State pension, earnings & tax

[Timbucktime]

My aunt is a non tax payer and only receives the state pension.
She wants to get a little part time job if she can but doesn’t want to earn an amount that would mean she would have to pay tax.
Does anybody know how much you can earn in addition to the state pension before you would need to pay tax.?

It depends on the amount of her state pension.

Tax free personal allowance is £12,500 p.a. so deduct her pension from that and it gives you the figure you are looking for.

But, you do realise you only pay 20% tax on the excess over the difference, not on the whole wage, so she'd still be 80% better off for any wages that accidentally take her total income over the £12,500.

www.moneyadviceservice.org.uk/en/articles/income-tax-and-national-insurance#:~:text=The%20tax%20year%20runs%20from,to%20pay%20any%20Income%20Tax.

Find out what her tax-free personal allowance is - probably £12,500

www.gov.uk/income-tax-rates#:~:text=Your%20tax-free%20Personal%20Allowance,income%20is%20over%20£100%2C000.

Find out how much her annual state pension is and deduct it from the personal allowance. The difference is the amount of unused portion of tax free allowance.

Why doesn't she want to pay tax? She does know that she'll only pay tax on any income over the threshold, and not on all her income?

The personal allowance is currently £12,500 so she would be taxed at 20% of all income above that, including her pension.

So if pension + earnings = more than £12,500 she will pay tax on the amount above that.

However, there are other benefits. She might get paid holiday. She will be out of her house and not needing the heating on. Even if she pays tax on the amount over £12,500 she will still be better off!

Thank you all, I really appreciate the information.
She has been a housewife all her adult life and I think she is afraid that if she has to pay tax now after all this time it can cause problems. Just fear for some reason. 🤷‍♀️

What a strange fear. Apart from the annoyance about seeing part of your salary disappear off your salary each month, suddenly starting to pay tax after a lifetime of not being in paid work won't cause any problems.

However, if she has never had a job, or not worked in decades, it might be harder than she imagines to 'get a little part time job'. She'll have no references from an employer, no experience of work and will be competing against hundreds, if not thousands of people with plenty of both.

Is it extra money she's looking for, or something to do/getting out of the house/socialisation? What about self employed cleaning? Or baby sitting, although there might be limited demand for that right now.

Your relative could volunteer, then they would be assured of not paying anything

Might be nice to contribute something to the country via tax if she’s never actually paid any, rather than avoid paying it. If we all did that there’d be no money for anyone 🙄

@blue25

Might be nice to contribute something to the country via tax if she’s never actually paid any, rather than avoid paying it. If we all did that there’d be no money for anyone 🙄

Really? There is no need for rudeness. I simply asked a question, if you don’t have the answer which other posters kindly gave then please refrain from such rudeness. 😒😒😒😒

If she hadn't paid in what pension is she getting? you would have had to work for 30 years under the old rules and 35 under the new rules to get the state pension, there is no way she would have the full pension if she had never paid in if she is single she would get pension credit to top up her pension , she would lose that if she earned any money.

@Oldsu

If she hadn't paid in what pension is she getting? you would have had to work for 30 years under the old rules and 35 under the new rules to get the state pension, there is no way she would have the full pension if she had never paid in if she is single she would get pension credit to top up her pension , she would lose that if she earned any money.

You get "credits" for years that you're unemployed, a stay at home Mum, or earning a small wage over NIC threshold but below tax threshold. There are lots of people who have paid little or no tax/nic but are eligible for some state pension. The OP has never said her Aunt is getting the full state pension, you get a smaller state pension if you don't have the full 30/35 years of "credits".

So, work a few years before marriage/children, get a few years of credits, then claim home responsibilities credits whilst a SAHM - 10/20 years more "credits" depending on number of children and age difference between them, and you can easily have over half a basic state pension, add a few years of unemployment or part time work after last child becomes a teenager and hey-presto, full or almsot full state pension.

Or the Aunt could have had a self employed husband who "employed" her, paid her a small wage for admin/phone answering, but large enough to go over the NIC threshold. She'd get NC credits for all the years that was the case, never paying any tax.

Kazzyhoward Ok however if she isn't getting the full state pension is she claiming pension credit, if she is any wages will reduce/negate pension credit and any other income based benefits like HB will also be affected or stopped