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Please note: that State Pension Lump sums are only available to persons that reached state retirement age before 6/4/16 Your state pension lump sum is taxed at the highest rate charged on income received in the year. This highest rate is the one that applies after the set-off of all reliefs and allowances that are deducted in arriving at total income. For example, if the highest rate of tax you pay is 20%, you'll pay 20% tax on the lump sum. You won't pay tax on a lump sum if your taxable income (excluding the lump sum) is less than your personal allowance. A state pension lump sum isn't added to your income to increase your total taxable income. For further information and guidance please see the HMRC website. |
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