Pension income

Most UK pension income is taxable, but how it’s collected varies:

• State Pension: taxable, but usually paid without tax deducted. It’s then collected via your tax code or through Self Assessment if HMRC can’t collect it all via PAYE. You can use HMRC’s checker to see if your pensions will be taxed and how.
• Private/Workplace pensions and annuities: usually taxed under PAYE by the provider (similar to a salary). You’ll see this on P60/P45 from the pension payer.

Do you always need Self Assessment for pension income?

Not necessarily. If all pension income is correctly taxed under PAYE and you have no other reason to file, you may not need a return. HMRC’s tool helps you check.

From most defined-contribution pots you can normally take up to 25% tax-free (PCLS). Further withdrawals are taxable as income and may be collected via PAYE by the pension provider. GOV.UK explains how private pension withdrawals are taxed and how relief works.

You only put contributions on your Self Assessment if there’s extra relief to claim or a charge to report.

Relief at source (RAS) personal pensions, many workplace group SIPPs

• You pay from your bank after tax; your provider adds 20% basic-rate tax relief automatically.
• If you’re a higher- or additional-rate taxpayer, claim the extra 20%/25% via Self Assessment by entering your gross contributions (your payment + the 20% added by the provider). Guidance: GOV.UK “Claim tax relief for your private pension contributions.”

Net pay or salary sacrifice 

• Your contributions are taken before tax, so you’ve already had full rate relief through payroll.
• Do not re-claim these on the return (unless your scheme confirms otherwise).

• Personal contributions with basic-rate relief added by the provider (RAS): enter the gross amount in the Tax reliefs area of SA100 (that’s what enables HMRC to give you higher/additional-rate relief).
• Employer scheme contributions not deducted before tax or retirement annuity contracts: also claimed in the Tax reliefs section as per HMRC notes.
• Possible charges (see below) are shown in SA101 Additional Information, using HMRC helpsheet HS345.

Use Ftax, choose Individual Self Assessment (SA100). We’ll switch on the Tax reliefs area and (if needed) SA101 so you can enter the figures once, with built-in validations.

• Annual allowance: usually £60,000 or 100% of your UK earnings (whichever is lower). Going over can trigger an annual allowance charge, reported via SA (HS345 explains the calculation and where to enter it).
• Tapered annual allowance: for very high incomes, the £60k may be reduced. Check HMRC’s “Work out your tapered annual allowance.”
• Money Purchase Annual Allowance (MPAA): if you’ve flexibly accessed a DC pot, your future DC contributions may be capped at a lower MPAA; current rules and trigger events are on GOV.UK.
• Carry forward: you may be able to use unused allowances from the previous 3 tax years if eligible.

I’m employed, earn under higher-rate, and pay into a personal pension (RAS). Do I put it on my return?

• Not if you’re not filing, your provider already added 20%. If you are filing but you’re not higher/additional rate, there’s usually nothing extra to claim.

I’m higher-rate and paid £8,000 net into my SIPP (provider added £2,000).

• Enter £10,000 gross on SA100 Tax reliefs to receive the extra 20% via your calculation/tax code.

All my pension is taxed under PAYE, but HMRC didn’t collect enough because of my State Pension.

• File a return (or contact HMRC) to settle the underpayment; HMRC’s tool shows if tax is due.

I exceeded my annual allowance.

• Use HS345 to work out the annual allowance charge and report it in SA101.