For some people, retirement plans include travelling to bucket list destinations, investing time into new hobbies, or home renovation projects that have been neglected for many years. It’s a chance to leave behind the world of work altogether and turn their attention to other things entirely.
For others, retirement is the perfect time to focus on a post-employment freelance venture. This could be continuing a freelance side hustle that is already up and running, or it could mean venturing into the world of freelancing afresh. There’s absolutely nothing to stop you freelancing once you reach retirement age, or even if you take early retirement.
We explore the benefits of freelancing after retirement and share our advice on things like tax liabilities and marketing your freelance services.
Should I start freelancing once I retire?
OK, so you can freelance, but should you? There are plenty of benefits depending on what you’re looking to get out of it.
Nurture your passion
Just because you’ve reached retirement age, it doesn’t mean you should give up doing what you love or what you’re good at. If you’ve still got energy and expertise, freelancing is the ideal way to go about it.
Earn extra income
As well as continuing to do something you love or exploring an untapped talent you’ve always had, freelancing is also a great way to earn extra money. It can be lucrative too.
Plus, freelancing is a far more flexible way to generate income. You can scale your workload up or down depending on your personal schedule, without having to commit to contracted employment hours.
Retirement is a cause for celebration, but it can also be a common trigger for anxiety and depression.
Leaving a life’s career behind can cause people to feel like they’ve lost their sense of purpose, which can lead to feelings of grief too. Plus, leaving employment behind can also come with financial stress.
Freelancing not only provides an extra stream of income, but it also reinstates a sense of purpose. This will support better mental stimulation, happiness, and improved physical health too.
You’re off the National Insurance hook
Once you reach State Pension age, you stop paying Class 1 and Class 2 National Insurance contributions (NIC). This is true even if you’re still working.
Class 1 relates to the NIC paid through employment, while Class 2 refers to the NIC paid through self-employment.
This means you get to keep more of your freelance earnings post-retirement than you would have done before reaching State Pension age.
Note: you will need to carry on paying Class 4 contributions until the end of the tax year in which you reach State Pension age.
Will I pay income tax if I freelance after retirement?
You might not be liable to pay National Insurance contributions once you reach State Pension age, but you may need to pay tax on your freelance earnings.
The good news is that everyone is entitled to the Trading Allowance, permitting you to earn up to £1,000 from self-employment in a tax year before you need to report it to HMRC or pay tax.
After that, you’ll need to register for and submit Self Assessment tax returns so you can pay Income Tax on any earnings over the (tax-free) Personal Allowance.
The current Personal Allowance threshold is £12,570, which means you don’t need to pay any Income Tax on the first £12,570 you earn.
Your Personal Allowance encompasses all sources of income, so your total income will include:
- State Pension
- Private pension (although some of this can be taken tax-free)
- Self-employment earnings (e.g., freelance income)
- Taxable benefits
- Income from property
- Investment earnings
Any income above the £12,570 allowance will be subject to tax. You are responsible for reporting these earnings to HMRC and paying the necessary taxes.
How to promote freelance services
So, you’re excited to take on post-retirement freelancing – but how do you go about sharing your offering with the world? Whether you’ve got a pre-established client base or not, here are some quick tips on how to market your freelance services successfully.
Be active on social media
Social media is one of the most effective ways to expand the reach of your offering and be an active part of current conversations in your industry.
These days, many people also use social media as an additional search engine so if people are searching for an expert in your field, being present online will help them find you. It’s also a great place for customers to share their reviews and recommendations.
Don’t think you need to be active on every single platform though – go where your customers are and speak to them in their language. If you’re a freelance financial advisor, for example, you might find it harder to target your audience on TikTok.
Consider setting up a website
This won’t be necessary for the operation of every freelance service but for some, a business website can be an invaluable tool. If you’re a freelance copywriter or wedding photographer, for instance, a website is the perfect place to collate examples of your work and explain pricing structures.
Attend online and in-person events
Getting out there and meeting people is a tried and tested way to find new business. There are stacks of digital events to attend online these days but don’t forget about good old-fashioned, face-to-face networking too.
Encourage word-of-mouth referrals
Ask clients to recommend you to their contacts, share your content on social media, and write testimonials for you to share on your own channels. Customer recommendations are a powerful force when it comes to finding and retaining business.
Find more expert advice and resources in our freelancer information hub.