State pensioners told when they will ‘stop paying NI’ if they work | Personal Finance | Finance
Addressing several widespread questions, the department explained how regulations shift if you access your pension while still earning a salary and when National Insurance deductions will cease from your wages, which can vary based on your employment status. In a brief video posted on X, an HMRC representative reassured pensioners they can carry on working even if they begin receiving the state pension, a private pension, a workplace pension or indeed any combination of these.
They stated: “Many people choose to do this and the tax rules are straightforward.”
It’s widely understood that National Insurance contributions cease once you reach state pension age, which is presently rising from 66 to 67. However, the exact timing of when payments stop may also hinge on your type of employment.
The video clarified: “Employed people stop automatically. Self-employed people stop from the next tax year.”
If you’re employed by someone, you might need to supply your employer with evidence of your age to verify when they should cease deducting National Insurance from your salary. This could include your passport, birth certificate or state pension award letter.
If you’re self-employed, you’ll be required to include your date of birth on your tax return so HMRC can ensure payments stop at the appropriate time. It’s important to be aware that ceasing National Insurance contributions does not mean your obligations to HMRC come to an end. Those who have reached state pension age are still required to pay income tax.
Income tax is charged on your total yearly income which can include:
- wages
- if you’re self-employed
- State Pension
- workplace or private pensions
- interest you get from savings
- investments
- rented property
For those who continue working beyond state pension age, income tax will typically be collected via PAYE and determined by your tax code. This could alter if you are drawing a workplace or private pension alongside your wages.
HMRC has launched a campaign encouraging people to get “Tax Confident”, particularly in retirement. It advises: “If you’re claiming a State Pension and are still working, keep an eye on your payslips to make sure the right amount of tax is being taken.”
According to research by the Centre for Ageing Better, published earlier this year, roughly one in 25 members of the workforce are currently aged over 65, with this figure rising year on year.
The research further revealed that those working beyond state pension age are taking home greater earnings than in previous years. Workers aged 65 and over were bringing in around half the median weekly pay of those aged 35 to 49 — a notable rise from just 40% a decade ago.
