What pensioners need to know about income tax

RETIREMENT is often seen as a time to relax and enjoy the rewards of a lifetime of hard work - but that doesn't mean that the dreaded taxes disappear.

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For pensioners, understanding how income tax applies in retirement is essential to managing finances and avoiding surprises. Whether you're drawing a state pension, private pension, or other forms of retirement income, knowing what's taxable can help you plan more confidently.

We got in touch with experts who have broken down key things every pensioner needs to know about income tax, so it's one thing fewer to worry about in your golden years.

What is income tax?

"Income tax is a tax paid on most types of income, from your salary at work, profits from a business to interest you make on investments," explains Liz Ritchie, head of tax at Forvis Mazars. "It applies to earnings from employment, self-employment, pensions, savings and investments. The amount you pay depends on how much you earn, with different income bands taxed at different rates."

Who has to pay income tax?

"Currently, anyone who has an income of more than £12,570 for the 2025/26 tax year will pay income tax on the amount they earn above the standard personal allowance," says Amy Knight, personal finance and small business expert at NerdWallet UK.