Tax Treatment of Pension Income

  • In most cases, 25 per cent of your fund can be withdrawn free of tax, at any time after you have reached the minimum retirement age. 
  • Whether taken as income drawdown or as annuity income, your remaining pension will be taxed as income at your normal rate.
  • Once you have started taking your pension income (other than your tax free lump sum), your Annual Allowance for further contributions into your fund will be reduced.
  • If your pension savings exceed the Lifetime Allowance (LTA) at the time of accessing your pension (other than your tax free lump sum), you may be subject to a tax charge on the excess.
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