Tax allowances for pensioners explained
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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.
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.
Common 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.