Working in retirement - Fees and Occasional Work

If you are paid each week as an employee, the earnings rule calculation is straightforward. But if you work occasionally, there are special rules about how your earnings are counted.

If you simply work occasionally or irregularly as an employee or on a 'casual' basis, your earnings are counted for the period to which they relate. For example if you do one week's work and get one week's pay of £360, that would wipe out one week's pension.

In either case, your earnings are net earnings after deducting tax and National Insurance and any expenses of working including travel, 19p towards a meal, and anything else which is reasonable and incurred because of the work.

However, there are special rules for people over retirement age (and their dependants) who are self employed. It is generally a great advantage to be counted as self employed (see Section of the site 9 for the tax implications).

If you are self employed, you do not take off the various expenses listed earlier. Instead you are assessed on your taxable profit as set out in your tax return. That profit is averaged out over the year. That means that you can have an annual taxable profit of £16,9OO before the earnings rule begins to affect you, even if you receive fees in any one week which are considerably more than £279 .

The DWP will assess your pension on the expected profit for the year and reduce your pension accordingly. You will be expected to submit your tax accounts to them once the Inland Revenue have approved them. If the expected figure turns out to be wrong, they will then adjust your current pension accordingly.

More on Working in retirment

Working in retirement - Having a Lodgers

If you have income from a boarder, you can be treated as self employed if you are taxed in that way.
Alternatively, your 'profit' from the boarder is assessed by subtracting 26 from the payment he or she makes and then dividing by two. If you do not provide the lodger with full board, the 26 can be reduced by the DWP, perhaps even to nothing so that your 'profit' would just be half the amount they pay.
Earnings Rules for Dependants
The earnings rules that apply to money paid for dependants are now harsher than those that apply to the basic pension.
A woman aged less than sixty is in a complicated position. There are two different earnings rules which may apply, depending on when her husband first . . . ... see: Working in retirement - Having a Lodgers