How much can a person earn before it effects?

Question

their STATE PENSION ???

If one is receiving a state pension and has the opportunity to take a nice part time job, how much can they earn before they have to pay tax, or it effects their state pension ???

I am of course referring to folks in ENGLAND !?!?

Answer 1

your state pension is a set amount and will not change at all no matter how much or little money you earn.

what you need to be careful of if whether you wish to pay tax or not and the details of any other income you have such as bank interest etc...

each year you are allowed an amount that you can earn tax free. for 07/08 you can earn £5225 a year tax free, however this includes your state pension.

also it depends on your age, if you are over 65 then you tax free allowance increases to £7550, and if 75 or over it is £7690 and if you are married and born before 6th april 1935 you also get an additional marriage allowance of 6285 if 65 and over and £6365 if 75 and over

for example, if your state pension is say £4000 a year then no tax is payable as it is under £5225. but if your part time job earns you say £3000 a year. then they add your pension and the salary to make £7000 and you will be taxed on £1775 at 10% (diff between £7000 and £5225)

if you receive bank interest, this will also be added to the £7000, however depending on whether you receive the interest net or gross, determines is any more tax is due or refundable as bank interest is taxed at 20%.

hope this is helps

Answer 2

There is no limit with regard to a State Pension as this is paid regardless of any additional income and is based on your NI Contributions during your working life.

However, If you are receiving Pension Credit, this is means tested and so would reduce by the same amount as you earned until the Pension Credit was exhausted. Thus any part time earnings would have to be greater than the amount of Pension Credit you received otherwise you could be working for nothing.

Income tax is different in as much as it would all depend on the tax code allocated to you by the Revenue and Customs people and this varies depending on the individuals circumstances. You should contact your local HM Revenue & Customs office or visit www.hmrc.gov.uk/individuals

Answer 3

you can earn up to your tax limit before paying any tax (around £4000 odd pounds for a single person) if ur earning im not sure if your state pension would be counted as income when calculating any tax. my mum has a state pension and a private pension, since last year they changed the rules and she is taxed on her private pension now, she used to get £250 a month now £234, its bad cos that money they used to purchase the private pension had already been taxed once. she has dementia and needs 24 hr care, we need every penny we can get and they do that. if your only income is state pension dont forget u can claim pension credit too, but if you have an income it wont be worth it. if my mum didnt have the private pension we would get it but with that private one we would only be entitled to about £1 a month which is not worth the red tape in trying to claim

Answer 4

You can earn as much as you like and it will not effect the amount of state pension paid to you.
(It used to in days gone by but that stopped about 20 years ago).
As regards tax on your part time earnings, it depends on your total income.
If you are already a taxpayer, then you will lose tax on your part time earnings at basic rate (22%)...........unless your total income per annum is in the region of £40,000 and you would lose tax on your part time earnings at 40%.
Hope this helps and go and enjoy your "nice part time job" and have an even nicer time spending the extra money earned from it !!!!
Good luck.