# Tax allowances for pensioners explained

> Benefits & tax · Last updated 4 July 2026

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## Quick answer

Pensioners receive the same personal allowance as working age — £12,570 for 2026/27 — plus potentially married couple's allowance or blind person's allowance if eligible.

The state pension is taxable but often paid gross, with tax collected through PAYE coding on private pensions instead. This guide explains personal allowances for pensioners, how tax codes work and how to avoid silent underpayments when the state pension rises.

## Key facts

- Personal allowance £12,570 for 2026/27 — age alone does not increase it unlike old age allowance abolished
- State pension uses your tax-free allowance first — may wipe allowance before private pension taxed
- Marriage allowance transfers £1,260 allowance if one partner earns below threshold and other basic rate
- Check coding notices when state pension rises each April — underpayments accumulate silently otherwise

## PAYE on pensions

Private pension providers deduct tax using your HMRC tax code. BR or D0 codes mean all pension income is taxed at basic or higher rate without using your personal allowance, which may happen if your allowance was misallocated.

If you have several small pensions, each provider may use a wrong split of your allowance. Call HMRC to consolidate your coding so you do not overpay tax across multiple sources.

## Additional allowances

Blind person's allowance adds £3,070 if you are registered severely sight impaired in England and Wales. Scotland and Northern Ireland have equivalent registration routes.

Married couple's allowance applies only to couples where one partner was born before 6 April 1935. It is a legacy benefit that most current pensioners will not qualify for.

## Self Assessment

You must complete Self Assessment if you have rental income, foreign pensions or the high income child benefit charge applies, even after you reach state pension age. State pension age alone does not exempt you from filing.

Pension credit claimants should check how work and other earnings affect their award. Small income changes can reduce means-tested support significantly.

## Frequently asked questions

### Is state pension tax-free?

No — the state pension counts as taxable income. It may fall entirely within your personal allowance if you have little other income, in which case no tax is due.

### Do I pay NI on pensions?

You do not pay employee National Insurance on pension income. Class 4 NI also stops when self-employment ends.

### Can I still pay into a pension?

Yes, until age 75. Tax relief is available on contributions within your annual allowances even if you are already retired and drawing other pension income.

## Primary source

https://www.gov.uk/tax-on-pension-income

## Related

- [State pension explained](https://moneyguide.org.uk/pensions/state-pension-explained/)
- [Tax codes explained](https://moneyguide.org.uk/work-earnings/tax-codes-explained/)

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Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.