Do You Pay National Insurance on Pension Income?
You’ll stop making National Insurance Contributions when you reach state pension age, so you won’t normally need to 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.
National Insurance (NI) for retiring self-employed people
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 the tax year in which you retire if you are self-employed and your earnings hit the Class 4 NI threshold (also known as the Lower Profits Threshold – £12,570).
If you’re planning to retire from your own business, 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.
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.
This means that you could continue working past state retirement age, or even retire from employment and set up your own business, and won’t need to pay National Insurance!
What happens if I retire early?
Plenty of people retire before state 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.
Want to learn more?
Subscribe to our newsletter to get accounting tips like this right to your inbox
Read more posts...
Why Do I Need to Verify My Identity for Companies House?
13th June 2025Verifying your identity to Companies House is now a legal requirement in the UK. We’ll explain how you can verify your identity,…
Read More
A Guide to the Non-Resident Landlord Scheme
12th June 2025It can sometimes be tricky for HMRC to collect property tax from individuals who live outside of the UK, especially if they…
Read More
Self Assessment Tax Returns for Landlords
30th May 2025People become landlords for all sorts of reasons. Some have a portfolio of properties and make a full-time income from it, while…
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
Annual tax efficiency reviews to reduce your tax bill
Proactive checks of your bookkeeping on Pandle
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 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:
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 »