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Tax and NI on pension

Please may I ask for some advise.

I need to work full time until state pension age at 67. At age 60 I have 2 small DB pensions which start paying out. 
The way I understand it that once drawing a pension you only pay tax and 1.25% NI (health tax or what ever they are calling it) on earnings above national allowance. As I will be still working full time will I have to pay the full 13.25% NI on the income from the DB pensions or will the income from these only be 1.25% NI as are pensions but obviously not retired and not reached state pension age of 67. 
For the national allowance does the pension money get counted first or the salary or just lumped together and some sort of calculation to work out how much NI paid? At 60 expect to be on about £20000pa wages and about £1500  pa for each of the DB pensions. 

Just trying to work out how much take home I will roughly get.

Thanks



Comments

  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 19,333 Forumite
    10,000 Posts Sixth Anniversary Name Dropper
    edited 27 June 2022 at 7:57PM
    Cear said:
    Please may I ask for some advise.

    I need to work full time until state pension age at 67. At age 60 I have 2 small DB pensions which start paying out. 
    The way I understand it that once drawing a pension you only pay tax and 1.25% NI (health tax or what ever they are calling it) on earnings above national allowance. As I will be still working full time will I have to pay the full 13.25% NI on the income from the DB pensions or will the income from these only be 1.25% NI as are pensions but obviously not retired and not reached state pension age of 67. 
    For the national allowance does the pension money get counted first or the salary or just lumped together and some sort of calculation to work out how much NI paid? At 60 expect to be on about £20000pa wages and about £1500  pa for each of the DB pensions. 

    Just trying to work out how much take home I will roughly get.

    Thanks



    I think you've misunderstood a few things.

    Drawing a pension will make no difference whatsoever to the National Insurance you will pay on your earnings (wages).

    You don't pay any National Insurance (or Health & Social Care Levy) on your pension income.

    Once you reach State Pension age you will stop paying National Insurance on your earnings but would still have to pay the Health & Social Care Levy (on earnings).

    With tax you should continue to pay the same as you do now on your earnings and will pay 20% on all of your (taxable) pension income.

    There are some calculators you can use here,

    https://www.gov.uk/government/collections/how-to-manually-check-your-payroll-calculations
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