Working past retirement – how it will affect your taxation?

24 Apr 2020

Tax payments Have you decided to continue working past retirement age?

Many people continue working past the recommended retirement age for various reasons:

• Pension is not enough and need more income
• Enjoy your work and want to carry on
• Have you own business
• Still feel like you can contribute
• You have specialised skills that are sought after

People are living longer and often feel at retirement that they have so much more to contribute.

If you plan on receiving a pension and continue working, then there could be tax implications for you. 

Remember that both your pension and your salary will be included on your total taxable income, and you could end up having to pay more income tax. Separately, your income will be taxed correctly, but when combined, it could put you into a higher tax bracket and thus you will owe tax.

If you are planning on working into retirement, then you need to meet with your financial adviser to discuss the tax implications of your decision. 

Here are some tips to help mitigate the tax implications.

• If you don’t need your pension right away, you could defer your state pension for a few years. You could benefit with an increase for every month you don’t draw it.
• Your private pension could also be deferred, which means you could keep contributing into it and grow your pot.
• If you have a defined contribution scheme, it means that by deferring it, your investment will continue to grow till you retire. (taken from Which.co.uk)

Chat to your deVere adviser about the implications of working into retirement. They will organise a video meeting with you in the comfort of your own home. [email protected]

Please note, the above is for education purposes only and does not constitute advice. You should always contact your deVere adviser for a personal consultation.

* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.