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NI and Tax after State Pension Age

This information explains government National Insurance and tax after State Pension age. Check the age related tax allowance and how to calculate tax if you continue working.

When You Stop Paying National Insurance

In most cases, once you reach State Pension age you do not need to pay National Insurance.

Note: The rules differ for those who are self-employed paying Class 4 NI contributions.

You would only pay Income Tax when you get a pension if your taxable income is higher than your tax-free allowances.

Your tax-free allowance is the amount of income allowed before you start to pay tax. This includes income from a private pension and the State Pension.

Paying National Insurance contributions qualifies you to claim certain welfare benefits and the State Pension.

Being employed means you pay Class 1 National Insurance contributions. It gets paid as a percentage of your earnings until you reach State Pension age.

Self-employed workers pay Class 2 contributions at a flat weekly rate. They might also pay Class 4 contributions ‘annually’ as a percentage of taxable profits.

Note: You must contact HM Revenue and Customs without delay if you think you should be paying taxes.

When You Reach State Pension Age

Several key changes take place once you get to the United Kingdom State Pension age:

  • You stop paying National Insurance Class 1 and Class 2 contributions. They do need paying even if you carry on working after State Pension age.
  • You still need to pay Class 4 NI contributions on taxable profits from the year you reach the State Pension age. You will become exempt from this from the following year.

Note: Self-employed people must still send a Self Assessment tax return for the year they reach State Pension age. There is a set way to claim a National Insurance refund if you overpay.

If You Carry On Working

Your employer may need to see proof of your age when you stop paying National Insurance. As a rule, you can use a birth certificate or a passport for this procedure.

What if you prefer not to let your employer see your birth certificate or your passport? In this case, you can get a letter from HM Revenue and Customs to show instead.

The letter from HMRC confirms you reached State Pension age and do not need to pay NI contributions. Write to HMRC explaining why you do not want to use your birth certificate or passport.

National Insurance Contributions and Employers Office
HM Revenue and Customs

Note: HMRC may not have a record of your date of birth. Thus, they may ask you to send one of the documents for verification. They also accept the process of certifying a document or a certificate of age exception (CA4140).

Age Related Tax Allowance

Married Couple’s Allowance

The Married Couple’s Allowance is one of the age-related allowances you can claim. You must be married or in a civil partnership with at least one partner born before the 6th of April 1935. The age-related allowance gets taken off your tax bill and your income determines the amount deducted.

Maintenance Payments Relief

There is another age related allowance to reduce a tax bill on maintenance payments. It applies if you make maintenance payments to an ex-spouse or a civil partner providing:

  • Either you (or they) were born before the 6th of April 1935.
  • You are divorced (or separated) and making payments under a court order.
  • The payments are for the maintenance of your ex-partner (if they have not formed a new civil partnership or re-married) or your children are under 21.

How much can you get? Maintenance Payments Relief for the 2022 to 2023 tax year can reduce a tax bill by the lower of:

  • £364 (if you make maintenance payments of at least £3,640 per year).
  • 10% of the money paid out (if you make payments below £3,640 per year).

Note: Maintenance Payments Relief tax reductions do not apply to any voluntary payments.

Claiming Back National Insurance and Tax

Income Tax Refund

In some cases you also can claim a tax refund. They are for cases where you had too much deducted from your pension or they got overpaid through your job.

Those who complete a tax return can correct mistakes and claim a refund when they file a Self Assessment.

Claim Back Tax on Savings Interest

People on a low income might qualify for tax-free interest. You may also get some tax back on savings interest.

National Insurance Refund

You can apply for a NI refund on any contribution overpayments you paid to HM Revenue and Customs. The government site helps you claim back overpaid National Insurance payments.

National Insurance and Income Tax after State Pension Age in United Kingdom