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You asked: How am I taxed on a pension?

The government gives you tax relief on contributions made into a pension plan, this is based on the highest rate of tax you pay. The basic rate of 20% is automatically applied. So if you pay the higher rates of 40% or 45% relief will need to be claimed back through a self-assessment tax return. If you don't have any earnings, or earn less than £3,600 each year, you can get tax relief when paying into your pension up to £3,600 in the 2019/2020 tax year. This means that if you pay £2,880 the government will top it up to £3,600.

When you're taking money out, withdrawals are taxed as part of your earned income, other than 25% tax-free cash normally available from your pension pot. For examples of how you may be taxed when taking an income from your pension take a look at Pension Pots and Income Tax - Some Examples. Please be aware that tax treatment depends on your individual circumstances. This information is based on our understanding of current tax legislation and may be subject to change in future.

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