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  • FIRST POST
    • EmmaMicawber
    • By EmmaMicawber 14th Nov 17, 11:40 AM
    • 49Posts
    • 98Thanks
    EmmaMicawber
    Paying into spouse's pension- tax relief
    • #1
    • 14th Nov 17, 11:40 AM
    Paying into spouse's pension- tax relief 14th Nov 17 at 11:40 AM
    I understand that a spouse (my husband in this case) can make "third party payments" into a pension for me and that this can attract tax relief at 20% for him.

    Looking at this advice it seems that, as I don't pay tax, I will also get a 20% uplift of the contribution, or am I missing something?

    https://www.aviva.co.uk/retirement/news-views/report/making-sense-of-tax-relief-on-pension-payments/

    e.g.
    OH pays £100 of his net, post-tax/NI income to my pension
    he will then get 20% back due to tax relief for him ie £20.

    The £100 payment goes into my pension
    The pension people add 20% uplift due to tax relief for me as I am a non-earner. So there will be £120 in my pension.

    This would mean that it would effectively cost OH £80 to make a £120 payment into my pension? (I am thinking of starting a SIPP but haven't yet).

    Is this correct? My OH is actually a higher rate taxpayer, but I don't think this makes a difference? Is there a catch?

    I'd be grateful for any comments.
Page 1
    • Lokolo
    • By Lokolo 14th Nov 17, 11:47 AM
    • 19,817 Posts
    • 14,869 Thanks
    Lokolo
    • #2
    • 14th Nov 17, 11:47 AM
    • #2
    • 14th Nov 17, 11:47 AM
    Your husband can pay into your pension, but the tax relief has nothing to do with him. It is your pension contribution and therefore down to your tax relief.

    In your example, your OH would not get 20% back at all.

    He would pay in £100. The pension provider would then top it up to £125. That is it.

    If he was to pay into his own pension, he would put £100 net. The pension provider would top it up to £125. Your OH would then be able to claim back £25 (or £20, can't quite remember how it works) from the tax man as he is a higher rate tax payer.
    • pip895
    • By pip895 14th Nov 17, 11:53 AM
    • 430 Posts
    • 234 Thanks
    pip895
    • #3
    • 14th Nov 17, 11:53 AM
    • #3
    • 14th Nov 17, 11:53 AM
    It is certainly worth doing up to the £2880 limit (£3600 gross) but I'm not sure he will get any tax relief on it.

    He can of course get 40% relief on money put into his own pension though.
    • xylophone
    • By xylophone 14th Nov 17, 12:29 PM
    • 23,464 Posts
    • 13,640 Thanks
    xylophone
    • #4
    • 14th Nov 17, 12:29 PM
    • #4
    • 14th Nov 17, 12:29 PM
    Your husband will not receive tax relief on a payment into your pension - you receive the tax relief.


    You say that you are a non earner - the maximum that he can pay into your pension per tax year is £2880 - the provider will claim £720 tax relief which will be added to your pension.
    • EmmaMicawber
    • By EmmaMicawber 14th Nov 17, 1:12 PM
    • 49 Posts
    • 98 Thanks
    EmmaMicawber
    • #5
    • 14th Nov 17, 1:12 PM
    • #5
    • 14th Nov 17, 1:12 PM
    Thanks everyone- I think I've got it! I thought it sounded too good to be true.
    But still worth doing.
    • Mnd
    • By Mnd 14th Nov 17, 4:08 PM
    • 236 Posts
    • 272 Thanks
    Mnd
    • #6
    • 14th Nov 17, 4:08 PM
    • #6
    • 14th Nov 17, 4:08 PM
    Yes it is well worth doing.. £720 I think free money!
    • Audaxer
    • By Audaxer 14th Nov 17, 8:33 PM
    • 587 Posts
    • 255 Thanks
    Audaxer
    • #7
    • 14th Nov 17, 8:33 PM
    • #7
    • 14th Nov 17, 8:33 PM
    You say that you are a non earner - the maximum that he can pay into your pension per tax year is £2880 - the provider will claim £720 tax relief which will be added to your pension.
    Originally posted by xylophone
    Yes, and being a non-earner I understand that OP will be not be liable for any tax when she draws the pension, so well worth maximising contributions to the £2880 limit.
    • michaels
    • By michaels 14th Nov 17, 10:39 PM
    • 19,759 Posts
    • 90,274 Thanks
    michaels
    • #8
    • 14th Nov 17, 10:39 PM
    • #8
    • 14th Nov 17, 10:39 PM
    Also it being her pension not yours may well help with tax when you draw both come to drawdown as she may well have a lower tax band than you.
    Cool heads and compromise
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