Paying National Insurance

When you reach State Pension age you stop paying National Insurance.

Paying tax

You only pay Income Tax if your taxable income - including your private pension and State Pension - is more than your tax-free allowances (the amount of income you’re allowed before you pay tax).

You must contact HM Revenue & Customs (HMRC). if you think you should be paying tax.

National Insurance contributions build up your entitlement to your State Pension.

If you’re employed you pay Class 1 National Insurance contributions as a percentage of your earnings.

If you’re self-employed you pay Class 2 contributions at a flat weekly rate and Class 4 contributions annually, as a percentage of your taxable profits.

What happens at State Pension age

At State Pension age:

• you stop paying Class 1 and Class 2 contributions, even if you’re still working
• you still have to pay Class 4 contributions if you have taxable profits from the year you reach State Pension age - the next year, you’ll be exempt

You can claim back National Insurance if you’ve overpaid.

If you continue working, show your employer proof of your age, eg a birth certificate or passport, to make sure you stop paying National Insurance.

If you don't want your employer to see your birth certificate or passport, write to HMRC giving the reason. HMRC will then send you a letter confirming you have reached State Pension age.

HM Revenue & Customs
National Insurance Contributions and Employer Office
Individual Caseworker
Benton Park View
Longbenton
Newcastle upon Tyne
NE98 1ZZ

If HMRC doesn't have a record of your date of birth, you'll be asked to send your birth certificate or passport for verification. Certified copies are accepted.

You’ll have to pay tax if your total income from work, private pensions and the State Pension is more than your tax-free allowance.

If you’re getting a private pension and you work, your pension provider or employer takes off any tax due. This includes tax on your State Pension.

You might have several private pensions or jobs which means you’ll get more than one tax code.

If you get a private pension or are employed, you’ll get a P60 at the end of the tax year showing how much you paid.

You’re just getting the State Pension

Your State Pension is paid to you without any tax taken off. If you have no income apart from your State Pension and this is below your tax-free allowance you don’t have to pay tax.

If you have to pay tax you’ll need to complete a Self Assessment tax return at the end of the tax year.

You have other income

If you have any other income apart from your State Pension and you’re over the tax free allowance, you’ll have to pay tax.

If your tax affairs are complicated you might have to fill in a Self Assessment tax return (eg if you’ve foreign income or a lot of investment income).

Employed or self-employed

If you’re employed, your employer will take any tax due off your earnings and your State Pension - this is called Pay As You Earn (PAYE ).

Self-employed people must fill in a Self Assessment tax return at the end of the tax year, declaring their overall income, including the State Pension.

You can get Pension Credit if you're on a low income, even if you work or get another pension.

You get more than one pension

If you get another pension or an annuity that you pay tax on, your pension provider will take off any tax due. They’ll also deduct tax due on your State Pension.

Get your tax code corrected or get a tax refund

You can get your tax code corrected if you think it’s wrong.

You can claim a tax refund if you think you’ve paid too much.

Higher Personal Allowance if you were born before 6 April 1948

You will have a higher personal allowance if you were born before 6 April 1948.

Married Couple’s Allowance

You can claim the Married Couple’s Allowance if you’re married or in a civil partnership and at least one partner was born before 6 April 1935. It gets taken off your tax bill - the amount that’s deducted depends on your income.

Maintenance Payments Relief

You can get an allowance to reduce your tax bill for maintenance payments you make to an ex-spouse or civil partner if:

• you or they were born before 6 April 1935
• you’re separated or divorced and you’re making payments under a court order
• the payments are for the maintenance of your ex-partner (as long as they haven’t re-married or formed a new civil partnership) or your children are under 21

How much you can get

For the 2013 to 2014 tax year Maintenance Payments Relief can reduce your tax bill by the lower of the following:

• £304 - where you make maintenance payments of £3,040 or more a year
• 10% of the money you’ve actually paid - where you make payments of less than £3,040 a year

How to claim

You can claim Maintenance Payments Relief by contacting HM Revenue & Customs (HMRC).

You can’t claim a tax reduction for any voluntary payments you make.

There's more information about Income Tax rates and allowances online.

National Insurance refunds

If you've overpaid tax or National Insurance you can claim it back.

Tax refunds

If you're on a low income and have savings, you can claim back tax deducted from the savings interest.

You can claim a tax refund if you’ve:

• had too much deducted from your pension
• overpaid through your job
• overpaid National Insurance

If you complete a tax return, you can also correct mistakes and claim a refund via Self Assessment.

Claiming back tax on savings interest

If you’re on a low income (less than £181 a week) you can register to have savings interest paid tax-free. You can also claim a refund of any tax you’ve overpaid on interest.

If your taxable income from savings is only slightly higher than your tax-free allowance you can pay tax at a rate of 10% instead of the usual 20%.

You can check if you can get your interest tax-free or pay tax at the 10% rate.