HMRC has issued new guidance for individuals who continue working after reaching state pension age, clarifying their tax obligations. The department addressed common questions about how tax rules change when you draw a pension while earning income, and when National Insurance contributions cease.
In a video on X, an HMRC spokesperson confirmed that pensioners can continue working while claiming the state pension, a private pension, a workplace pension, or a combination of these. The spokesperson noted: “Many people choose to do this and the tax rules are straightforward.”
National Insurance Contributions After State Pension Age
Most people are aware that National Insurance contributions stop once you reach state pension age, which is currently increasing from 66 to 67. However, the exact timing depends on your employment type. HMRC explained: “Employed people stop automatically. Self-employed people stop from the next tax year.”
For employed individuals, you may need to provide your employer with proof of age—such as a passport, birth certificate, or state pension award letter—to confirm when they should stop deducting National Insurance from your wages. Self-employed workers must include their date of birth on their tax return so HMRC can ensure contributions cease.
Income Tax Still Applies
Even after National Insurance stops, income tax remains payable. Income tax is charged on total yearly income, including wages, self-employment profits, state pension, workplace or private pensions, savings interest, investments, and rental income. For those still employed past state pension age, income tax is typically collected through PAYE based on your tax code. This may change if you also receive a workplace or private pension.
HMRC advises: “If you’re claiming a State Pension and are still working, keep an eye on your payslips to make sure the right amount of tax is being taken.”
Rising Numbers of Older Workers
According to analysis by the Centre for Ageing Better, around one in 25 workers in the UK are currently over 65, and this number is rising annually. The analysis also found that workers over 65 now earn on average half the median weekly pay of workers aged 35 to 49, up from just 40% a decade ago.
