HMRC confirms state pension rules for anyone who continue working past 66

Many Brits choose to carry on working while receiving a pension, and they are absolutely allowed to do so. However, some may be confused regarding how to tax their income. In a new campaign called Tax Confident, the HM Revenue & Customs (HMRC) explains the tax rules for those who wish to continue earning money during their retirement. The rules are part of a website that helps people understand tax in plain, simple terms. It comes as the State Pension age is rising from 66 to 67 between April 2026 and March 2028.

First of all, if you are employed but reach State Pension age, your employer won't take National Insurance from your wages. To prove your age, you can show your employer your passport, birth certificate, or State Pension award letter. You can also ask HMRC to send your employer a letter saying you have reached State Pension age.

If you are self-employed, you will stop paying all National Insurance contributions from the start of the tax year (April 6) after you reach State Pension age. Remember to put your date of birth on your tax return so HMRC can make sure you stop paying.

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However, while National Insurance stops, Income Tax doesn't. Most people have something called a tax-free Personal Allowance - the money you can earn every year before you start paying tax. The current standard tax-free Personal Allowance is £12,570 a year. If your total income from work and pensions is below this amount, you won't pay any Income Tax.

However, if you earn above that, tax needs to be paid on your total income. This can come from various sources, including your wages, State Pension, workplace or private pensions, savings interest, investments or rented property.

You will always be paid your State Pension without any tax taken off; it will simply be added to any other income you may have to see if it takes you above your Personal Allowance that year. If you do go over your Personal Allowance, then you will only pay tax on the amount that's above it, the website explains.

If you are employed, your tax is usually collected through Pay As You Earn (PAYE). HMRC provides your employer with a tax code, which they use to calculate how much tax to deduct from your wages. You can learn more on our PAYE page.

Your tax code is the combination of numbers and letters shown on your payslip. It is worked out using your Personal Allowance and any other income you receive, including your State Pension.

If you receive a workplace or private pension as well as wages, HMRC will normally adjust your tax code so that the correct amount of tax is collected by both your employer and pension provider. In most cases, you won't need to do anything.

If you are self-employed, you will need to include all sources of income, including workplace or private pensions, on your tax return. Any tax owed can then be paid directly to HMRC.