What does semi-retirement look like as a self-employed person?

How to semi-retire with self-employed work

As you approach later life, your retirement planning may involve thinking about how best to transition into life without work.

Semi-retiring involves slowly winding down work, rather than stopping at once. It’s become increasingly popular, with many workers choosing to move into post-work life this way.

One option for doing this is to move into self-employment, which can be more flexible than full-time employment.

This allows you to work when and how much you choose. So, it can be ideal for moving from a full-time career into something with greater freedom.

What is semi-retirement?

Semi-retirement usually describes the shift from working full-time to working less as you approach retirement. Often, this is through reducing your working hours in your current occupation. Or, it could involve switching to an entirely different job or career.

You might then start drawing your pension (typically accessible from 55, rising to 57 from 2028) or other savings and investments to supplement your income once your earnings fall.

Our guide to semi-retirement has even more information about exploring this option.

Can I be self-employed during retirement?

Yes, you can work as a self-employed person during retirement. 

You don’t have to have been self-employed throughout the majority of your career, either. You can pursue a brand-new profession in semi-retirement that’s completely unrelated to what you did before. 

Once you stop working, you can also return to it at any point and in any role.

Self-employment in your retirement years can offer various benefits. You’ll have the opportunity to:

• Explore an alternative career - that could be something you never had the chance to do during the main part of your working life.
• Enjoy the structure and social aspects of work in later life - working in later life can define your free time more, rather than every day feeling like a weekend, and it can also offer more time to spend around others.
• Supplement your retirement income with your self-employed earnings - this could allow you to enjoy a more comfortable lifestyle, or support your loved ones with their own financial goals.

Ideal self-employed roles for semi-retired people

There are many options to choose from for self-employed work in semi-retirement. You now have the freedom to explore opportunities that suit your lifestyle, so this will partially come down to your preferences.

Below are a few ideas to consider, based on different later life goals.

Using your current skillset

Throughout your career, you’ll have built up lots of different skills. And although you may be considering working less, you might still want to use them.

For example, you could explore consultancy or mentorship roles. These can allow you to share your knowledge and experience with businesses and younger workers.

Or if you previously worked in a trade, you could train an apprentice.

Learning new skills

You could also choose to throw yourself into something new. No matter your main career, you can look across a whole range of different occupations where you’ll learn new skills and gain knowledge.

There are countless roles you could consider for this, from office-based and administrative positions to jobs in hospitality, healthcare, or education.

Working while travelling

If you want to explore the world in later life, you could do so while working remotely.

Remote work has become far more commonplace. Many companies allow you to work from anywhere in the world, a lifestyle known as being a ‘digital nomad’.

There are different roles to explore, and it could even be in the same field that you’ve always worked in.

If you plan to work abroad, make sure you consider local tax and visa rules.

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Managing finances when semi-retired and self-employed

If you want to explore semi-retired, self-employed work, it’s important to consider your finances.

You can supplement your retirement income

Working for yourself when semi-retired could allow you to enjoy some extra income. This might help make the transition away from a full-time salary feel a little less steep.

Equally, you might already have enough saved for retirement. In this case, you could use this extra income to achieve your later-life goals. That might be making a big purchase, or helping a child or grandchild with the deposit for their first home.

You may pay more tax in retirement

Any income you earn in retirement is still potentially subject to Income Tax. 

In ^{_current_tax_year_yyyy_yy}, you can earn up to the Personal Allowance of ^{_personal_allowance_top} before you have to start paying tax. However, all your forms of income count towards this, including:

• any State Pension payments you receive;
• pension income from personal, private, and workplace pots (excluding your 25% tax-free lump sum);
• savings interest if it exceeds certain thresholds; and
• any earned income that exceeds the £1,000 trading allowance each year.

So, if you’re drawing income from any of these alongside your self-employed earnings, the money could be taxed.

Your total income may actually fall when you semi-retire. Even so, it’s important to be aware that these earnings are still taxable.

Your tax-efficient pension contributions could be limited

It's not just Income Tax on your self-employed earnings to think about, either. You may face a limit on your tax-efficient pension contributions. 

Each tax year, you can usually tax-efficiently contribute to your pension up to the annual allowance. This is the limit on the gross amount that can be saved into a pension each tax year without incurring tax charges.

The current standard annual allowance for pension contributions is ^{_annual_allowance} (^{_current_tax_year_yyyy_yy}) - this includes personal, employer, and any third party contributions. You may be able to contribute more if you carry forward unused allowances from previous years.

However, once you flexibly access your pension (starting from 55, rising to 57 from 2028), you may trigger the money purchase annual allowance (MPAA). This permanently reduces your annual allowance to just ^{_money_purchase_annual_allowance} (^{_current_tax_year_yyyy_yy}). You won’t be able to tax-efficiently contribute more than this to your pension each tax year moving forwards.

Bear this in mind before accessing your pension if you want to continue contributing. You might have planned to do so from your self-employed earnings, but that may no longer be as tax-efficient as before.

Summary

Being semi-retired and self-employed can offer a whole range of opportunities. You can work on your terms while enjoying some added flexibility, allowing you to gently transition into retirement.

If you’re approaching the end of your full-time career and you’ve had many roles with different employers, you might have lots of different pensions. In that case, you might want to consider consolidating them into a single plan.

Consolidating can make it easier to track your total pension balance. And, you might save money on fees. 

However, you could lose certain benefits. So, it can be sensible to get guidance from an Independent Financial Adviser (IFA) if you’re unsure. 

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

Please note that tax rules change regularly, and the actual tax benefits you receive will depend on your individual circumstances. If you’re not sure, please seek professional advice.

Last edited: 19/02/2026