Taking a career break

The information in this guide was last updated on 26/02/2014

Whether you want to travel, take a course or bring up a family, a career break means you can put your working life on pause to achieve other personal goals. However, your financial commitments like bills, rent or mortgage payments and living expenses won’t stop, so you’ll need to make sure they’re taken care of during your time off.

Financing your time off

If you’re thinking of taking a career break, the first priority is working out how you'll finance your time off work without your usual salary coming in. It’s important to have a plan and budget in place before taking the plunge.

  • Saving in a tax- free cash ISA or other savings account can help you build up a fund for your career break. The longer you can lock your money away for, the better rate of interest you’re likely to get, so the further you can plan your career break in advance, the better.
  • Setting a budget will help you determine how much money you need to put aside to pay for your break- you’ll need to work out how much money you’ll need to live off during your break. With less money coming in, it’s likely there are things you’ll need to cut back on. See more about making a budget.
  • Having the right mortgage can help you manage your payments during a career break. For example, if your mortgage allows over and underpayments, you can pay more before your break and less during it.
  • If you’re going abroad or moving to a different town during your career break you could consider renting out your home to cover some of your costs. 

Don't forget about tax

If you’re self-employed, or have money coming in from rent or investments, you’ll need to fill out a tax return for the year. If you’re planning to travel overseas, make sure you take everything you need to do it online while you’re away.

If you’re going to work abroad, you may still have to pay some UK income tax on sources of income from the UK like a rental property, savings or a pension. See HMRC for details.

If you stop work mid-way through the tax year, which runs April 6 – April 5, you are likely to have overpaid, and you could be entitled to a tax rebate. Contact HMRC to claim it. 

...or National Insurance!

You can choose to keep up your National Insurance contributions while you’re on a break. This is optional, but if you stop them, it could affect your eligibility for benefits like maternity pay and Jobseeker’s Allowance, and your State Pension when you retire.