Research* suggests a significant minority of over-55s either have or are planning to unretire. Worryingly, though, a majority in this group have not checked the tax implications associated with such a decision, leaving many potentially at risk of falling foul of the unretirement ‘tax trap.’
The great unretirement continues
According to the research, more than a quarter of people aged 55 and over plan to continue with some form of paid work after retiring, with respondents citing a variety of reasons for doing so. For some, a desire to generate additional income to pay for luxuries was a key driving force, while others felt it would keep their brains active or give them a better sense of purpose.
Unknown tax implications
However, the survey also revealed that almost two thirds of those that have or are planning to unretire had not checked the potential tax implications of doing so; additionally, six out of ten over 55s who are either working or plan to work in retirement had no plans to seek financial advice.
Minimising the tax burden
Clearly, anyone undertaking paid work in retirement needs to fully understand the tax implications, which include a possible increase in tax liability if extra earnings take someone’s income above the personal tax threshold or pushes them into a higher tax bracket. They also need to consider how any potential liabilities could be mitigated, for example by maximising the use of tax reliefs and allowances.
On an even keel
If you are currently working in retirement or plan to do so, we can provide you with personalised advice tailored to your unique set of circumstances that will help structure your finances in the most tax-efficient manner and ensure you avoid falling into the unretirement ‘tax trap.’
Contact us at hello@cailean.co.uk or call 0131 510 1971 to arrange an initial consultation.
* https://www.wesleyan.co.uk/insights/2024/07/unretiring-survey