Is It Possible To Become Self-Employed After Retirement?
Retirement is a time for new beginnings. You’ve finally hung up your work suit, said goodbye to the daily commute and now have the freedom to pursue your passions. But what if that passion involves being your own boss?
If you’re getting twitchy feet and looking to return to work in a more freeing way, self-employment may be the option for you. But with self-employment comes with a few financial responsibilities, which can be alleviated with the right accountants behind you. Read on to find out how to become self-employed after retirement.
Can I Become Self-Employed After I Retire?
In short, yes you can! In fact, there are many reasons why retirement might be the perfect time to make this leap. Self-employment offers a freedom that you are not afforded with a traditional full-time job. You can choose the projects you work on, set your own hours and work from wherever you have a good Wi-Fi connection.
Imagine finally having the time to travel the world while still bringing in some extra income. Plus, as a retiree, you won’t have to pay National Insurance on your self-employed earnings, giving you a financial boost. But before you dive headfirst into the world of freelance, there are a few financial considerations to keep in mind.
Does Being Self-Employed Affect My State Pension?
One common concern is how self-employment might affect your state pension. The good news is, your pension payments won’t be impacted. However, any income you earn from your new venture will be taxed. This applies to anything you earn above the £12,570 tax-free personal allowance.
But what about losses? If your self-employment takes a nosedive and you end up in the red, you can offset those losses against other income depending on whether you use cash basis or traditional accounting methods. A good accountant such as those here at Stonehouse Accountants can help you navigate this with our sole trader services, which you can find more about via our website.
Do I Need to Do a Self-Assessment If I Am Retired?
If your self-employed adventure takes off and your earnings exceed the Trading Allowance (which allows you to earn up to £1,000 per year tax-free), then you’ll need to complete a Self Assessment tax return each year. This means declaring all your income from every source to HMRC, who will then calculate your tax bill.
On the bright side, you won’t be taxed twice on your pension income, as any tax on that will already have been deducted by your pension provider. They will even send you a P60 at the end of the tax year showing exactly how much tax you’ve paid.
Become Self-Employed with a Professional Small Business Accountant
If you’re ready to enter the world of self-employment, you need an accountant that you can trust by your side to help you through the process Stonehouse’s sole trader accountant services are the most esteemed in the Peterborough area, and we can help you with everything from bookkeeping to VAT, PAYE and tax returns, so you can focus on enjoying your post-retirement work. Contact us today to learn more about our services and how we can help you.