NHS Pension Plus State Pension: What You Pay Tax On

This guide is for people who draw an NHS pension and either already get the State Pension or are about to. The surprise many people report is that the NHS pension seems to be taxed much harder after the State Pension starts. Nothing has gone wrong: the two incomes share one allowance, and the State Pension is taxed through your other pension. Here are the figures for 2026/27, how HMRC collects the tax, and what to check.

The numbers that matter for 2026/27

These come from gov.uk, read on 19 October 2026, and from the income tax engine this site uses for every tax figure.

• Personal Allowance: £12,570. You pay no income tax on income up to this. It is reduced by £1 for every £2 of adjusted net income above £100,000, which is unlikely for a pensioner on these amounts.
• England, Wales and Northern Ireland rates: 20% on taxable income up to £50,270 of total income, 40% to £125,140 and 45% above, according to gov.uk.
• Full new State Pension: £241.30 a week. It goes to men born on or after 6 April 1951 and women born on or after 6 April 1953. Over 52 weeks that is £12,547.60.
• Full basic State Pension: £184.90 a week. It goes to men born before 6 April 1951 and women born before 6 April 1953. Over 52 weeks that is £9,614.80.
• National Insurance: none on pension income. NHSBSA says National Insurance contributions are not deducted from your NHS Pension.

Many people get less than the full amount, because of their National Insurance record or because they were contracted out. Your State Pension letter or forecast gives your own weekly figure, and you can put it into our NHS pensioner net income calculator.

How the tax is worked out

HMRC treats your pensions and any other income as one total for the year. You pay tax only on the part of the total that is above your Personal Allowance. gov.uk lists what counts: the State Pension (new or basic), Additional State Pension, any workplace or private pension, earnings, taxable benefits and other income such as rent or savings interest. So the sum is:

• ✓ Add your yearly NHS pension, your yearly State Pension and any other taxable income
• ✓ Take off the Personal Allowance of £12,570
• ✓ Tax the rest at 20% up to £37,700 of taxable income (£50,270 of total income), then 40%
• ✓ The result is your tax for the year, whichever pension it was deducted from

Because the State Pension is the same every week and tax-free headroom is so small with it, the order does not matter to the total. What matters is how the money is collected, which is the next section.

Tax on an NHS pension plus State Pension, 2026/27

England, Wales and Northern Ireland, no other income, full Personal Allowance. The tax columns show the total tax on both pensions together, and the take-home column is the NHS pension plus the State Pension, after tax, per month. All figures come from the same function as our calculator.

Estimates that assume the standard Personal Allowance and no other income, allowances or lump sums. At £40,000 of NHS pension with the new State Pension, total income passes £50,270 and part of it is taxed at 40%.

Who collects the tax, and the tax code

This is the part that causes the confusion. The DWP pays your State Pension without taking tax off. gov.uk says that if you are working or getting a private pension, you usually pay more tax to include any tax due on your State Pension, and your tax code changes to collect it. Only one payer collects it. For many NHS pensioners that payer is NHS Pensions, because the NHS pension is the largest of their other incomes. NHSBSA says it takes tax from your pension before it pays you, and that HMRC sets the code: NHS Pensions cannot change it unless HMRC tells it to.

The code number is your tax-free amount with the last digit replaced by a letter, as gov.uk explains with its 1100L example. If the State Pension is your only other income, the allowance left for the NHS pension is £22.40 with the full new State Pension and £2,955.20 with the full basic State Pension. That would give a code of roughly 2L and 295L, instead of the standard 1257L. HMRC's rounding and any other adjustments mean yours may differ slightly, so treat these as an indication.

Two safeguards from gov.uk are worth knowing. If the tax due on the State Pension is more than half your pension, the provider cannot take more than half using a K code, so HMRC collects the rest another way. And if the State Pension is your only income and it is above the allowance, HMRC sends a Simple Assessment bill telling you how much you owe and how to pay it.

What changes when your State Pension starts or changes

If you have drawn your NHS pension for years and the State Pension starts, expect these things, all from gov.uk and NHSBSA:

• A new tax code on your NHS pension. gov.uk lists getting the State Pension, and a change in your weekly State Pension amount, among the reasons HMRC changes a code. NHS Pensions writes to you when your tax code changes and when your yearly rate changes.
• Possibly an emergency code first. gov.uk says you might be put on an emergency tax code if you start getting company benefits or the State Pension. It says this is normal and helps you pay the right amount for that year, and that you will be on a non-emergency code in the new tax year. Emergency codes are explained in our guide to being taxed wrongly on your first NHS pension payments.
• A lower take-home from the NHS pension, a higher total. Your NHS payment after tax falls, but you now have the State Pension coming in untaxed. The combined figure is what you should compare.
• The yearly rise changes the mix. The NHS pension rise follows CPI and the State Pension has its own rise, so the split between them shifts each April. See the April 2027 increase page.

Scotland and Wales

Scotland has its own income tax bands and rates, and gov.uk says Scottish taxpayers use them for pension income. Scottish codes start with S. Wales uses the same bands and rates as England in 2026/27 and Welsh codes start with C. For the full new State Pension and three NHS pension sizes, here is the difference in 2026/27:

Scottish figures use the bands in the site's tax engine for 2026/27. A negative difference means less tax in Scotland. Check the current Scottish rates with the Scottish Government or gov.uk when you plan.

What to check, and who to ask

• ✓ Your NHS pension tax code on your advice of payment or your P60. HMRC sets it, and NHS Pensions cannot change it unless HMRC tells it to
• ✓ Your HMRC online account. gov.uk says you can check your code online, see why it changed, and update your details if anything is wrong or missing
• ✓ Any other income HMRC does not know about, such as part-time earnings, rent or savings interest above the allowance. Missing income is a common reason for a wrong code
• ✓ The end-of-year letter. gov.uk says HMRC sends a tax calculation letter or a Simple Assessment if you have paid the wrong amount, between June and March after the tax year
• ✓ Your own situation. For tax advice on your own figures, speak to HMRC or a regulated adviser. NHSBSA says it is up to you to tell HMRC if you think you have paid too much or too little tax

If the tax on your first payments looked wrong, our guide to being taxed wrongly on your first NHS pension payments explains why and how to get it put right. And if you want to see how the April rise changes what you keep, the increase by pension amount table shows the extra pounds at every pension from £5,000 to £40,000.