Retirement/State Pension/Taxation please

EnfieldP17

Good evening to all.

State Pension questions please.

I reach my 65th in April and would welcome advise as to my situation regarding taxation and starting to take my State Pension.

To keep tax matters tidy for the future and to avoid shooting myself in the foot, should I time my official finishing date to fall
before or after the start of the new tax year?

My employer requires one months notice, my birthday is 3rd April, tax year ends 5th April, new tax year starts 6th April.

Should I aim to finish work on 4th or 5th April, to avoid breaking into the new tax year?

Should I aim to finish work on 6th or 7th April, to ensure full completion of the current tax year?

Would it make any difference in the long term if I did either?

Any advise from personal experience would be much appreciated.
Thank you in advance, Pete.

mgdavid

If you don't have other pensions or income, and only have State pension then there's every chance you will have unused Personal Allowance next year (SP around £8k?, PA will be £11.5K).
Therefore it might make sense to keep working after April 6th until you will have earned £3.5k or whatever figure you calculate to be the unused part of the PA.
But without the whole picture and detailed numbers we're really just guessing.

jamesd

If your health is OK, deferring claiming your state pension for a few years is usually a good move. So how about this alternative plan: don't claim your state pension in 2016-17 or 2017-18, instead, defer. You pay no NI from when you reach state pension age - remind your employer - and so you can earn £11,500 in that 2017-18 tax year without any income tax or NI to pay on it. So why not plan to do that, it's a great deal?

Your employer probably will still be paying into a pension for you so that's another bit of extra money that may be completely tax free when you take it out.

Then when you claim your state pension at the start of the 2018-19 tax year it'll be increased by 5.8% plus the usual inflation increase. Unless you choose to carry on deferring.

Maybe your employer might have seasonal demand or a desire for you to do a bit of part time work that might let you do this tax free earning while deferring for a bit longer, if you want to?

For this post I've assumed that you don't have any other taxable income so your whole personal allowance will be available.

kidmugsy

jamesd, isn't it 5.8% rather than 5.4%? Every little helps.

jamesd

Yes, thanks, fixed.

EnfieldP17

Hello again and very many thanks to MGDavid, JamesD and Kidmugsy for your replies.

Yes, I had it down as 5.8 as well, as a workmate (who took retirement at Christmas) was working on similar parameters to those that David and James describe. He was 66 and 7months and would have stayed on longer but for health problems.

His departure means that I am now the old man on the shop floor.
Very many thanks again, Pete.

kidmugsy

What other pension provision have you got?

EnfieldP17

Hello Kidmugsy and thank you for your interest.

I do have a workplace, final salary, pension which I am able to stay on top of locally.

My priority here, is to make sure that I do not make any mistakes in relation to my State Pension ( if I take it this year or next ) that I will regret later. This is the reason for my making the original post.

Thanks again, Pete