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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.

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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.

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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
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 »

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