Self employed but draw civil service pension help

WHUFC123

Hello I am considering starting work self employed, I get 23k a pension currently, would I only pay National insurance on the self employed pay as my pension currently doesn’t have to, and at what rate is it ?

MattMattMattUK

WHUFC123 said:

Hello I am considering starting work self employed, I get 23k a pension currently, would I only pay National insurance on the self employed pay as my pension currently doesn’t have to, and at what rate is it ?

How old are you?

WHUFC123

57 years old now

molerat

Yes you will only pay NI, if required, on your SE income.  Depending on your profits you may not need to actually pay anything.

https://www.litrg.org.uk/tax-guides/self-employment/what-national-insurance-do-i-pay-if-i-am-self-employed

Have you checked your state pension forecast ? The important bit in that respect

For 2022/23 onwards, you pay Class 2 NIC if your profits are above the Lower Profits Limit (which is £12,570 in 2023/24 and was £11,908 in 2022/23). If your profits are below the Small Profits Threshold (£6,725 in 2022/23 and 2023/24) then you can choose to pay voluntary Class 2 NIC. If your profits from self-employment are between the Small Profits Threshold and the Lower Profits Limit then there is no Class 2 NIC to pay – instead you will be treated as making Class 2 NIC. This will mean you will be able to access entitlement to contributory benefits in the same way as if you had paid Class 2 NIC.

MalMonroe

Hi,

I retired and then started a small online business. But I had reached state pension age and did not have to continue to pay any NI contributions. Obviously, I do have to pay tax.

Your case is different as you have retired before state pension age and draw a pension.

I think your best bet will be to register as self-employed with HMRC - info in link here -

https://www.gov.uk/register-for-self-assessment/self-employed

Then you can ask HMRC any questions that are relevant but they will probably give you the information you need before you ask. (They did in my case, anyway). 

There's some really good info about NI here - https://www.gov.uk/national-insurance/how-much-you-pay

I hope that's helpful. I have to admit that it seemed a bit overwhelming to me at first but it's quite straightforward. And you can always ask questions via the HMRC account if things aren't clear.

All the best with your self-employment. 

Dazed_and_C0nfused

Craighoy said:

Hi - interesting topic - I will be 63 very soon and plan to take early retirement in the about two months time. I currently work as a technical sales advisor for an IT manufacturer and some of clients and business partners/ resellers have asked if I would be available for some consultancy on a per day basis. 

I hadn’t planned to do this - but a couple of days per month may be nice - earning, keeping my hand in and social.

I will be drawing down on my pension to live off and paying the appropriate tax on this - trying to keep just under the 40% threshold at about £49k pa. gross.
If I start doing some consultancy I assume I’d set up as Self Employed. I estimate it would be earning around £10k per year. 
How does the NI and tax work in this situation? 

Appreciate any advice 
thx

The profit would be added to your other income and taxed accordingly (via a Self Assessment return)

If your only other income was £49k from a pension then a little bit of your self employment profit would be taxed at 20% and the rest at 40%.  This assumes you aren't Scottish resident for tax purposes.

On £10k profit ther would be no NI to pay.

https://www.gov.uk/self-employed-national-insurance-rates

lincroft1710

Dazed_and_C0nfused said:

Craighoy said:

Hi - interesting topic - I will be 63 very soon and plan to take early retirement in the about two months time. I currently work as a technical sales advisor for an IT manufacturer and some of clients and business partners/ resellers have asked if I would be available for some consultancy on a per day basis. 

I hadn’t planned to do this - but a couple of days per month may be nice - earning, keeping my hand in and social.

I will be drawing down on my pension to live off and paying the appropriate tax on this - trying to keep just under the 40% threshold at about £49k pa. gross.
If I start doing some consultancy I assume I’d set up as Self Employed. I estimate it would be earning around £10k per year. 
How does the NI and tax work in this situation? 

Appreciate any advice 
thx

The profit would be added to your other income and taxed accordingly (via a Self Assessment return)

If your only other income was £49k from a pension then a little bit of your self employment profit would be taxed at 20% and the rest at 40%.  This assumes you aren't Scottish resident for tax purposes.

On £10k profit ther would be no NI to pay.

https://www.gov.uk/self-employed-national-insurance-rates

I think you've posted on the wrong thread!

Savvy_Sue

lincroft1710 said:

Dazed_and_C0nfused said:

Craighoy said:

Hi - interesting topic - I will be 63 very soon and plan to take early retirement in the about two months time. I currently work as a technical sales advisor for an IT manufacturer and some of clients and business partners/ resellers have asked if I would be available for some consultancy on a per day basis. 

I hadn’t planned to do this - but a couple of days per month may be nice - earning, keeping my hand in and social.

I will be drawing down on my pension to live off and paying the appropriate tax on this - trying to keep just under the 40% threshold at about £49k pa. gross.
If I start doing some consultancy I assume I’d set up as Self Employed. I estimate it would be earning around £10k per year. 
How does the NI and tax work in this situation? 

Appreciate any advice 
thx

The profit would be added to your other income and taxed accordingly (via a Self Assessment return)

If your only other income was £49k from a pension then a little bit of your self employment profit would be taxed at 20% and the rest at 40%.  This assumes you aren't Scottish resident for tax purposes.

On £10k profit ther would be no NI to pay.

https://www.gov.uk/self-employed-national-insurance-rates

I think you've posted on the wrong thread!

I don't think so, the recurring question seems to be about whether or not someone who doesn't have to pay NI on their EMPLOYED earnings has to pay them on SELF-employed earnings, and I think we have an answer here.  

lincroft1710

Savvy_Sue said:

lincroft1710 said:

Dazed_and_C0nfused said:

Craighoy said:

Hi - interesting topic - I will be 63 very soon and plan to take early retirement in the about two months time. I currently work as a technical sales advisor for an IT manufacturer and some of clients and business partners/ resellers have asked if I would be available for some consultancy on a per day basis. 

I hadn’t planned to do this - but a couple of days per month may be nice - earning, keeping my hand in and social.

I will be drawing down on my pension to live off and paying the appropriate tax on this - trying to keep just under the 40% threshold at about £49k pa. gross.
If I start doing some consultancy I assume I’d set up as Self Employed. I estimate it would be earning around £10k per year. 
How does the NI and tax work in this situation? 

Appreciate any advice 
thx

The profit would be added to your other income and taxed accordingly (via a Self Assessment return)

If your only other income was £49k from a pension then a little bit of your self employment profit would be taxed at 20% and the rest at 40%.  This assumes you aren't Scottish resident for tax purposes.

On £10k profit ther would be no NI to pay.

https://www.gov.uk/self-employed-national-insurance-rates

I think you've posted on the wrong thread!

I don't think so, the recurring question seems to be about whether or not someone who doesn't have to pay NI on their EMPLOYED earnings has to pay them on SELF-employed earnings, and I think we have an answer here.  

Definitely on the wrong thread

Should have been posted on

Self Employed and drawing down down a pension - how does Tax and NI work? Confused!

Started by Craighoy

May 9, 2024