HMRC has issued guidance for state pensioners still in work
HMRC has released updated guidance aimed at state pensioners “thinking about working while drawing their pension”. The tax authority took to X, formerly Twitter, to share its advice with state pensioners who are considering continuing to work while receiving Department for Work and Pensions (DWP) payments.
The taxman said: “No one wants to spend their retirement worrying about tax. Whether you’ve just retired or you’re planning ahead, we’re here to help you understand how tax works at this stage of your life. When you retire, tax can feel a bit different. For a start, the money you get might be coming from several places – a pension, interest from savings, or perhaps some self-employed work.
HMRC said: “Our QandA 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. The good news is that the basics are simple once you know them. Watch this short video or read on to find out what topics we can help with.”
It adds: “You don’t need to be a tax expert. These pages are here to help you understand the basics, give you confidence and fill any gaps in your knowledge. Each one explains things in plain English. No jargon. No assumptions that you already know how it all works.
“Take your time, read what you need, and if something still isn’t clear you’ll find links to more help.” Most people are aware that National Insurance contributions cease once you reach state pension age, which is currently being raised from 66 to 67. However, the precise moment when you stop paying may also depend on your employment status. Employed people stop automatically. Self-employed people stop from the next tax year.”
If you work for an employer, you may be required to provide proof of your age to confirm when they should stop deducting National Insurance from your wages. This can include your passport, birth certificate or state pension award letter, reports Birmingham Live.
If you are self-employed, you will need to include your date of birth on your tax return so that HMRC can ensure you stop paying at the correct time. It is important to note that while your National Insurance contributions end, this does not mean you are exempt from paying HMRC altogether. Even those beyond state pension age are still liable for income tax.
Income tax is levied on your total annual income which can include:
- wages
- if you’re self-employed
- State Pension
- workplace or private pensions
- interest you get from savings
- investments
- rented property
If you remain in employment beyond state pension age, income tax will typically be collected through PAYE and determined by your tax code. This may alter if you are drawing a workplace or private pension alongside your wages.
