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Topic: Curious about tax on pension?

Demih on Wed 06-Jun-2018 | 12:23pm

Offline Demih

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Hello :) I recently registered so please bear with me.

I am going to be retiring in the next couple years, and with that comes my pension. However I don't want to stop working so will likely continue somewhere else and do part time hours (I don't have anything to do!). I was wondering how tax on this would work? What tax band would it be in? I've looked at a salary calculator https://www.income-tax.co.uk/ but just can't work it out, so was hoping someone here could help me out :)

See you around! ;)
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Comments: 5

Norn on Wed 06-Jun-2018 | 16:30pm
Reply #1

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If you keep working past retirement age, you can defer taking your state pension. This gets more valuable depending how long you defer for. 
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Gillian on Wed 06-Jun-2018 | 17:50pm
Reply #2

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If your pension and your wages together come to more than the current tax allowance then you will pay have to pay tax.   The HMRC will give your employer a tax code to use.   How much you pay depends on how much you earn.

Cassiopea on Wed 06-Jun-2018 | 18:07pm
Reply #3

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Say your state pension was 10,00 and your earnings were 18,000 then your total income is 28,000.  Your personal tax allowance is 11,850 per year.  Deduct 11,850 from the total and you are left with 16,150 which will be taxed at 20%.  You do not pay NI if you are of state pension age and you need to get a form for this to show your employer. The tax code will go on your work pay.

If however the total comes to over 34,500 you then start paying 40% tax after personal allowance has been deducted.

magellan on Wed 06-Jun-2018 | 18:15pm
Reply #4

Offline magellan

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Yep, that's the way it works. You are taxed on income, it matters not whether that is income from pension or work earnings. The good news: if your total income in the tax year 2018/19 is less than 11,850 you'll pay no tax at all.
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SG on Wed 06-Jun-2018 | 21:25pm
Reply #5

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If I may, can I point out that this thread is on the Front Page - ie it is open to view to the world!  Given the subject matter, please be wary of posting anything personal.

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