Working whilst drawing the state pension.

sixtytwo

Hi,
I wonder if anyone can tell me how much your allowed to earn whilst drawing the state pension,and do you have to start paying tax again?Would really like to find a part-time job as I am very,very bored,but if our savings become taxable it would not be worth it.

jonathon_hart

My parents do. All income is taxable as per the normal rules for income tax. Yes if you statr paying tax on income then you will have to pay tax on savings interest.

seven-day-weekend

You can earn any amount of money as State Pension is not means-tested and you will pay tax on in the normal manner on your total income after your personal allowance has been deducted.

Please bear in mind that you will get a higher personal allowance after 65 and therefore will be able to earn more before paying tax.

jennifernil

And you don't have to pay any National Insurance!

seedo

Hello everyone
I have just become a state pensioner from 25/2/2008 not received any pension as yet. Can someone explain the taxation on state pension, I have had a notice of coding from the tax office for 6/Apr2008 to 5/Apr 2009
stating personal allowance £5435 plus £60 for job expenses.
My state pension is £6179 which bring my state pension over my personal
allowance by £684 so tax will be due on £684.
On my wage slips at work since 2nd Feb 2008 they have taken off an extra
£200 in tax, although I have not received any pension. How much tax should
I have to pay on £684?

Thanks Seedo

chesky369

Did you opt to take the pension monthly (or four-weekly, I think it is)? If you did, then it's paid in arrears. That is why I chose weekly - paid in advance - I want my hands on my money as soon as possible.

seedo

At first I did say four-weekly then when I phoned them up they said
oh you will not get paid until 28/March so I said please pay me weekly
instead, I agree I want my mney as soon as possible.

chesky369

I think you're going to have to call them again on Tuesday, since there seems to be no basis for you not having received your payments - administrative !!!!-up rather than major error I'd say. If they haven't changed the method over, you may have received it anyway by then.

seedo

What is confusing me the most is the amount of tax they
are taking off me. Tax is due on £684, I worked it out that
I should be paying £150.48 tax on that amount, I don't really
know if that is right.

djohn2002uk

Don't forget that your personal allowance is set against your total income, not just your pension. If you were already paying tax at work then obviously you're earning more than your allowance so all your pension then becomes taxable.
The way you had worked it out, the ( My state pension is £6179 which bring my state pension over my personal
allowance by £684 so tax will be due on £684.) are annual figures anyway so wouldn't have any relation to the tax being deducted weekly/monthly. If your £150 was right that would have been payable over 12 months.
BUT, you need to add your annual wages and pension together, set your allowance against the total and you have to pay tax on the rest.

Mikeyorks

seedo wrote: »

How much tax should
I have to pay on £684?

As previous post - that's the wrong question. As you're still working - the effect is that you're suddenly getting an extra £6179pa .... and tax is going to be payable on all that? Unless .... it coincides with you being 65 and your personal allowance goes up. But the quote from your coding notice suggests otherwise? So - simplistically you're going to be paying an extra 20% on £6179 = £1236pa. Just above £100pm on average?

But that doesn't explain an increase in tax from 2nd Feb? You've either had a real pay increase (not the Pension) from that date ... or a change in Code late in 07-08 in order to achieve that?