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Taxed according to entitlement

Once a state pension is claimed (see E7.109–E7.112), the whole amount drawn, received or due to be received (ie accrued) in the tax year, is taxable as income in the hands of the recipient. This is pension income for the purposes of the income tax calculation (see E1.101B). All the normal income tax reliefs are available against this income.

Note that the amount of state pension included in taxable income is the amount to which the taxpayer is entitled in the tax year¹. Entitlement is based on weekly state pensions amounts. The weekly pension is usually paid on a Monday or a Thursday and so entitlement over the year depends on how many of those weekdays occur in the tax year. So in some tax years there may be 53 weeks worth of state pension entitlement to include in taxable income.

Interaction with personal allowance

As the personal allowance for income tax (see E1.910) usually covers the basic state pension, a UK resident pensioner with no other