The only exception is if your annual income is under the ‘tax threshold’. If it is, you don’t pay any tax.
Tax codes from HMRC
To tax your pension, we need a tax code from HMRC. They send us the tax code we need to use so if you think this is wrong, you can ask them to review it.
The good news is that you don’t have to pay National Insurance contributions on your pension income.
When we start to pay your pension, we might need to use a Basic Rate tax code until HMRC send us the right tax code to use. For the time we use a Basic Rate tax code, we might deduct too much tax from your pension, or not enough tax. When HMRC send us the right tax code to use, they’ll take this into account.
You can see the tax code we are using on your monthly pension payslip. Just go to the My Documents tab on PensionsOnline, click on My Payslips on the right and download your latest payslip, the tax code will be on there.
If you think this is wrong, you can speak to HMRC. We can’t speak to them for you.
When you speak to HMRC you’ll need a reference number, so they know which pension you have. The reference number you need is either:
- Clergy pension – 709 STC/721
- CWPF or CAPF pension – 709 STC/722
Paying your pension if you live overseas
We can pay your pension into a UK bank account which you can access from abroad, but your income can be affected by changes in exchange rates. If you prefer, your pension can be paid into an overseas account, but check the charges for converting your money into a different currency.
If you ask us to pay your pension into an overseas account, we use Crown Agents Bank to do this.
Taxing your pension if you live overseas
If you retire overseas, you don’t usually pay UK tax on your pension. Instead you’ll pay tax in the country that you live.
If you live abroad but are classed as a UK taxpayer, then you will have to pay tax on your UK pension.
Be careful to check whether you live in a country that has a double-tax agreement with the UK, this means you usually have to pay tax in both countries.
Tax codes can be confusing, especially if your circumstances are not straightforward.