Pension Tax Calculator 2026/27
The full new state pension is now £12,547.60 a year. The personal allowance is £12,570. That leaves just £22.40 of tax-free headroom — work out what your pension income actually costs you.
Your net pension income
£16,552.08
a year · £1,379.34 a month · 5.7% effective tax
| State pension | £12,547.60 |
| Private pension | £5,000.00 |
| Total income | £17,547.60 |
| Personal allowance | −£12,570.00 |
| Taxable income | £4,977.60 |
| Income tax | −£995.52 |
| National Insurance | £0.00 |
| Net income | £16,552.08 |
Why is there no National Insurance?
Once you reach State Pension age you stop paying Class 1 National Insurance — on your pension and on any earnings. Income tax still applies. That is why the NI line above is always £0.00.
Only £22.40 of allowance left. The full new state pension (£12,548) almost fills the £12,570 personal allowance. Nearly every pound of private pension on top is taxable.
Full breakdown for £18,000 pension income →Estimates for England, Wales and Northern Ireland (Scotland sets its own income tax bands). Assumes no other income, standard PAYE coding and no additional reliefs. Personal allowance £12,570, frozen until April 2031. Headroom after a full new state pension: £22.40. Not tax advice.
The £22.40 that stands between pensioners and a tax bill
In April 2026 the state pension rose 4.8% under the triple lock, taking the full new state pension to £12,547.60 a year (£241 a week). The personal allowance did not move. It has been frozen at £12,570 since 2021 and is legislated to stay there until April 2031.
The two numbers are now £22.40 apart. A pensioner whose only income is the full new state pension still pays no tax — but only just. Every pound of private pension, annuity or savings interest on top of it is taxable at 20% almost immediately, because the allowance has already been used up.
This is fiscal drag in its purest form. Nobody raised a tax rate. The threshold simply stood still while incomes rose, and the result is that a growing number of pensioners are pulled into income tax for the first time in their lives.
How pension income is actually taxed
| Band | Income | Rate |
|---|---|---|
| Personal allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 – £50,270 | 20% |
| Higher rate | £50,271 – £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
| National Insurance | Any amount | None |
The state pension is paid gross — DWP never deducts tax from it. But it is still taxable income. HMRC solves this by adjusting your tax code on your private or workplace pension: the tax owed on the state pension is collected through PAYE from the private pot instead. That is why so many pensioners open a coding notice and find a number far below 1257L.
If you have no private pension to code against, HMRC uses Simple Assessment — a bill sent directly to you. Above the higher-rate threshold the personal allowance also begins to taper away (£1 lost for every £2 of income over £100,000), which this calculator applies automatically.
Triple lock up 4.8%, allowance frozen: the squeeze
The triple lock guarantees the state pension rises by the highest of average earnings growth, CPI inflation or 2.5%. For 2026/27 earnings won at 4.8%, worth up to £574.60 a year more. The basic state pension rose too, to £9,614.80.
Meanwhile the personal allowance has been frozen since 2021. Had it tracked inflation it would sit comfortably above £15,000 by now. Instead the gap keeps closing from one side only. On current policy the full new state pension will exceed the personal allowance within a couple of years, at which point pensioners with no other income at all become taxpayers.
What changes in 2027/28: the government has confirmed that state-pension-only pensioners will no longer be sent Simple Assessment bills for the small sums involved. It removes the administrative absurdity of billing someone £4 — but it does not change the underlying arithmetic for anyone with a private pension on top.
Tax by total pension income
£13,000 to £35,000 a year (full new state pension + private pension)
£13,000
pension tax
£14,000
pension tax
£15,000
pension tax
£16,000
pension tax
£17,000
pension tax
£18,000
pension tax
£19,000
pension tax
£20,000
pension tax
£21,000
pension tax
£22,000
pension tax
£23,000
pension tax
£24,000
pension tax
£25,000
pension tax
£26,000
pension tax
£27,000
pension tax
£28,000
pension tax
£29,000
pension tax
£30,000
pension tax
£31,000
pension tax
£32,000
pension tax
£33,000
pension tax
£34,000
pension tax
£35,000
pension tax
Pension tax questions
Do pensioners pay National Insurance?
No. Once you reach State Pension age you stop paying Class 1 National Insurance — on your pension and on any earnings from a job. Income tax still applies in the normal way. That is the single biggest difference between a pensioner's tax bill and a worker's on the same income.
Is the state pension taxable?
Yes, the state pension is taxable income. It is paid gross (without tax deducted), but it counts against your £12,570 personal allowance. The full new state pension of £12,547.60 uses up all but £22.40 of that allowance, so any private pension on top is taxed almost from the first pound.
How much tax will I pay on a £25,000 pension?
On a total pension income of £25,000 in 2026/27, you pay £2,486 in income tax, leaving £22,514 net — an effective rate of 9.9%. The first £12,570 is covered by your personal allowance and the remaining £12,430 is taxed at the 20% basic rate. No National Insurance is due.
How is tax collected on my private pension?
HMRC collects it through PAYE on your private or workplace pension. Because the state pension is paid gross, HMRC reduces your tax code so that the tax owed on the state pension is deducted from the private pension instead. That is why pensioners often see an unexpectedly low tax code.
Will I get a tax bill if the state pension is all I have?
Not in 2026/27 — the full new state pension of £12,547.60 sits just below the £12,570 personal allowance, so no tax is due. But the triple lock rises faster than the frozen allowance, so state-pension-only pensioners are on course to be dragged into tax. From 2027/28 the government has said it will stop billing them for these small amounts via Simple Assessment.
2026/27 figures. Estimates for England, Wales and Northern Ireland — Scotland sets its own income tax bands. Sources: gov.uk (State Pension rates, Income Tax rates and Personal Allowances). Not tax advice.