Standard personal allowance limits and tax deductions

The standard personal allowance (the amount you can normally earn before paying tax) will remain at £12,500 in 2020/21.

If your total taxable income across all sources (local government pension, state pension and any other income) is less than the personal allowance then you won't pay any tax, although different rules apply if you earn over £100,000 per annum or claim marriage allowance or blind person's allowance.

Where you live in the UK (England, Scotland or Wales) will determine the rate of income tax you pay on your pension. Therefore it is important that you keep us and HM Revenue and Customs (HMRC) informed if you move address.


 

Tax rates

If your total income takes you over £12,500 then the amount over this is taxed as follows:

UK rate

These are:

  • basic rate 20%, up to £37,500
     
  • higher rate 40%, from £37,501 - £150,000
     
  • additional rate 45%, from £150,001

Scottish rate (S)

These are:

  • starter rate 19%, up to £2,049
     
  • basic rate 20%, from £2,050 - £12,444
     
  • intermediate rate 21%, from £12,445 - £30,930
     
  • higher rate 41%. from £30,931 - £150,000
     
  • top rate 46%, from £150,000

Welsh rate (C)

These are:

  • basic rate 20%, up to £37,500
     
  • higher rate 40%, from £37,501 - £150,000
     
  • additional rate 45%, from £150,001

 

Queries about tax codes

HM Revenue and Customs (HMRC) make the decision of what tax code to issue against each of your income sources in order for the correct tax deductions to be made.

If you have a query with any of these decisions you should speak to HMRC directly: