Many over-55s are returning to work or planning to ‘unretire’. Having additional income in retirement is a great idea, but it’s essential to consider the tax implications of this decision to avoid falling into a tax trap.
Research1 shows that over a quarter of people aged 55 and above plan to work after retiring. Some want extra income for luxuries, while others seek mental stimulation or a sense of purpose.
The problem is, nearly two-thirds of those planning to unretire haven’t checked how this could affect their tax bill. Additionally, 60% have no plans to seek financial advice about the matter.
Working in retirement may increase your tax liability, especially if your income pushes you over the personal tax threshold or into a higher tax bracket. To avoid this, it’s essential to understand your tax situation and make use of any available reliefs or allowances.
If you’re currently working in retirement or thinking about doing so, getting financial advice can help you manage your income and avoid falling into the unretirement tax trap. A tax-efficient plan can keep your finances steady while maximising your earnings.
1Wesleyan, 2024
It is important to take professional advice before making any decision relating to your personal finances. Information within this article is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK.