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

x

Upon reaching the age when you can claim your state pension, you will not have to pay any more National Insurance Contributions. However, you may have to pay income tax, depending on the level of your income. If you are taking in more than the personal allowance for the year, you will pay tax on any amount that isn’t covered by the tax free allowances.

Should you be paying income tax?

tax and retirement
Do you pay tax when retired?

There are three steps to discovering whether or not you should be paying income tax. Initially, you will have to calculate your annual taxable income, which will include your state pension. You should then work out how many personal allowances you are due to receive for that year. Finally, subtract the allowances from your total taxable income and you will be left with the taxable amount.

Calculating taxable income

Any earnings from employment, state pension, interest from savings accounts, self employment income, dividends, foreign income, and some benefits all count as taxable income. Pension credit and benefits such as the Cold Weather Payments and Attendance Allowance are non-taxable. If you are married and the income is in joint names, only count half the income as yours. If you are in a civil partnership and the income is in joint names, again, only count half the income as being yours. Add up your total taxable income for the year.

Calculating your allowances

Anyone who was born after 6th April 1948 will receive the basic personal allowance of £10,000, unless income exceeds £100,000. If your date of birth is between 6th April 1938 and 5th April 1948, you will receive allowances of £10,500, although this will depend on your level of income. If your income exceeds £27,000, the allowances will be reduced by one pound for every two pounds over the limit. If you were born prior to 6th April 1938, you will receive allowances of £10,660 unless your income exceeds £27,000, in which case the allowances will be reduced.

There are other allowances and tax reliefs that can be claimed. The Blind Person’s Allowance is offered, for instance, to those certified as blind; it can be transferred if you won’t have to use it to cover your own income. If you were born before 1935 and are married, you can claim Married Couple’s Allowance.

About The Author

Karl Bilby

We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!

More posts by this author
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments

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.