Did you know that once you reach State Pension age, you can stop paying National Insurance – and boost your income in the process? It’s a little-known HMRC rule, but it could put hundreds of pounds back in your pocket each year if you’re still working past 66.
With around 13 million people in the UK now receiving State Pension payments, knowing this tax break could be a game-changer – especially as more older adults continue working beyond retirement age.
Basics
The State Pension age is currently 66, but it’s set to gradually rise to 67 between 2026 and 2028. Once you hit this milestone, you’ve got a few choices:
- Stop working and claim your pension
- Keep working and claim your pension at the same time
- Defer your claim to boost your future payments
But here’s what many don’t realise: if you keep working after 66, you no longer have to pay National Insurance Contributions (NICs). That means more take-home pay — but only if you take the right steps.
Boost
This NIC break doesn’t happen automatically. You or your employer must notify HMRC. If you’ve already reached State Pension age and are still paying NICs, you might even be eligible to claim money back.
For someone earning a typical salary, this change can mean over £600 a year in extra income — a helpful bump, especially with the cost of living still high.
Here’s how it works depending on your situation:
- Employees: Need to show proof of age (passport or birth certificate)
- Self-employed: Stop paying Class 4 NICs from the start of the tax year after reaching pension age
If you’re shy about handing documents to your employer, HMRC can send a letter confirming your age and exemption status instead.
Process
Want to stop paying National Insurance? Follow these steps:
- Show proof of age (passport or birth certificate) to your employer
- Don’t want to share personal documents?
- Write to HMRC explaining why
- HMRC will send a letter for your employer
- HMRC may ask for a certified copy of your ID if your date of birth isn’t on file
Once confirmed, your employer will stop deducting NICs from your pay. That’s extra cash in your account every payday.
For self-employed workers:
- Class 2 NICs are no longer counted as paid
- Class 4 NICs stop from 6 April following your 66th birthday
You’ll still need to pay income tax if your income (including pensions and earnings) goes over the personal allowance of £12,570 – which is frozen until April 2028.
Deferral
There’s another way to boost your State Pension: deferring it.
If you delay claiming it for at least nine weeks, your weekly payments will increase. The current rate is around 1% increase for every 9 weeks you defer, which adds up to just under 5.8% per year.
Here’s an example:
- If you defer for 12 months, your pension could rise by about £670 annually.
- This extra amount gets paid along with your regular pension
However, there’s a catch — any extra income from deferral is taxable. So if you’re working or have other income, it could push you into a higher tax bracket.
Payments
To get the full New State Pension, you typically need 35 years of National Insurance contributions. Some people might need more if they were contracted out during their career.
Here’s a quick look at payment rates:
| State Pension Type | Weekly Payment | 4-Weekly Payment | Annual Total |
|---|---|---|---|
| Full New State Pension | £230.25 | £921.00 | £11,973 |
| After April 2026* | £241.30 | £965.20 | £12,547 |
*Based on 4.8% increase due to Triple Lock in 2026/27
So even without deferring, your pension is likely to increase over time thanks to the Triple Lock — which guarantees yearly rises based on the highest of:
- Earnings growth
- CPI inflation
- 2.5% minimum
Savings
This HMRC rule on NICs might not sound like much, but it can quietly boost your income at a time when every penny counts. If you’re still working past 66 and haven’t told your employer, you could be missing out on hundreds each year.
Combine that with deferring your pension, understanding your entitlements, and checking if you’re overpaying tax — and you’ve got a strong foundation for a healthier retirement income.
It’s worth taking a few minutes to sort the paperwork. A short chat with your payroll department or HMRC could be the easiest pay rise you’ll ever get.
FAQs
Do I pay NICs after 66?
No, once you hit State Pension age, you stop paying NICs.
Is NIC removal automatic at 66?
No, you must notify your employer or contact HMRC.
Can I claim NICs back?
Yes, if you’ve paid NICs after 66, you can claim a refund.
How much does deferring increase pension?
About 5.8% for every full year you defer.
Is deferred pension income taxed?
Yes, it’s added to your taxable income.
