Multiple Pensions in Payment: Why You Might Be Emergency Taxed in 2026/27
Drawing income from more than one pension at the same time often triggers an emergency tax code on the second and later pensions. How to fix it, and claim back any overpaid tax, in 2026/27.
Quick answer
If you're drawing two or more pensions at once — perhaps a small workplace pension alongside a SIPP, or the State Pension alongside a private pension — don't be alarmed that the smaller one seems to be taxed more heavily. HMRC can only give your full Personal Allowance to one income source at a time, so additional pensions are typically taxed from the first pound under a basic-rate or emergency code, which is often correct once your total income is considered, but not always.
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Each pension payer operates PAYE independently, without automatically knowing what your other pension providers are paying you. HMRC's system typically nominates one source (often whichever is identified as your primary pension) to carry your full Personal Allowance via a code like 1257L, while other sources get a BR (basic rate, 20% from the first pound) or sometimes an emergency code, especially when a new pension starts mid-year without full information yet reaching HMRC.
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Pension calculatorWhen it's actually correct, and when it isn't
If your combined income from all pensions realistically keeps you a basic-rate taxpayer overall, a BR code on the smaller pension, combined with the standard code on the larger one, often produces roughly the right total tax — the mechanics look odd on a single payslip but net out correctly. It's worth actively checking, rather than assuming, particularly if:
- A pension is genuinely on an emergency, non-cumulative code (rather than a settled BR code), which can significantly over- or under-tax a lump sum or the first payment.
- Your total combined income would actually put you in a different tax band than the default split assumes.
- One pension is short-term or one-off, and having the allowance on the wrong source wastes it for that tax year.
Asking HMRC to reallocate
You can contact HMRC to request your Personal Allowance be applied against a different pension than the default — useful, for example, if a smaller, shorter-duration pension is the one currently carrying the allowance, when a larger, ongoing pension would make better use of it across the full tax year.
Claiming back an overpayment
If a pension starts and ends within the same tax year while on an emergency or BR code, and this results in too much tax being paid overall for the year, the overpayment doesn't always correct itself automatically — particularly for one-off lump sum pension withdrawals. Check your position at year-end, or use the specific HMRC forms for reclaiming overpaid tax on pension lump sums, rather than assuming a refund will simply appear.
Bottom line
Multiple pensions in payment is genuinely common in modern retirement planning, and the resulting tax codes usually make sense once you see the whole picture — check all your codes together, and don't assume a BR-coded pension is an error without doing the combined-income sums first.
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Frequently asked questions
Why does my second pension get taxed more heavily than my first?
Your Personal Allowance can normally only be applied to one source of income at a time. HMRC typically allocates it to what it identifies as your main pension or income source, and applies a basic rate (BR), or sometimes emergency, code to any additional pension, meaning it's taxed from the first pound with no allowance.
Is being taxed at a flat rate on a second pension necessarily wrong?
Not automatically — if your total income across all pensions genuinely means you're a basic-rate taxpayer overall, a BR code on the smaller pension can work out correctly, or close to it, once combined with the other income. Problems arise mainly when the code is a genuine 'emergency' non-cumulative code, or when the split doesn't reflect your real total income.
How do I check if my tax codes across multiple pensions are correct?
Check all your current tax codes together via your Personal Tax Account, and compare the total tax being deducted across all pension sources against what you'd expect based on your combined annual income — HMRC's online services show all your active income sources and their codes in one place.
Can I ask HMRC to reallocate my Personal Allowance differently?
Yes — if you'd prefer more of your Personal Allowance applied against a specific pension (for example, the one that will run for the whole tax year, rather than a shorter one), you can contact HMRC and ask for the codes to be adjusted, rather than accepting the automatic allocation.
Will overpaid tax from an emergency code correct itself automatically?
Often yes, if the code becomes cumulative and corrects within the same tax year — but if a pension starts and finishes within the same tax year on a non-cumulative emergency code, any overpayment may need to be actively reclaimed from HMRC rather than automatically refunding through payroll.
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