assessment) showing tax due and how to pay it. This happens after the tax year and may require a single payment or installments if agreed.

C. Self Assessment tax return

If you already complete Self Assessment (for example because you’re self-employed, have complex tax affairs, rental income, or large capital gains), you should include your State Pension on your return. HMRC will collect tax through the Self Assessment process.

D. P800 (P53/P800) and refunds

If HMRC’s calculations show overpaid tax (you’ve paid too much across PAYE), HMRC may issue a P800 tax calculation showing a refund due or advising you how to claim. If you have underpaid, you may get a Simple Assessment or be asked to pay via Self Assessment.

5. Typical scenarios and worked examples

Below are practical, step-by-step scenarios and arithmetic examples showing how tax on the State Pension is handled in common situations. All numeric thresholds use the 2025/26 Personal Allowance of £12,570 where relevant; confirm the current tax year values when you read this.

Scenario A — State Pension only (no other income)

Facts: You receive the full new State Pension at £10,000 per year (example figure). You have no other taxable income.

Analysis: Your total taxable income (£10,000) is below the Personal Allowance (£12,570). You will not pay income tax. HMRC will usually not adjust any tax code or collect tax; no PAYE will apply. If your State Pension exceeds the Personal Allowance, HMRC will assess and may issue a Simple Assessment.

Outcome: No tax due; you receive pension gross.

Scenario B — State Pension + private pension paid via PAYE

Facts: State Pension = £8,000/year. Private workplace pension = £10,000/year paid via PAYE. Total income = £18,000.

Analysis: Personal Allowance is £12,570. Taxable income above allowance = £18,000 − £12,570 = £5,430. HMRC will usually amend the PAYE tax code for your private pension so the private pension provider deducts the tax due during the year (20% basic rate in this band) — producing tax deductions of 20% × £5,430 = £1,086 (subject to band boundaries and Scotland adjustments). You will get your State Pension gross; PAYE on your private pension will be higher.

Outcome: Tax collected through PAYE on the private pension.

Scenario C — State Pension + self-employment (no PAYE)

Facts: State Pension = £12,000. Self-employment profits = £5,000. Total income = £17,000.

Analysis: If you are not on PAYE and your other income is not collected by PAYE, HMRC may place you into Simple Assessment or require a Self Assessment return. Under Simple Assessment, HMRC sends a calculation after the tax year showing tax due on the excess above allowances. If you already complete Self Assessment, you must include both incomes and pay tax via the Self Assessment deadlines (31 January and 31 July, as applicable).

Outcome: HMRC sends a calculation (PA302) or you declare via Self Assessment and pay tax accordingly.

Scenario D — High income and Personal Allowance taper (special case)

Facts: If your adjusted net income exceeds £100,000, your Personal Allowance reduces by £1 for every £2 of income above £100,000. If income reaches £125,140 (2025/26 figures), the Personal Allowance is removed entirely. This can produce very high effective marginal rates for people with incomes in the taper zone. State Pension forms part of adjusted net income and can therefore trigger the taper effect.

Implication: If you continue working and drawing a State Pension, or you take large pension withdrawals, be aware of the allowance taper and the possibility of 60% marginal rates in the £100k–£125,140 band (40% tax plus 20% lost allowance effect). Professional advice is strongly recommended if affected.

6. Practical steps when you start receiving your State Pension

1. Check your expected State Pension amount with DWP: When DWP confirms award and first payment, note the start date and annual amount.

2. Tell HMRC about your State Pension: If you already pay tax via PAYE through a job or private pension, HMRC will normally pick this up from DWP/DWP data sharing. But you should check your tax code or contact HMRC to confirm. If you have no other PAYE income, HMRC may use Simple Assessment — confirm whether you need to register for Self Assessment.

3. Check your tax code(s): Expect to see a change if HMRC collects State Pension tax through PAYE. You can check your PAYE code on payslips or on any pension provider statements. HMRC provides the tax code P9X guidance for each year — look for code 1257L (or equivalent) for standard Personal Allowance.

4. Keep records: Save DWP award letters, pension statements, bank payslips and any tax calculations (P800/PA302). These will be essential if HMRC raises queries or you need to appeal.

5. If you are abroad, check residency: The tax treatment of your State Pension depends on your UK tax residence status and any double tax treaty your new country has with the UK (see section 9).

7. What to do if HMRC contacts you (P800, Simple Assessment, PA302)

• Read the notice carefully. HMRC will explain how much tax is due (or refund due), the period it covers, and how to pay or claim.

• Check the figures. Compare HMRC’s income figures with your own records (DWP statements, private pension payslips, payslips, etc.). Errors can arise because of timing differences or incomplete employer/private pension reporting.

• If it’s correct and you owe tax: Follow HMRC’s payment instructions. If you cannot pay in one go, call HMRC to discuss payment options — they may allow installments or Time to Pay arrangements in certain circumstances.

• If it’s incorrect: Contact HMRC immediately with evidence (DWP award letters, payslips, bank statements). You can ask them to correct the Simple Assessment or issue an amended calculation. Always keep records of calls and correspondence.

8. How to check and change your tax code / contact channels

• Check online: If you have a Government Gateway / HMRC online account, you can view your tax code there. You can also see coding notices and PAYE information.

• Contact HMRC by phone or online: HMRC publishes contact numbers for pension and PAYE queries. Use the official HMRC contact pages (search “HMRC pensions and State Pension tax contact”). Keep reference numbers and the name of the person you speak with.

• Ask your private pension provider to confirm: If HMRC adjusts PAYE for your private pension, the private pension provider will usually act on an updated tax code. Confirm with them if your payments change.

9. Living abroad — State Pension and tax residency considerations

• Residency determines taxation: If you move abroad, whether your State Pension is taxable in the UK depends on your UK tax residency status. UK non-residents are generally not taxable in the UK on foreign income, but the State Pension is UK-sourced. The UK may still tax it if you’re a UK resident for tax purposes. You must check both UK residency rules and the tax treaty with the country you now live in.

• Double Taxation Agreements (DTAs): The UK has DTAs with many countries. A DTA may allocate taxing rights to the resident country or the UK. If both countries tax the same income, relief methods such as foreign tax credit or exemption might apply. Contact HMRC or a tax professional to determine the treaty outcome for your country.

• DWP overseas payments: DWP can pay your State Pension overseas (depending on country). That does not automatically change the UK tax treatment — you still must check residency and treaty positions. Keep DWP and HMRC informed of your address and residency status.

10. Common State pension tax at source problems, errors and how to fix them

1. You received a tax bill unexpectedly. Often caused by HMRC not having a PAYE route — they will issue a Simple Assessment. Check whether HMRC can collect via PAYE by updating tax codes; if not, pay the Simple Assessment or ask for a Time to Pay arrangement.

2. Your tax code is wrong. Ask HMRC to confirm the figures and issue a corrected code. Provide supporting documents if necessary. Keep copies of any corrected coding notice.

3. DWP and HMRC data mismatch. DWP supplies pension data to HMRC; mismatches occasionally occur. Provide DWP award letters and bank statements to HMRC to reconcile.

4. You owe a small amount but HMRC says it’s not economical to collect. HMRC has discretion in some low-value cases; however, you should still respond to correspondence. Recent media reports discuss HMRC writing off very small liabilities in some circumstances — but do not rely on this: if HMRC asks you to pay, follow up promptly.

11. State pension tax Record keeping, appeals and when to get professional help

• Keep documentation for at least six years: DWP award letters, bank statements showing pension payments, HMRC notices, P800/PA302 forms, payslips and coding notices.
• Appeals and disputes: If you disagree with an HMRC decision, you can request an internal review and appeal procedures are set out in HMRC guidance. If the dispute is beyond simple correction, consider engaging a tax adviser or accountant experienced in pension and retirement tax.
• Complex situations: If you have significant other incomes, run a Self Assessment, live abroad, or are subject to the Personal Allowance taper, seek professional tax advice. The arithmetic and interplay of allowances can create unexpected liabilities.

12. State Pension Tax FAQs (short answers)

Q: Is State Pension taxed before it reaches me?

A: No. The DWP pays State Pension gross; tax is not deducted at source. HMRC collects tax due by other methods.

Q: Will I get a tax bill when I start my pension?

A: Not automatically. If tax is due and you have other PAYE income, HMRC usually adjusts PAYE codes. If not, HMRC may send a Simple Assessment after the tax year.

Q: How much State Pension is tax-free?

A: No specific tax-free amount applies to the State Pension alone — the Personal Allowance applies to total income. For 2025/26 the Personal Allowance is £12,570.

Q: What’s a Simple Assessment (PA302)?

A: A Simple Assessment is HMRC’s post-year calculation showing tax due for people who don’t have tax collected via PAYE. It includes a PA302 form telling you what to pay and how.

Q: I live abroad — do I pay UK tax on the State Pension?

A: It depends on your UK tax residency and any DTA with your country of residence. Check HMRC guidance or a tax adviser.