Older workers should consider deferring their state pension to avoid paying thousands of pounds in tax. Many over-65s still working are needlessly paying tax by drawing the state pension.
In 2017, around 1.1 million workers were aged 65 and over and 950,000 of them were in receipt of their state pension
Of these, around 520,000 earned more than the £11,850 tax-free personal allowance and so paid tax on their state pension as a result.
Yet, if you wait to claim until you stop working, it is likely the personal tax allowance will cover your state pension.
And, for every year you defer your pension, you get an extra 5.8 %, which is paid for the rest of your life.
You do have the option of ‘un-retiring’, by telling the DWP to halt your state pension and then getting payments restarted at a higher rate when you stop work.
So, for around half a million workers, this means every penny of their state pension is being taxed, in some cases at the higher rate.
If their earnings are enough to support them, it makes sense to consider deferring taking your state pension so that less of their pension disappears in tax.
AV Trinity are happy to advise on this and your options