Are pensions taxable?
Retiring from work has a number of effects on tax, all of which you should bear in mind when dealing with your finances.
When you reach State Pension age, you automatically cease paying National Insurance contributions. Income tax is still applicable, dependant on how much your income level (including the amount you receive as a State Pension) exceeds whichever tax-free allowances you're eligible for.
To make sure you have enough of an income during your retirement, you should work out how much tax you'll have to pay:
(Your taxable income) - (your tax free allowances) = the amount you'll pay tax on
If you choose to withdraw your pension as a lump sum, then you are not taxed on the first 25% of the value of your pension.
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