Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s National Insurance regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.
What happens to tax and National Insurance after pension age?
Once you reach State Pension age, you don’t need to pay National Insurance unless you are self-employed and paying Class 4 contributions. You might still have to pay Income Tax if your taxable income (which includes your private and state pensions as well as any other forms of income you might have) is more than your tax-free allowance.
The State Pension age is currently under review – if you are due to retire between 2044 and 2046, the State Pension age has now risen from 65 to 68.
How do you stop paying National Insurance?
You need to pay National Insurance to be able to qualify for certain benefits, such as the State Pension, contribution-based unemployment benefits or Maternity Pay and these contributions are usually deducted from your wages by your employer (Class 1 contributions) or paid through your Self Assessment tax return if you are self-employed (Class 2 and Class 4 contributions).
If you pay Class 1 or Class 2 National Insurance contributions, these stop when you reach State Pension age – even if you are still working and earning. However, if you pay Class 4 contributions, you will still have to pay them if you have taxable profits from the year in which you reach State Pension age, but you will be exempt from paying them from the following year. Due to the timescales involved in Self Assessment, this means that you will still have to pay after you reach State Pension age but only for the tax year in which you reached State Pension age, not for any afterwards.
If you are still self-employed after State Pension age, you will still need to send in a Self Assessment tax return for the year you reach State Pension age. You will be able to claim back any overpaid National Insurance.
What happens if you continue working?
If you continue to work after you have reached State Pension age (and you can if you still want or need to – you are no longer required to retire at 65 whether you like it or not), you need to show your employer proof of your age so that they can make sure you no longer pay National Insurance. This proof can be a birth certificate or passport. If, for some reason, you don’t want your employer to see your birth certificate or passport, you can ask HMRC to send you a letter to show your employer instead. This letter will confirm that you have reached State Pension age and that you no longer need to pay National Insurance. You will need to write to HMRC explaining why you don’t want your employer to see your proof of age documents. The address for writing to is:
National Insurance Contributions and Employers Office, HM Revenue and Customs, BX9 1AN.
If HMRC doesn’t have a record of your date of birth, you will be asked to send those proof of age documents to HMRC so they can verify that you have indeed reached State Pension age. HMRC will accept certified copies if you don’t want to send the originals through the post.
If you have a Certificate of Age Exemption (CA4140) form, you can also use this to prove to your employer that you are of State Pension age and no longer have to pay National Insurance contributions. However, HMRC stopped issuing these in December 2013, so unless you already have one, this won’t be an option for you.
Are there any age-related tax allowances?
Depending on when you were born and what your personal circumstances are, there are a couple of tax allowances you may be eligible for. These are:
Married Couple’s Allowance: if you are married or in a civil partnership and at least one of you was born before 6th April 1935, you can claim this tax allowance. It can help to reduce your tax bill by between £326 and £844 per year, depending on your income and the date of your marriage or civil partnership. You will either need to claim it in your Self Assessment tax return or contact HMRC to claim it.
Maintenance Payments Relief: if you make maintenance payments to a former spouse or civil partner, you might be eligible for this allowance. If either one of you was born before 6th April 1935, you are separated or divorced, and the maintenance payments are for the ex-partner (as long as they haven’t remarried or entered into a new civil partnership) or your children under the age of 21, then you can claim this allowance. If your maintenance payments are £3,260 per year or more, you can reduce your tax bill by £326 – if your payments are less, you can reduce your tax bill by 10% of the payments you have made. If any of the payments were voluntary (rather than court-mandated), you can’t claim for those.
Can you claim a refund on your tax or National Insurance payments?
If you have overpaid on your National Insurance payments, you can contact HMRC and request a refund of those overpayments. If you have paid too much income tax, maybe because you have paid too much tax through your job or because too much has been deducted from your pension, you can also claim a refund – if you’re not sure how, call our team of experts on 0330 122 9972 and we can guide you through the process.
If you pay by Self Assessment, you can also correct any mistakes that way and claim a refund of your overpaid tax.
It is also possible to claim back any tax you have had deducted from your savings if you are on a low income.
How can DSR Tax Claims help?
We know that dealing with tax and National Insurance after State Pension age can be a complicated affair, even with our helpful guide to tell you everything you might need to know. It’s all very well reading about it and knowing what HMRC’s stand on it is – but how do you apply that to your own circumstances? It can seem like an absolute minefield but help is always available and you don’t need to battle through this alone. Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax relief. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.