Your Teachers Pension will be taxed in the same way your salary used to be taxed - a PAYE coding notice will be issued annually showing you how much personal allowance is being allocated against your pension income. The main difference when you reach retirement age is that you are no longer required to pay National Insurance Contributions.
Now that you have reached your 65th birthday, your annual personal allowance may increase. The maximum personal allowance available for somebody aged between 65 and 74 is currently £9,490 - this allowance is pro-rated where income exceeds £22,900, down to a minimum of £6,475. There is also a higher alloance available for individuals aged 75 and over, currently at a maximum amount of £9,640.
With regard to your self-employment, your Class II National Insurance Contributions should have ceased on the week of your 65th birthday. Class IV Contributions, which are based on assessable profits for the year are still charged in full for the tax year of your 65th birthday, but not charged for subsequent years.
If you would like somebody to check your tax and National Insurance liability for the year, please contact your local TaxAssist Accountant who will be happy to assist you.
By Jo Nockels
Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.