Working & State Pension

According to their website you can take your DWP (pension) and continue to work, earning as much as you want.
However, the DWP amount is added into your total taxable income.
It’s worth remembering that your DWP will ‘die’ with you, so best not to defer it too long.

Should have said that the first £12570 of your total income is tax free.

I have had my state pension just over 2 yrs now.
I still carried on working 16 hours at my Supermarket.
Due to the cost of living, plus I do/did enjoy my little job.

So yes I now pay tax over the Personal Allowance.

If you don't take your state pension it increases by 5.8% each year that you defer (part years are also calculated). You don't pay NI once you are pension age but as you get taxed on earned income + your pension it's worth doing a few calculations to see what works better for you. I could retire at 60 but didn't take my pension until I stopped work completely at 65. I saw my take home salary increase by quite a lot as I wasn't paying NI and my state pension increased by a huge amount, interest rates were very low so it wasn't worth taking my pension and saving it as I was getting over 10% a year increase by leaving it. It's a personal calculation really.

I have my State Pension and a small private one and I work part time. I don't pay any tax on the State Pension but tax kicks in once the two Pension together reach my tax free allowance and then the rest of my private pension has tax taken off it. My work pay is all taxed at the full rate 20%. I've been doing this for over 10 years and it has always been very straightforward, no tax returns or under/over payments.

Don't forget you don't have to pay NI after pension age, I had to get a notice from the tax office to confirm that for my employer when I started with them, but I don't think you even have to do that now, the employer should just go by your date of birth.

Incidentally I looked at deferring the State Pension, but decided it was better to have the money in my hand now, rather than the State keeping it for the future!

Think of it like having two separate jobs . You will pay tax at the standard rates for anything over your tax threshold/ allowence . The tax won't be applied to the state pension but will all be applied to any other job/s you have once you are over the allowence/ threshold , which is usually 12.5k .

Yes.. I still work at 69..I get my State pension, and NHS pension.
I pay tax on my salary, and work pension, I stopped NI contributions when I turned 66 when I got my State pension.
But I would be happy to pay NI as I'm still working.

I took my state pension at 60 (born 1944) and have a couple of modest occupational pensions. Now a self employed antique dealer at 79. I probably work about 20 hours a week and have just closed all my online shops for a month long holiday from selling. I take 3 such in a year. However I employ an accountant to ensure that I pay as little tax as possible. Ive put enough of my money into the kitty already.

Lyndylou - I did the same, after much consideration and advice from various sources - a bird in the hand is worth 2 in the bush. And I’m so glad I did.

biglouis

I took my state pension at 60 (born 1944) and have a couple of modest occupational pensions. Now a self employed antique dealer at 79. I probably work about 20 hours a week and have just closed all my online shops for a month long holiday from selling. I take 3 such in a year. However I employ an accountant to ensure that I pay as little tax as possible. Ive put enough of my money into the kitty already.

That sounds interesting biglouis. Have you ever come across anything really rare?

Are you near retirement age Mel1967?

I think I'd start drawing it myself; deferring it might prove to be financially advantageous in the future, but it's really a gamble.

A bird in the hand etc.

I deferred for 10 months as I was still working. Taking my State Pension would have pushed me into a higher tax band. Mind you it increased my SRP by 10%. It is around half that under the new rules, so is not so advantageous. You also need to take your health and potential longevity( genes?) into account.

You apply for a new tax code which has a different letter in the end. Your employer then knows you are in receipt of the state pension and taxes your pay accordingly. It is your responsibility to get the code

And enjoy not paying NI once you get to SP age.

Cabbie21

I deferred for 10 months as I was still working. Taking my State Pension would have pushed me into a higher tax band. Mind you it increased my SRP by 10%. It is around half that under the new rules, so is not so advantageous. You also need to take your health and potential longevity( genes?) into account.

I was in a similar position , I think if it was now I'd probably take the pension and pay it into a regular savings account until I retired. When I hit retirement age, interest rates were appallingly low and I calculated that it was worth deferring it and getting the extra pension than paying 40% tax. I've lived 10 years so far and the pension increases have been pretty good so I think I made the right decision for me at the time.