Starting a new business? Get 40% off our accountancy services for 3 months! 😎

x

You’ll stop making National Insurance Contributions 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 tax allowance.
 

NI for retiring self-employed people

When does National Insurance start and stop?

What happens if I retire early?

You won’t continue to make NI contributions once you reach state pension age, although you may still have to pay Class 4 NI for the remainder of that tax year if you are self-employed and your earnings hit the threshold.

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, covering the period until you finished working.
 

Comprehensive tax return services

From only £24.50 per month

Learn more

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.

Some people retire before the retirement age. It might be possible to receive your pension early if you have one through your employer or if you have a private pension as a self-employed person. You’ll be able to check this with your employer or pension scheme provider, but be aware that there might sometimes be tax implications for taking money out of your pension pot early.

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 using your Personal Tax Account to see how many qualifying years of contributions you have made.

Learn more about our online accountancy services for businesses. To talk to one of the team, call 020 3355 4047, request a free call back, or get an instant online quote.

About The Author

Lee Murphy

MAAT and ICPA accountant, with a passion for making accountancy and bookkeeping accessible. Other interests include cloud-based software development for web and mobile access, keeping fit, reading, and entrepreneurship.

More posts by this author
Subscribe
Notify of
guest
2 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
jean wilson
jean wilson
27th July 2020 4:52 pm

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?

Elizabeth Hughes
Admin
Elizabeth Hughes
31st July 2020 9:25 am
Reply to  jean wilson

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 »

Read more posts...

What is a Non-Established Taxable Person for VAT?

There are special VAT rules in place for online sellers who are classed as non-established taxable persons (NETPs), and use an online…

Read More

The Accountancy Partnership – Our Positive Reviews

Here at The Accountancy Partnership, we’re proud of our customer reviews The reviews we receive from our customers show how hard we…

Read More

What Type of Legal Structure Should I Choose When I Start a Business?

The structure that you choose when you start a business affects how the business operates, the amount of tax you pay, how…

Read More
Back to Blog...

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?

Yes, submit my quote
No, let me change it

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?

Yes, the business is VAT registered
No, let me change it

Call us on 020 3355 4047 if you’re not sure.

Bookkeeping

You will receive our bookkeeping software Pandle for free, as part of your package.

You can use this to complete your own bookkeeping, or we can provide a quote to complete your bookkeeping for you.

Please select and option below:

I will do my own bookkeeping
I want you to do my bookkeeping

Call us on 020 3355 4047 if you’re not sure.