TL;DR
Workers who continue earning after State Pension age stop paying employee National Insurance but pay income tax on State Pension plus earnings combined. HMRC usually applies the personal allowance to the larger income, so the second income is taxed in full.
HMRC has issued updated guidance for state pensioners who continue to work, confirming how the tax code and National Insurance position changes once an individual reaches State Pension age. Earnings above the personal allowance remain taxable, but employee National Insurance stops at State Pension age, which is currently 66.
State Pension age and the rules
State Pension age is currently 66 for both men and women and is set to rise to 67 between April 2026 and April 2028 under the Pensions Act 2014. Reaching State Pension age does not by itself trigger any payments and the State Pension must be claimed.
Anyone who keeps working past State Pension age continues to pay income tax in the normal way. The change is that employee Class 1 National Insurance contributions stop on the first pay date after the qualifying birthday.
How HMRC applies the personal allowance
The personal allowance for 2026-27 is £12,570. Where a pensioner has two sources of income, typically the State Pension and earnings from a job, HMRC normally allocates the personal allowance to the larger income.
If earnings are larger than the State Pension, the tax code on the job carries the full personal allowance and the State Pension is taxed in full through the secondary code. If the pension is larger, the position reverses.
How the State Pension is taxed
The State Pension is paid gross, with no tax deducted at source. HMRC collects any tax due on the State Pension through the tax code on another income, usually the job or a private pension.
Pensioners with no other income whose total State Pension exceeds the personal allowance can still receive a tax bill at the end of the year, usually settled through self-assessment or a simple assessment letter.
National Insurance after State Pension age
Employees stop paying Class 1 National Insurance contributions from the first pay date after reaching State Pension age. The employer continues to pay employer National Insurance on the worker's earnings.
Self-employed workers stop paying Class 4 National Insurance from the beginning of the tax year after the year in which they reach State Pension age. They should hand the employer a copy of their birth certificate or HMRC certificate confirming the qualifying age.
Other things to check
Some pensioners can claim Marriage Allowance, which transfers £1,260 of personal allowance to a spouse or civil partner who is a basic-rate taxpayer, worth up to £252 a year.
Pension Credit remains available to low-income pensioners and unlocks Cold Weather Payments, Council Tax Reduction in most areas and free TV licences for the over-75s. Earnings can affect Pension Credit entitlement, so working pensioners should check eligibility through gov.uk's Pension Credit calculator.
Key facts
- State Pension age is 66, rising to 67 from April 2026 to April 2028.
- Employee National Insurance stops at State Pension age.
- Personal allowance for 2026-27 is £12,570.
- State Pension is paid gross and taxed through another code.
- Marriage Allowance can transfer £1,260 of allowance for up to £252 saving.
FAQ
Do I still pay National Insurance after State Pension age?
No, employee Class 1 National Insurance stops from the first pay date after reaching State Pension age, currently 66. Self-employed Class 4 stops from the next tax year. Income tax continues to apply on earnings.
How is my State Pension taxed if I am still working?
The State Pension is paid gross. HMRC collects any tax due through the tax code on your job or private pension. Your personal allowance is usually allocated against your larger income.
Can I get a tax refund if I worked past pension age?
Yes, if too much tax has been deducted across your combined income. HMRC reconciles tax positions after the end of each tax year and issues refunds through P800 or simple assessment letters.
Does Pension Credit affect working pensioners?
Earnings affect Pension Credit eligibility. Use the gov.uk Pension Credit calculator to check whether your combined income still allows a claim, and consider Marriage Allowance if your spouse is a basic-rate taxpayer.
