Tax and allowances in retirement
Find out about paying tax if you have retired or receive a pension, and learn about the range of allowances and help that is available.
Income tax rates and personal allowances
As you get older there are age-related allowances that can reduce how much tax you pay. Some allowances are income amounts which aren't taxed. Other allowances reduce your tax bill.
Tax when you get a pension
When you get money from a pension you pay tax on any income above your tax-free Personal Allowance. How much Income Tax you pay depends on the tax rate that applies to you.
- Tax when you get a pension - GOV.UK
- Tax on your private pension contributions - GOV.UK
- Tax on a private pension you inherit - GOV.UK
- The new State Pension - GOV.UK
- Pension scheme administration - GOV.UK
- Contact HMRC - GOV.UK
Tax relief on pension contributions
The government encourages you to save for your retirement by giving you tax relief on pension contributions. Tax relief reduces your tax bill or increases your pension fund.
Tax on savings interest
Most people can earn some income from their savings without paying tax. This is called a Personal Savings Allowance which applies to each tax year, from 6 April to 5 April the following year.
Reclaiming overpaid tax on savings
If you think you've paid tax on your savings interest when you didn't need to, or paid more than you should have, you can claim it back. You can download form R40 to do this, or contact your local tax office or the HMRC Office.
- Claim for repayment of tax deducted from savings and investments (R40) - GOV.UK
- Income tax: general enquiries - GOV.UK
Tax on dividends
You may get a dividend payment if you own shares in a company.
National Insurance contributions
Find out about your National Insurance contributions If you’re employed, or self-employed when you reach State Pension age.
- National Insurance after State Pension age
- National Insurance and tax after State Pension age - GOV.UK
- National Insurance - GOV.UK
- Claim a National Insurance refund- GOV.UK
Blind Person's Allowance
If you're registered as blind you can claim Blind Person's Allowance. This is an amount of income you can get without paying tax.
Married Couple's Allowance (includes civil partnerships)
Find out if you can claim Married Couple's Allowance if you are married or in a civil partnership.
Maintenance Payments Relief
Maintenance Payments Relief reduces your Income Tax if you make maintenance payments to an ex-spouse or civil partner.
Tax if you're employed and getting a pension
When you get money from a pension you pay tax on any income above your tax-free Personal Allowance.
- Tax when you get a pension - GOV.UK
- Income Tax rates and Personal Allowances - GOV.UK
- Tax codes - GOV.UK
- Tax overpayments and underpayments - GOV.UK
- Self Assessment - GOV.UK
Retired but starting a new job
If you start a new job after retiring, your employer will need to tell HMRC so they can make sure that you're paying the right tax.
Tax if you're self-employed and getting a pension
If you're self-employed and getting one or more pensions as well as the State Pension, you'll pay tax in a number of different ways.
- Self-Assessment tax returns - GOV.UK
- Tax overpayments and underpayments - GOV.UK
- Self Assessment - nibusinessinfo.co.uk
- Tax when you get a pension - GOV.UK
- National Insurance after State Pension age
Becoming self-employed for the first time
If you start working for yourself, you’re classed as a sole trader - even if you haven’t yet told HM Revenue and Customs (HMRC). You must register and follow the rules for self-employed tax and National Insurance.
If you're self-employed and worried that you're paying too much tax or if you have any other questions about tax and self-employment after State Pension age, you can contact your Tax Office.
Or, if you're newly self-employed, you can call the Newly Self-Employed Helpline.
- phone: 0845 915 4655 (lines are open from 8.00 am to 5.00 pm Monday to Friday)
- Contacting 08 and 03 numbers
Working or self-employed and on a low income
If you're earning a wage and receiving a pension or you're self-employed and you get a pension but have a low income, you may be able to claim Pension Credit.
If you think you're paying too much tax
If you think you're paying too much tax or shouldn't be paying tax at all, you may be able to claim a tax refund.
Appointing someone to deal with HMRC on your behalf
You can allow someone else to deal with HM Revenue and Customs (HMRC) for you, for example, an accountant, friend or relative.
Tax if you leave the UK to live abroad
You must tell HM Revenue and Customs (HMRC) if you are leaving the UK to live abroad permanently or you’re going to work abroad full-time for at least one full tax year.
- Tax if you leave the UK to live abroad - GOV.UK
- Income Tax: leaving the UK - getting your tax right (P85) - GOV.UK
Paying tax if you retire in NI after living abroad
Find out if you need to pay UK Income Tax on your foreign income, including income from pensions held overseas.
- Tax on foreign income - GOV.UK
- Pensions: report a change in your circumstances
- Moving back to Northern Ireland from abroad
Contacting your tax office
HM Revenue & Customs (HMRC) is responsible for collecting, paying, administering and enforcing taxes.
Help and advice
The organisations below can provide you with free, independent tax advice. The list isn't exhaustive and the links are to external organisations which are not managed by HMRC.
- Tax Help for Older People
- Taxaid
- Advice NI
- 'Money matters' on the ageNI website
- Tax allowances for pensioners