[Dave_Lee]

Well I become a State Pensioner in a couple of weeks time, and received a couple of Tax codes today, in the post.
It makes you question the worth of carrying on working after the age of 65.
For myself I have no choice but to carry on, I am fit and able to do so, and am not bothered about the actual work aspect. It's the Tax aspect that bothers me, really bothers me.
Upon reaching 65 years the taxation personal allowances for 2011 to 2012 are £9,940.
However if you carry on working and earned over £24,000 your personal allowance is reduced by over £2,000 to £7,922.
Your full time earnings are taxed along with all your income from pensions etc.
In my case My State pension, plus my Army pension and small private pension, all add up to an annual excess of income after deduction of personal allowance of £510.
This £510 will be added to my Self Employment income and ALL of the total will be taxable.
What this actually means is that regardless of what self employment income I achieve, the taxation on my three pensions will be £1,186.
The point I am trying to make is that because I choose to carry on working, and paying tax at the same time on my income, I am penalised by way of reduction of personal allowances to the sum of £2018. This means I will pay an additional £500 or so in tax, unless I purposely reduce my self employment income to below £24,000.
I mean, bloody hell haven't you paid enough into the system, when you've worked and paid taxes all your life, without them scrounging every penny they can out of you, for as long as they can.
Dave.

[jasonl]

That is a tough situation , though I cannot nderstand why you would want to earn more than 24k , plus about 10k in pensions , surely you dont have kids or a mortgage to pay for ?

I hope that once I reach 50 the earnings from my properties will pay a pension and i can pick and choose work , down to less than 20 hours a week . Then I can spend time with family and my hobbies .

I am not critiscizing , just curious why you want to earn so much?

[Helen]

Bare with me it's been along week so may have misread your post Dave.
Lets say you are not going to work at all, will you still get taxed on your pensions?
If £24k is the top limit you can earn, does this include your pensions?
If so then I would deduct my pension value from the £24k and not more earn than the remainer, after all who wants to carry on full time into retirement? Keep fit keep agile, but not full time working

[CATMAN]

I'd tell them you've retired.

Any money earned is cash in the hand, to put under my carpet.

I was always an advocate of paying my dues, and boy, I've paid them. Then you look at how our taxes are wasted, £7 Billion in overseas aid whilst people on the front-line  are being given their P45's.

We have to send planes from Norfolk to bomb Libya, because we don't have a single aircraft carrier.

And not finally we got MP's saying they've had to sleep in their offices because they couldn't afford  a Travelodge, so we the tax payer give them more money for expenses.

Honesty is this country is a bye word for taxing you until the pips squeak

[markpowell]

Retire and keep your stuff and just clean for your regular customers and get them to pay cash, this country is unbelievable.
Mark

[Mike Halliday]

reduce your profit to under £24k, i would start having work related holidays to far away places, perhaps attend the connections convention in las Vegas, have you seen the rug cleaning plants in India?.

easy to cut down your profit with legitimate  beneficial perks to yourself

[Dave_Lee]

That is a tough situation , though I cannot nderstand why you would want to earn more than 24k , plus about 10k in pensions , surely you dont have kids or a mortgage to pay for ?

I hope that once I reach 50 the earnings from my properties will pay a pension and i can pick and choose work , down to less than 20 hours a week . Then I can spend time with family and my hobbies .

I am not critiscizing , just curious why you want to earn so much?

Well Jason, good luck to you, you have obviously got it more right than I have.
Like I said I have no choice but to carry on working, and want to get our mortgage paid off quicker than the 6 years still left on it.
There are also other private reasons for wanting to earn as much, but my point was not about why I want to do so, but the way you are penalised Tax wise if you do.
I am not a 'sitter' anyway and would have to do something, so may as well get paid at the same time.
Dave.

[clinton]

Id think about the cash jobs dave too.

Lots out there doing it from car and motorbike mechanics and they get paid in cash.lots of other trades too do that mate

Bit like the beatles song when am 64  :

[Mike Halliday]

I would contact AgeUK and see if they have a tax specialist you can speak to, i would guess there are loopholes that can be exploited.

[Joe H]

Dave
You mention class 4 in your original post, I assume this is Nat.Ins.
I thought one you receive your state pension you dont pay NI, or is class 4 something outside of that.

[Dave_Lee]

My advice to everyone is to make sure you have a good pension set up for your future, either by way of investments or in property like Jason and a few others that I know.
The older you get the faster time seems to pass so don't put it off until tomorrow.
Don't get the wrong idea though, I am quite happy working, my dad still does and he's 88 this year, and not doing it for the money.
I do intend slowing down work wise in a couple of years, but certainly not easing up on my active pastimes, in fact I intend on getting out in those hills, more than ever.
The cash thing sounds a good idea, but the Tax man will be keeping an even keener eye on those things very soon.
Helen, yes the £24,000 does apparently include ALL income, including pension, so that's even worse than I thought.
That now means my self employment income has to be below £15,568 to get the additional personal allowance.
Dave.

[Dave_Lee]

Dave
You mention class 4 in your original post, I assume this is Nat.Ins.
I thought one you receive your state pension you dont pay NI, or is class 4 something outside of that.

Yes Joe, sorry for the error, once 65 you are exempt from Class 2 & 4 contributions.
Dave.

[Doug Holloway]

Hi Guys

There was talk before the Budget that N.I might be put on retirement income but I don't think their brave enough.

However when Tax and NI are merged together what happens?

It's a recent thing that people are working in retirement but will be the reality for many of us.

Keep fit!!

Doug

[Joe H]

Dave
If you still have a mortgage for 6 years plus other personal reasons you need to work, then its a tough story, and does seem unfair.
End of April 2012, just 13 months I will be in the same position as you.
My mortgage has finished, but we downsizing now to reduce outgoings. I want to continue carpet cleaning for one or two years after I am 65 and if the ceiling works out at £15.6k then thats fine, I only want enough work to bring in maybe £100 a week.

Just on another point but related I suppose.
I was talking to a guy on Wednesday. He is from Turkey and his wife from Germany.
He said he wants to go back to Turkey because they fed up paying taxes over here just to see scroungers who dont want to work getting the benefits hes paying for.

[David_Annable]

Hi

How about charging twice as much and doing a third of the work?

Dave

[Helen]

Thanks think I am with you now
1)So if you don't work they don't tax your pensions.
2)If you do work and keep the income and pension under the £24k the tax allowance will be £9940
3)If you do work and  the income and pension goes over the £24k the tax allowance will be £7922

Think I would opt for (2) for a couple, maybe 3 years on a part time basis and then go for (1) (hopefully this would pay your mortage off and relieve you of that)

but I agree it is wrong for any pension entitlement to be taxed, just because you decide you are fit enough to carry on and work into your more mature years.

[richy27]

I am not worrying about a pension because by the time i get there i dont think state pensions will exist. I am investing in property and land things to an extent i can control. I am reluctant to pay into a private pension which to an extent is out of my control. So basically i am trying to build my mini empire up and my portfolio of property which will see me through my retirement and hopefully by 55 i will be able to stop working and play golf everyday in the sun

[jasonl]

Exactly Richard ,  when you pay into a pension company , they invest your money into commercial property and shares anyway , so I take the attitude that I may as well do it myself.  Next year I am getting it all put into a SIPP which means it is all more tax efficient , and my personal returns will be better.

Having said that I do not think that i wil ever fully retire , our line of work makes it simple to be part time.

[Doctor Carpet (Ret'd)]

Whilst unfair, that is the nature of "marginal rates of tax".

No different really to when you bump up against the VAT threshold. If you don't add VAT to every job because you're afraid you may lose jobs then your disposable income reduces considerably until such time as your total T/o increases considerably.

It's also the same with the old-age allowance for pensioners with higher income from pernsions. Once their income hits a certain level then the personal allownance drops by £1 for every £2 income above that threshold. (50% marginal rate.)

And probably the most extreme example....

The Duke of Westminster was once accosted in the late 70's by an obviously jealous person who was moaning to him that it was all very well for the Duke to be going out for a £20 per head meal which most people could never truly afford. As the Duke pointed out his marginal rate of tax was that he had to earn £1000 to pay for that £20 meal as his marginal rate was 98%.

Was that fair?

Rog

[Dave_Lee]

Again a variety of comments.
I guess my wife and myself are just too honest, and it simply doesn't seem to pay, to be so.
My wife had to take early retirement due to medical conditions a few years ago. She should have finished years earlier but we needed her income, so she struggled on until she started having Epileptic seizures at work. This led to being off for almost a year but eventually went back, then began to have difficulty with damage from a broken wrist. Over the next year gradually compensating for the weak wrist, led her to finally seeking a doctors appointment. She never went back to work after that.
Her Statuary sick pay had long run out and she was on Incapacity Benefit for a short time. She was then called in for a check up by the Benefits people. I knew before she went that they would take her off it, because although she was still struggling she wouldn't in-dignify herself by spinning them a sob story and exaggerating things. She was quite upset when she received the latter telling her that she hadn't scored enough points for Benefit. They scored her zero for her Epilepsy, because she wasn't falling over every day, and that made the difference. They absolutely have no idea. However she refused to appeal the decision and we decided to just think 'Stuff them', rather than do any pathetic pleading.
I know guys are talking about cash jobs and money in the biscuit tin, but I have never done that, I do declare everything, even jobs done for friends. Some may think I am crazy doing so, but I had an in depth Tax investigation after I had only been in business for two years.
Everything was above board apart from a single invoice for a Grey carpet, which the Tax lady waived at me and asked me to explain its presence in my books as it couldn't be accounted for. I owned up that I must have included it in mistake, as that was a carpet I purchased for my own use.
I received two penalties as a result, something I don't wish to repeat, and anyway employees can't fiddle their tax so why should self employed, everyone has to pay tax on income. I just don't see why they should reduce personal allowances, if you carry on working past 65, especially when the threshold is so low.
As already mentioned working beyond retirement is becoming a norm for a lot of people and I think this will drastically increase, either that and/or some will join the ever increasing number of people who have to take Equity Release from their property in order to supplement their pensions.
Dave.