Do You Pay National Insurance on Pension Income?
National Insurance Contributions finish when you reach state pension age, so you won’t pay NI on any pension payments or other income. You might still have to pay income tax though, if your taxable income exceeds the personal allowance.
NI for retiring self-employed people
It’s also worth keeping in mind that if you are self-employed and your earnings hit the threshold, then you may still have to pay Class 4 NI for the tax year that you reach state pension age. When you retire, remember to let HMRC know that you have stopped working! You will need to send them your final Self Assessment tax return.
When does National Insurance start and stop?
National Insurance Contributions are payable from the age of 16 until state retirement age. The amount of NI that you have to pay depends on how much money you earn, and whether you’re employed or self-employed. Check the current NI rates and thresholds in our article.
What happens if I retire early?
Some people retire before the retirement age. It might be possible to receive your company or personal pension early, – this is something that your employer or their pension scheme can advise you on. There might sometimes be tax implications for taking money out of your pension pot early, which is something to watch out for.
Even if you retire early, you won’t receive your state pension until you reach state retirement age. Early retirement might also mean that the amount of state pension you eventually receive is less. This is because you might not have made enough NI contributions. You can check your National Insurance record online to see how many qualifying years of contributions you have made.
Learn more about our online accountancy services for business here. To talk to one of the team, call 020 3355 4047 or request a free call back. You can grab an instant online quote from us here.
Read more posts...
What Employers Should Know About Payroll Giving
21st September 2021Payroll Giving – also known as Give As You Earn (GAYE) – has been around for some time now but a sizeable…
Read More
National Insurance, Dividend Tax, and the Health and Social Care Levy
14th September 2021What the changes mean for employers, employees, and the self-employed The UK government announced their new plan for health and social care…
Read More
Can Self-Employed People Get Help with Childcare Costs?
7th September 2021Being self-employed can mean that your working hours are more flexible than they would be for an employer, but caring for children…
Read More
×
What else is included in our accountancy packages?
If you have any questions about our services please call us on 020 3355 4047
Unlimited support via phone or email
Automated reminders for your important deadlines
Regular tax efficiency reviews to reduce your tax bill
Proactive checks of your bookkeeping records
Automated bank feeds to speed up your bookkeeping
Live chat support on our bookkeeping software
Mobile app to invoice customers & upload receipts
Free representation during a HMRC investigation
Confirm Transactions
The number of monthly transactions you have entered based on your turnover seem high. A transaction is one bookkeeping entry such as a sale, purchase, payment or receipt. Are you sure this is correct?
Please contact our sales team if you’re unsure
VAT Returns
It is unlikely you will need this service, unless you are voluntarily registered for VAT.
Are you sure this is correct?
Call us on 020 3355 4047 if you’re not sure.
Bookkeeping
You only need this service if you want us to complete the bookkeeping on your behalf.
Would you prefer to complete your own bookkeeping?
Call us on 020 3355 4047 if you’re not sure.
I plan to retire at 60 in 2022. I have an NHS pension but can’t get my state pension until I’m 67. Will I still pay NI contributions until I get my state pension? I will have paid in 44 years of full NI contributions. Also will I pay tax on my lump sum from my NHS pension?
Hi Jean, thanks for your message. You don’t pay National Insurance contributions (NICs) on any payments that you receive from a pension scheme, including an annuity, but you may be liable to income tax on these payments. You will continue to pay NI on income such as employment and self employment until you reach state pension age. Pensions are taxable income, but you can take 25% tax free. Pension providers often issue a P60 and sometimes they deduct tax. There is a P55 form that can be filled in to reclaim tax on flexibly accessed pensions. It’s a bit of… Read more »