Pensioners have been advised of the rules
HMRC has released guidance regarding a key issue to pensioners. The authority clarified the rules following an enquiry from a taxpayer.
The person explained they intended to retire at the end of April and would become a “non taxpayer”. Their query was whether it would be preferable to adjust their salary for the upcoming 2026/2027 tax year now to “claim back the tax”. The department initially asked them to clarify whether they would have a “continuing UK source of income” after retirement. The person confirmed their income would solely come from pensions and that their total earnings would fall “below the personal allowance”.
Thanks to the personal allowance, you can earn up to £12,570 each tax year without paying income tax on this amount. HMRC provided this advice for the taxpayer: “So once you retire and you’ve got your P45, you can contact the helpline and we can take the details over the phone.
“We’ll use the P45 info and instruct your pension provider to refund any overpaid tax through your pension payments.” Another consideration when planning your retirement is your state pension entitlement.
The state pension can be claimed once you reach the age of 66. However, this is set to change soon, with the eligibility age rising from April 2026.
Changes to the state pension
The age will gradually increase to 67 by April 2028. The full new state pension currently stands at £230.25 a week, or £11,973 annually. Thanks to the triple lock policy, payments will see a 4.8 percent rise from April, bringing the full new amount to £241.30 weekly, or £12,547.60 yearly, just shy of the personal allowance threshold.
You can verify your projected state pension using a tool on the Government website. If you’ve overpaid or underpaid tax by the end of the tax year, which concludes on April 5, HMRC will typically get in touch with you the discrepancy.
HMRC will either send you a tax calculation letter, also known as a P800, or a simple assessment letter. These methods of contact are only used if you’re employed or receiving a pension.
These letters are dispatched between June and March of the following tax year. If you’re registered for self assessment, HMRC will automatically adjust your bill and you won’t receive a letter.
If you don’t receive a letter but you think you are owed an amount, there’s a tool available on the Government website that can help you work if you can claim for a refund.
