Home > Ask Our Experts > Does Part Time Work Affect Your Pension?

Does Part Time Work Affect Your Pension?

By: Garry Crystal - Updated: 5 Dec 2018 | 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.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
[Add a Comment]
I am 68 years old and have been offered a job at 12 hrs a week paying £99.this company wants me to go self employed which I feel is more for some one starting a small business.The question is how much income can I earn before tax and how do I let the tax office know that I am working with going self employed
amuri - 5-Dec-18 @ 9:45 AM
I'm a pensioner (68) and took on some part time work for a total of 7 weeks 3 months ago (Sep) Because of this I have just been informed that my pension credit is being stopped. My question is this can I re-apply and if so how long do I have to wait. I have only my state pension to live on £112.00 a week....
Marty - 4-Dec-18 @ 3:52 PM
I am on Pension Credit. My hobby is art and occasionally I sell a painting. I do not make a profit as I buy materials. Do I have to register for self-assment?
arty - 18-Oct-18 @ 6:34 PM
My husband is 67 and receives his pension and guaranteed pension credit and I am 62 and named on it but I want to know if I can go to work and how will it affect his pension,housing benefit council tax etc
Ninno - 19-Sep-18 @ 1:35 PM
I am 67 years old and on a state pension and small NHS pension, which enables me to claim savings credit. I own an old village house (renovation) which is up for sale(long story!) Housing benefit have said I have 26 weeks to sell then I will lose both my housing and saving credit benefits. I have just been told, the house sale has fallen through, I am in a total panic as I will not be able to afford to pay my rent, council tax, bills and food, out of my pension alone. If that happens I could become homeless. Any advice very much appreciated. Help!!!!!!
Duff1 - 15-Sep-18 @ 1:03 PM
I receive the married couple allowance as my husband is a low earner. Will I lose this when he retires next year and claims old age pension? Thanks advance.
Karen - 23-Aug-18 @ 6:43 PM
I am retired in receipt of private pension, I do some casual work gardening when asked by a customer. Do I need to declare what I earn ie 20 to 40 pound a week at the most.
Harry - 20-Aug-18 @ 9:52 AM
My husband receives pensions credit. How many hours can I work with out claiming it. I'm not pension age yet.?
Herflick - 14-Jul-18 @ 7:54 PM
paul - Your Question:
I am 65 on 3rd july.2018. date given for state pension 06/03/2017. age then was 63years 8months and 3 days.I want to continue working.part time,I do 10 hours per week. I hav'nt intentionally defered my pension claim,so am a bit worried that because I get housing benefit I should inform pensions people.If they reduce my benefit I wil have to pay the difference,And I cannot afford to do this.what shall I do?

Our Response:
You can choose to keep on working, whether paid or on a voluntary basis, while claiming your State Pension. Any money you earn will not affect your State Pension, but it may affect your entitlement to other benefits such as Pension Credit, Housing Benefit and Council Tax Reduction (help with your rates in Northern Ireland), please see link here. It would be worth speaking to someone at Citizens Advice Bureau or the DWP to see what your best options are.
FinancingRetirement - 19-Jun-18 @ 11:39 AM
I am 65 on 3rd july.2018.date given for state pension 06/03/2017. age then was 63years 8months and 3 days.I want to continue working.part time,I do 10 hours per week. I hav'nt intentionally defered my pension claim,so am a bit worried that because i get housing benefit i should inform pensions people.If they reduce my benefit I wil have to pay the difference,And i cannot afford to do this.what shall i do?
paul - 18-Jun-18 @ 3:36 PM
I am a pensioner claiming housing benefit, how much am I allowed to earn
Maz - 15-Apr-18 @ 2:59 PM
FinancingRetirement - Your Question:
liz - Your Question:
I am due to retire on the 6th of july and want to carry on working I work 20 hours a week on minimum wage what tax will have off is it worth carrying on I have no morgage or any other pensions
.
Our Response:
You can see more via the link here, which should help answer your question.

Our Response:
You won’t usually pay any tax if your total annual income adds up to less than your annual tax personal allowance of £11,500. Any income earned over this amount is taxable.
FinancingRetirement - 6-Mar-18 @ 2:39 PM
liz - Your Question:
I am due to retire on the 6th of july and want to carry on working I work 20 hours a week on minimum wage what tax will have off is it worth carrying on I have no morgage or any other pensions

Our Response:
You can see more via the link here, which should help answer your question.
FinancingRetirement - 6-Mar-18 @ 2:37 PM
i am due to retire on the 6th of july and want to carry on workingi work 20 hoursa weekon minimum wagewhat tax willhave offis it worth carrying oni have no morgageor any other pensions
liz - 6-Mar-18 @ 12:58 PM
I am 55yrs in march 2018...l can take my pension from my previous job of £6, 000 a year. I would still like to work part time. How much can l earn before the pension gets taxed. Thanks
Mazza - 28-Dec-17 @ 12:14 PM
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
Share Your Story, Join the Discussion or Seek Advice...
Title:
(never shown)
Firstname:
(never shown)
Surname:
(never shown)
Email:
(never shown)
Nickname:
(shown)
Comment:
Validate:
Enter word:
Latest Comments