Retirement Age Tax: What You Need to Know About Taxes After 60
When you reach retirement age tax, the point at which your income shifts from employment to pensions and savings, and tax rules change dramatically, it’s not just about stopping work—it’s about understanding how the government taxes what you’ve saved. In the UK, you can start accessing your pension from age 55 (rising to 57 in 2028), but that doesn’t mean all of it’s tax-free. Your state pension, the regular payment from the government based on your National Insurance record is taxable income, even if you never paid tax on your contributions. And if you withdraw cash from your private pension, a workplace or personal retirement pot you’ve built up over years, 25% is usually tax-free, but the rest gets added to your other income and taxed at your marginal rate.
Many people assume retirement means lower taxes, but that’s not always true. If you’re still earning from part-time work, rental income, or investment dividends, your total income could push you into a higher tax band. The personal allowance, the amount you can earn before paying income tax drops if you make over £100,000, and your state pension counts toward that total. Plus, if you take a large lump sum from your pension all at once, you could accidentally trigger a big tax bill because HMRC treats it as if you’re earning that much every month. It’s not a mistake you can undo easily.
What you pay in retirement depends on where your money comes from. A defined benefit pension, a guaranteed income for life, often from a former employer is fully taxable. A defined contribution pension, a pot you’ve built up yourself, like a SIPP or workplace scheme lets you choose when and how much to take out—giving you control over your tax bill. And don’t forget your ISA: money pulled from an ISA after retirement is completely tax-free, making it one of the smartest places to keep emergency cash or spending money. The key is planning your withdrawals so you stay in the lowest possible tax band each year.
You’re not alone in feeling confused. Most people don’t realize that tax rules don’t turn off when you retire. That’s why the posts below break down real cases: how much tax you actually pay on £20,000 of pension income, what happens if you cash out your pension early, why some retirees get hit with unexpected bills, and how to use your ISA, savings, and state pension together to keep more of your money. No theory—just what works for people like you in the UK right now.
At What Age Is Social Security No Longer Taxed?
There's no age when Social Security stops being taxed. Whether you pay taxes on your benefits depends on your total income, not your age. Learn how to reduce or avoid taxes on Social Security in retirement.
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