Paying £2880 into pension when retired

Mothman · 20 February 2018 at 4:44PM

Dazed_and_confused wrote: »

Marriage Allowance doesn't have an income threshold. All that matters (from your perspective) is that you aren't a higher rate payer.

You could easily have income of say £50k but with pension contributions not be a higher rate payer.

Oh bother! I searched for this some while ago on the GOV website but had obviously missed that pension contributions were offsetable and so did not claim.:(

Dazed_and_confused · 21 February 2018 at 7:00AM

I presume you mean you didn't ask your wife to make an application :-)

It's still not too late for her to apply right back to 2015:16 but before doing so it might be worth investing 10 minutes into checking her taxable income each year and if you definitely were just a basic rate payer in each tax year.

Mothman · 21 February 2018 at 9:27AM

Dazed_and_confused wrote: »

I presume you mean you didn't ask your wife to make an application :-)

It's still not too late for her to apply right back to 2015:16 but before doing so it might be worth investing 10 minutes into checking her taxable income each year and if you definitely were just a basic rate payer in each tax year.

Yes sorry that is what I meant, though in practice it is left to me to do all the form filling:rotfl:.

Wife has had no income since 2015 other than a few small dividend payments as her SP is currently deferred. I have been making large pension contributions for the last 3 tax years and so if these are offsetable then my income will have been comfortably within the basic rate band. I have found the form for claiming 2016/17 and will ask my wife to call about making a claim for 2015/16.

Thanks again for the help:T

enthusiasticsaver · 21 February 2018 at 11:37AM

Mothman wrote: »

Yes sorry that is what I meant, though in practice it is left to me to do all the form filling:rotfl:.

Wife has had no income since 2015 other than a few small dividend payments as her SP is currently deferred. I have been making large pension contributions for the last 3 tax years and so if these are offsetable then my income will have been comfortably within the basic rate band. I have found the form for claiming 2016/17 and will ask my wife to call about making a claim for 2015/16.

Thanks again for the help:T

She can do it online on the gov.uk site. Took me 10 minutes last week to transfer mine to my DHs. To be honest though when you go through the online eligibility checker I do not remember anything about pension contributions being offsetable. My DH is now retired though and does not pay HR tax or pension contributions so perhaps I missed it.

Dazed_and_confused · 21 February 2018 at 2:15PM

It might not mention it but on the Cutting Tax board there have been extensive threads and one very knowledgeable poster called Polymaff posted a link to the actual tax law.

No mention of income (or offsetting pension contributions), the rules are are simply based on what rate of tax you pay and higher rate payers cannot benefit.

Oddjob · 23 February 2018 at 7:12AM

I had though that I understood this but I think I have got myself confused again. Please could someone advise me, I would be most grateful.

I have lived for many years on a low income. Therefore I don't have much in savings, except for a small amount that is left from a small company pension which I needed to take last year - only took the 25% tfls, the rest is paid monthly.
I am semi retired, I had deferred my state pension but decided to take that last year too. I am a 65yo woman.
I don't earn a great deal but with the two pensions, this year I will have received just above my personal allowance so will be paying a small amount of tax I think, not worked it out but it won't be much above.
I am interested in this thing where I could put £2880 into a HL SIPP account and get some tax relief.
I also get WTC and PIP.
If I put the £2880 into a HL account, once the tax relief has gone in, would I be able to draw most of it out as a lump sum, or would I have to leave £1000 in? I know you can't draw all of it out as HL would charge fees, don't they charge fees for the account anyway?
Next year, my work is being cut by around 40% so I won't be paying tax next year.
If I paid the £2880 in before April 6th, 2017-2018 tax year, in a tax year that I would be paying tax, but didn't take it out until a few months into 2018 - 2019 tax year, would I still get charged tax on it if I drew most of it out, less of course the 25% tfls?
If I paid the lump sum in to the SIPP, would that lessen my available earnings, therefore increase my WTC?
Would it also count as lessening my earnings as far as self assessment was concerned, therefore making it less likely that I would have to pay tax anyway?
I know it has to be a HL cash SIPP.

I don't want to tie my money up because as I say, I don't have much spare in the bank and might need it for a change of car at some point. Just wanting hopefully to increase it a bit.
Is it limited to paying in £2880, would there be any advantage to paying in more?
If it was left in HL, would it be earning interest or would I be better to draw it out and put it into something which I could still get it out of but would earn interest? At the moment it is just in a current account which is not paying interest.

Also, HMRC owes me £2200 + interest on overpaid tax from years ago, I left it in in case I ever did need to pay tax, so I presume if I did need to pay tax this year, they would take it out of that anyway. Does anyone know how much interest that is earning?

Sorry for all the questions. Thanks for reading this far!!!

Mnd · 23 February 2018 at 8:52AM

I will answer a few points as I understand them

Yes you can pay in this tax year and take when you like, if your liable for tax on this money then the gain will be about £180 but you can wait to get the full benefit if you don't exceed your tax allowance
I understand that you will pay tax anyway and either claim back or wait until they refund you
If you don't earn anything then you are limited to the 2880
Hl don't charge if you hold the pot as cash but insignificant interest
I'm not sure about the 1000 but I will be finding out soon, as I intend to clear mine and start again in April
Get your money back from hmrc pronto..that's nearly this year's payment
Hope this helps

Oddjob · 23 February 2018 at 12:49PM

Mnd wrote: »

I will answer a few points as I understand them
..........Get your money back from hmrc pronto..that's nearly this year's payment
Hope this helps

I would rather they kept it as it is at least earning interest, just not sure how much. It was £3,300 but I had to draw some last year.
I keep it there as rainy day money.

thanks.

skycatcher · 6 March 2018 at 6:00PM

HI,

Just completing the paper work to move into drawdown. Am I correct in thinking that moving money from SIPP to drawdown in itself does not have tax implications but only when withdrawals are made?

So I could move £2880 (haven't received the tax money yet!) into drawdown and take £720 TFLS and say £10 a month thereby avoiding any tax as the rest is still sitting in the drawdown account i.e. £2880 - £720 = £2160 then £2160 - £10 ongoing.

Or does the fact of moving £2660 into drawdown even if not taking the money out has a tax implication?

Thanks,

Sky

Dazed_and_confused · 6 March 2018 at 9:18PM

You only pay tax (on the taxable element) when it is withdrawn from the pension.

Withdrawing £10 of the taxable element doesn't avoid any tax. If you have enough other income you will owe tax on the £10.

On the first payment (usually paid as a monthly payment for tax purposes) the pension companies use the emergency tax code which allows you to receive £959 before tax is deducted in the current year.

From 6 April this becomes £988.

Paying £2880 into pension when retired

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