Business Ideas for Retirees: Earning Extra Income After State Pension Age
Running a business after State Pension age
Your State Pension and a small business sit comfortably together. There’s no earnings limit on the State Pension, so what you earn from self-employment won’t reduce it. Once you’re over State Pension age you also stop paying National Insurance on your profits. Income Tax still applies, and so does Self Assessment, so it’s worth knowing the basics before you start.
Business ideas for retirees
Consulting in your field
Decades of experience are something people will pay for. A retired accountant can help sole traders keep their books in order. A former site manager can advise homeowners on renovations, and an HR manager can coach job seekers before interviews. You don’t need premises or expensive equipment. A phone, a laptop and a few referrals are enough to get started.
Tutoring and teaching
GCSE maths, English for adults, music lessons or a sewing class at the village hall. You can teach in person or online and set your own hours. Many retirees start with a handful of pupils from friends and neighbours and grow from there.
Crafts and handmade goods
Wooden toys, pottery, knitwear and jewellery sell well at craft fairs, farmers’ markets and on online marketplaces. Christmas markets in particular can bring in a large share of the year’s sales over a few weekends.
Tour guiding
If you know your town’s history or the places visitors tend to miss, guided walks can fill a few hours a week. Local guiding qualifications can help you stand out, and tourist information centres and hotels are good places to look for bookings.
Pet sitting and local services
Dog walking, pet sitting while owners are on holiday, gardening or running errands for neighbours who find it harder to get about. Start-up costs are close to nothing and there’s demand in every community. Local Facebook groups and Nextdoor are good places to find your first clients.
Letting property
If you have a property you don’t use, letting it can bring in regular income with less day-to-day work than running a service business. Rental income is taxed as property income, not as self-employment, so it’s not subject to Class 4 National Insurance. If you let a furnished room in your own home, the Rent a Room Scheme may let you earn part of it tax-free.
How to get started
Most retirees start as sole traders. You can start trading straight away and register with HMRC afterwards. If your gross trading income is more than £1,000 in a tax year, you need to register for Self Assessment by 5 October after the end of that tax year. Our guide on how to register for Self Assessment walks you through the process.
National Insurance and tax after State Pension age
National Insurance: If you’re self-employed, you stop paying Class 4 National Insurance from 6 April after you reach State Pension age. In the tax year in which you reach State Pension age, Class 4 still applies to your profits for the whole year.
Income Tax: Your State Pension counts as taxable income, together with your business profits and any private pension. You pay Income Tax on the part of your total income above the Personal Allowance. Because the State Pension can use up most of your allowance, more of your business profit may be taxed than you expect. What changes for pensioners from April 2027 is explained in our article on pensions in the UK in 2027.
Self Assessment: You still need to file a tax return for each year you’re self-employed, even after State Pension age.
In the 2026/27 tax year, the trading allowance is £1,000 and the Personal Allowance is £12,570. Making Tax Digital for Income Tax applies from April 2026 if your self-employment and property income is over £50,000, and from April 2027 if it’s over £30,000. From 6 April 2027, the trading allowance rises to £3,000, and so does the threshold for registering for Self Assessment.
Example
Margaret reached State Pension age before 6 April 2026. In the 2026/27 tax year she earns £6,000 profit from dog walking and pet sitting. She pays no Class 4 National Insurance, because she was over State Pension age at the start of the tax year. She files a Self Assessment return and pays Income Tax on the part of her total income, including her State Pension, that is above the £12,570 Personal Allowance.
Reaching State Pension age this year?
National Insurance doesn’t stop on your birthday if you’re self-employed. You keep paying Class 4 on your profits for the whole tax year in which you reach State Pension age and stop from the following 6 April. The State Pension age is currently rising from 66 to 67, so check your exact date on GOV.UK.
Will working affect my State Pension?
No. There is no earnings limit on the State Pension, so income from self-employment does not reduce it.
Do I pay National Insurance if I am self-employed after State Pension age?
You stop paying Class 4 National Insurance from 6 April after you reach State Pension age. In the tax year in which you reach it, you still pay Class 4 on your profits for that year.
Do pensioners pay tax on self-employed income?
Yes. Business profits are taxed together with your State Pension and any other income. You pay Income Tax on total income above the Personal Allowance of £12,570.
Do I need to register with HMRC for a small side income?
If your gross trading income is £1,000 or less in the 2026/27 tax year, you normally do not need to register. From 6 April 2027, this threshold rises to £3,000. Above the threshold, you must register for Self Assessment by 5 October after the end of the tax year.
Do I still need to file a tax return after State Pension age?
Yes. If you are self-employed, you need to send a Self Assessment return for each year you work, whatever your age.
