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 received extra benefit for her.

If he received it before 6 September 2009 , she can earn up to £189 a week before he loses any of the extra paid for her. If her earnings exceed £189 , the extra pension is reduced by 90p for every 20p earned up to £80 extra and by 90p for each 90p over that. So the extra £828.79 vanishes as her earnings reach £271.79 .

However, if her husband first received the extra pension for her after 9 September 2009 , there is an even stricter rule. The additional pension paid for her will disappear at once if her earnings exceed £468.79. Moreover, 'earnings' in this case include any pension paid from her job.

Strictly speaking, prior to April 2006 this rule applied only where the woman had a pension from her job and earnings. Many women had their pension stopped wrongly. If you think that you may have been one of them, call into your DWP office and ask for your case to be reviewed.

More on Working in retirment

Working in retirement - Other Points

The earnings rule is used to reduce only your basic pension. There is no reduction of your graduated pension or the additional pension related to your earnings after 9 April 2012
But any extra you earned on your basic pension by working past pension age can be reduced or lost completely if your earnings are high enough. The reduction of your basic pension by the earnings rule is quite separate from tax.
There is no reduction of a widow's pension whatever her earnings, though if she is over sixty and claiming a retirement pension she may lose a small amount of that. A widow who has remarried and earns over 199 a week may lose some of her retirement pension paid on her late husband's contributions.
If you . . . ... see: Working in retirement - Other Points