Retirees can continue working after reaching State Pension age – but there are factors to consider
Brits have been issued with a reminder about their pension. HM Revenue and Customs (HMRC) says you are able to keep working while receiving it – and it has offered guidance on how the arrangement operates, describing it as “pretty straightforward”.
In the UK, if you were born on or before 5 April 1960, your State Pension age is 66. However, if you were born after this date, the age is progressively increasing, beginning at 67.
The sum you receive will depend on your age as well as how many years you have paid National Insurance. Additionally, you may also have a workplace or private pension, which can likewise be claimed while you work.
If you’re contemplating working while receiving your pension, HMRC offered some guidance on social media platform X. It said: “Thinking about working while drawing your pension?
“Our Q&A is here to help you understand your options, from working alongside a pension to changes in National Insurance. Find out more at Tax Confident and feel confident about tax in retirement.”
This was accompanied by a video addressing some frequently asked questions about working while claiming. It said: “Can you keep working while getting a pension?
“Yes, you can work while receiving your State Pension, a private or workplace pension, or both. Many people choose to do this and the tax rules are straightforward.
“Do you still pay National Insurance when you work? No. You stop paying National Insurance once you reach State Pension age even if you keep working.
“Employed people stop automatically. Self-employed people stop from the next tax year.”
Further details on how this operates can be found on the GOV.UK website, where HMRC added: “Many people choose to carry on working while receiving the State Pension, a private pension, or both. And the good news is that the tax rules are pretty straightforward.”
National Insurance payments
If you’re employed, HMRC will not deduct National Insurance from any earnings once you reach State Pension age. Your employer will cease taking National Insurance contributions from your wages once they have verified your age.
HMRC confirmed this verification could include your passport, birth certificate, or State Pension award letter. You can also request that HMRC write to your employer confirming you’ve reached State Pension age.
If you’re self-employed, you’ll cease paying all National Insurance contributions from the beginning of the tax year (April 6) following the point at which you reach State Pension age. HMRC said: “Remember to put your date of birth on your tax return so we can make sure you stop paying.”
Income Tax doesn’t stop
While National Insurance contributions will cease upon reaching State Pension age, Income Tax does not. You’ll continue to pay this on your total annual income.
This could be drawn from a variety of sources, including:
- Your wages
- If you’re self-employed
- State Pension
- Workplace or private pensions
- Interest you get from savings
- Investments
- Rented property
Most people benefit from what’s known as a tax-free Personal Allowance. It’s the sum of money you can earn annually before tax kicks in. The current standard tax-free Personal Allowance stands at £12,570 per year.
If your combined income from employment and pensions falls below this threshold, you won’t be liable for any Income Tax. For more information, visit GOV.UK here.
