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Does Part Time Work Affect Your Pension?

By: Garry Crystal - Updated: 11 Oct 2017 | comments*Discuss
 
Taxable Retired Income Pension Allowance

Q.

I am looking for a Saturday assistant. I have been approached by a gentleman who is retired and receiving a pension.

If I employ him will this affect his pension? He will be working 6 hours a week. He is worried about losing his pension if I take him on.

(Mrs Juli Murray, 2 October 2008)

A.

Working When Retired

While six hours per week may not seem likely to bring in a large income, and may not have a bearing on pension amount, it may make a change to actually paying tax. The main issue will be with taxable income, a figure that can change each year. Part-time work during retirement does still count as taxable income. The good news is that the tax-free allowance is usually higher when a person reaches retirement, meaning that you will be able to earn more before paying any tax. A person who is retired and claiming their state pension and then decides to resume work will need to work out whether or not the extra employment income will affect their tax free allowance. This can be done adding up all of your taxable income and then comparing this amount to the amount you are allowed to earn before paying tax.

Tax Free Allowance

There are numerous forms of income that are classed as taxable. Taxable income will include all state and occupational pensions, employment earnings, interest made from savings, money from benefits, some income from property, and income from various shares. However there are a number of income sources that are not taxable such as pension credit, premium bonds, certain benefits such as income supports and lump sum pension benefits. Tax free allowances will also include the basic personal allowance that is applicable to everyone and this limit does become higher the older you are. To work out if your part-time employment earnings will make a difference you will need to subtract your tax free allowance from your total taxable income including the new earnings from your part-time job. If there is money left once you have subtracted then you will need to pay some tax, if there is nothing left then you should not be paying any tax and may be entitled to a refund. Also bear in mind that there are certain allowances that can decrease your tax bill such as married couple’s allowance. Anyone who is working after retirement will also not have to pay any National Insurance Contributions. You can find more information on the tax free allowance from government offices such as the Department for Work and Pensions.

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Den - Your Question:
I'm 67yrs pensioner, my state pension & 3 small occupational pensions.I get small help with my housing & council tax benefit. I'm looking to work part time, will it affect my housing & council tax benefit?

Our Response:
You can see more via the Turn2Us link here .
FinancingRetirement - 12-Oct-17 @ 10:43 AM
I'm 67yrs pensioner, my state pension & 3 small occupational pensions. I get small help with my housing & council tax benefit. I'm looking to work part time, will it affect my housing & council tax benefit?
Den - 11-Oct-17 @ 5:20 AM
Graham smail - Your Question:
If I was to retire at 60 and start using my civil service pension, can I do some part-time work without getting taxed,how many hours a week am I aloud to work.graham

Our Response:
You are able to earn or receive up to £11,500 in 2017-18 tax year (April 6th to April 5th the next year) and not pay any tax. This is called your Personal Allowance. If you earn or receive less than this then you’re a non-taxpayer, please see link here.
FinancingRetirement - 15-Sep-17 @ 2:41 PM
If I was to retire at 60 and start using my civil service pension, can I do some part-time work without getting taxed,how many hours a week am I aloud to work.graham
Graham smail - 12-Sep-17 @ 7:05 PM
I am 65 and my wife is 56 , I now get my state pension and is topped up with guaranteed pension credit to bring our money up to minimum amount for a couple, we also get our rent and council tax paid in full. My wife wants to get a part time job to enable us to go out occasionally because at the moment we have very little spare money. Will we be worse off if she works part time. Thank you . Sammy
Sammy - 1-Sep-17 @ 10:58 AM
If i worked between 25to 30 hrs a week how does this effect my state pension payment
Len c - 11-Aug-17 @ 5:46 PM
Squibbs - Your Question:
My elderly dads neighbour has asked for my help 1hr a week as she has cancer and can't manage to vacuum and mop the floors. I of course said yes but she wants to pay me. I myself am almost 71 and in receipt of a state pension plus a private pension. She suggested £10 a week but up until now I have refused as I,m afraid it could affect my tax payments. Someone has now made it their business to ask her what I do and we are both afraid we may get into trouble. X

Our Response:
The standard Personal Allowance is £11,500, which is the amount of income you don’t have to pay tax on. If this additional wage will take you beyond this amount, then you would have register for self-assessment. But, you are not going to pay much tax on £520 per year. If this amount means that you are still earning below your annual tax allowance, you would not have to register for self-assesment and can do the work without fear of any repercussions from nosey neighbours or the like. Please see link here.
FinancingRetirement - 23-Jun-17 @ 11:13 AM
My elderly dads neighbour has asked for my help 1hr a week as she has cancer and can't manage to vacuum and mop the floors. I of course said yes but she wants to pay me. I myself am almost 71 and in receipt of a state pension plus a private pension. She suggested £10 a week but up until now I have refused as I,m afraid it could affect my tax payments. Someone has now made it their business to ask her what I do and we are both afraid we may get into trouble. X
Squibbs - 22-Jun-17 @ 12:13 PM
Jenny - Your Question:
I am 66 and retired. I draw my state pension, but I receive a small pension from my last job. Altogether, these add up to £750.00 per month. I am thinking of taking a part time job. Will it affect my pension please?

Our Response:
Only if you earn over £11,500 per year, which is any amount over your annual personal tax allowance. It will not affect your pension, but you will be taxed on earnings over and above this amount.
FinancingRetirement - 19-Jun-17 @ 4:07 PM
I am 66 and retired. I draw my state pension, but i receive a small pension from my last job. Altogether, these add up to £750.00 per month. I am thinking of taking a part time job. Will it affect my pension please?
Jenny - 19-Jun-17 @ 12:50 PM
Pearl - Your Question:
When my husband retires next year on his state pension ,i will still be working 30hrs per week ,will my husband get help with rent etc

Our Response:
You can see more via the Age UK site here, which should tell you all you need to know.
FinancingRetirement - 14-Mar-17 @ 10:30 AM
When my husband retires next year on his state pension ,i will still be working 30hrs per week ,will my husband get help with rent etc
Pearl - 13-Mar-17 @ 8:16 AM
@babydoll - I'm sure you are not the only person who feels this way! In a few years we will all be working until we drop :(
Fliss45 - 27-Feb-17 @ 2:29 PM
my pension is so bad i am considering going back to work
babydoll - 27-Feb-17 @ 1:04 PM
@Pat - Yes, and as long as your total earnings fall under your annual personal tax allowance you won't have to pay tax. Charlie
CF** - 15-Feb-17 @ 11:56 AM
My fella is claiming a state pension for both of us I was wondering if I can get a partime job wld it effect our state pension atall plus we need help on how to get extra help on decorating plus need more furniture thanks pat cavannagh
Pat - 14-Feb-17 @ 1:46 PM
I am 55. Moving next year to coast. A And want to cut my full time working hours to 30 hours per weeks. I have worked since I was 18 no. Gaps in 18 paying national insurance. Will I still be able to claim full pension.Or be allowed to top up?log
Vickie - 11-Feb-17 @ 6:01 PM
Tony- Your Question:
I'm getting a state pension & firms pension of £ 227 a month I'm 72 I've been offered a part time job working 10 hours a week & I was wondering if this would affect my pension & if it's worth taking the job many thanks a j jefferies

Our Response:
You are still eligible to claim your state and personal pension when you’re working past retirement age. You only pay income tax if your taxable income - including your private pension and state pension - is more than your tax-free allowance (the standard personal allowance for 2016-17 tax year is £11,000). Neither will you pay National Insurance after you reach state pension age - unless you’re self-employed and paying Class 4 contributions.
FinancingRetirement - 4-Jan-17 @ 1:47 PM
I'mgettinga state pension& firms pensionof £ 227 a month I'm 72 I've beenofferedapart timejobworking10 hours a week & I was wonderingifthis wouldaffectmypension& if it's worthtakingthejob manythanksa jjefferies
Tony - 3-Jan-17 @ 5:43 PM
Trish- Your Question:
I am on pension credit and have been offered a job for one day a week. How much can I earn and not loose the benefit

Our Response:
The amount of Pension Credit you get may change if your income, capital or other circumstances change. If you are 65 or over an assessed income period may apply. If so you do not need to tell the Pension Service about every change in circumstances. The letter sent to you with the Pension Credit decision will tell you if an assessed income period applies to you. You will also have been sent an accompanying information sheet called Pension Credit 'what you need to tell us about'. It tells you about the changes you must report even if you do have an assessed income period. The Turn2Us website may also be able to help find out if your benefit will be affected, please see link here. I hope this helps answer your question.
FinancingRetirement - 7-Nov-16 @ 11:11 AM
I am on pension credit and have been offered a job for one day a week. How much can I earn and not loose the benefit
Trish - 6-Nov-16 @ 4:11 PM
Mop - Your Question:
I am in receipt of guaranteed pension credit, and I also get my rent and council tax paid. I have been offered a part-time job. How much benefit will I lose? I don't mind if it's only what I earn, I would prefer to pay my own way, but if I lose more than I earn (for example if they stop my housing benefit altogether, rather than just reducing it) I won't be able to manage. I live alone, I have no savings and some debt. I need an answer before I agree to take this job.

Our Response:
You may be able to find out what benefits you would be entiltled to via the Turn2Us link, here.
FinancingRetirement - 21-Sep-16 @ 12:15 PM
I am in receipt of guaranteed pension credit, and I also get my rent and council tax paid. I have been offered a part-time job. How much benefit will I lose? I don't mind if it's only what I earn, I would prefer to pay my own way, but if I lose more than I earn (for example if they stop my housing benefit altogether, rather than just reducing it) I won't be able to manage. I live alone, I have no savings and some debt. I need an answer before I agree to take this job.
Mop - 20-Sep-16 @ 1:52 PM
My sister's husband claims pension credit for them both. He is 67 and she is 62. He gives her no money what so ever. She would like to get a part time job, how much can she earn before it affects his money Please can you advise
Kay - 2-Aug-16 @ 1:36 PM
l am 58 and my husband on pension credit guaranteed, which is about £55a work and no council tax to pay. l am thinking of getting a part time job of 12 hours. which will workout about £80. Will he lose all his benefits ?
kat - 16-May-16 @ 2:20 PM
I am 67, receiving both state pension and credit guarantee..my only income.I want to work part time...how many hours may I work and how much can I earn before my benefits are affected by the part-time earnings.
blythespirit - 10-Mar-16 @ 11:52 AM
Smiller - Your Question:
I am 65 years old and my pensions are about 18000per year my wife is 54years of age and working 12 hours minimum wage a week can she claim any benefits/support

Our Response:
You can see if you are eligible via the Turn2Us site here.
FinancingRetirement - 23-Feb-16 @ 12:13 PM
I am 65 years old and my pensions are about 18000per year my wife is 54years of age and working 12 hours minimum wage a week can she claim any benefits/support
Smiller - 22-Feb-16 @ 5:46 PM
I have to say that reading the questions re whether a person should take up a job or whether they would be 'better off' continuing to get all the bennies they can get for ever more make me mad. Get a job where you can. Do what you can for yourself and contribute where you can. I do appreciate that in some cases this isn't possible due to extreme poor health but all those who think they'll just continue to take should be ashamed of themselves. Have a bit of pride in yourself and stop poncing - if you've been offered some work, take it.
AnaisAnais - 24-Oct-15 @ 11:18 PM
I'm retired I have 2 pensions and claim housing benefits also community tax benefit , I've been asked if I would like to go back to work for 15 hours a week , would my pensions or benefits be affected
Oldgit - 15-Oct-15 @ 4:40 AM
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