Working after pension age

swingaloo

If you reach the state pension age but are able to carry on working what are the implications?
Do you just pay 20% tax on your pension?.

LittleVoice

swingaloo wrote: »

If you reach the state pension age but are able to carry on working what are the implications?
Do you just pay 20% tax on your pension?.

Assuming you receive all of your tax-free allowance in your paid employment then, yes, your pension is taxed at 20%. If your pension and wage/salary combined would take you into a higher rate tax band, HMRC will make an adjustment to your coding.

If you are receiving the state retirement pension, that is not taxed at source but HMRC will adjust your tax code so that you pay the tax in your regular employment.


If you are paid under PAYE you do gain from not having to pay NI from the time you reach state retirement age.

swingaloo

Thank you very much for your help

GrannyLiz

I may be wrong about this but I think you could also decide to defer the state pension until you stop working. I don't think you get any more pension in the future by doing that, than the straight addition of what you didn't take before , but if your income after retirement will be much less, you might pay less tax on the pension when you do take it.

John_Gray

Granny Liz is partially correct, but it would be worth reading this DirectGov webpage: State Pension deferral – taking up your State Pension later

atush

If you are still working and don't actually need your SP, I would defer it.

funnyguy

My wife was due her state pension last September.But we have delayed it to April this year,as that is when she will be leaving work[hoorah],which means she has saved paying tax on her pension these past 8 months..and will get a 6% higher tax free pension for delaying it[you get an extra 1% for every 5 weeks you delay taking your pension].It will therefore only be a few years when she will have made the money up and continue to get the 6% extra till she goes to heaven.

anamenottaken

funnyguy wrote: »

My wife was due her state pension last September.But we have delayed it to April this year,as that is when she will be leaving work[hoorah],which means she has saved paying tax on her pension these past 8 months..and will get a 6% higher tax free pension for delaying it[you get an extra 1% for every 5 weeks you delay taking your pension].It will therefore only be a few years when she will have made the money up and continue to get the 6% extra till she goes to heaven.

The percentage increase, by the way, is not on the entire pension.