Reducing TAX on Pensions

Gatser

Is it possible to transfer a pension to my spouse?

I guess not because a high rate tax payer could save the 40% tax then transfer the funds to his wife and pay 0% tax on the pension.

If not... any other (legal!) hints & tips please ?

whiteflag_3

Is it possible to transfer a pension to my spouse?

No

Cook_County

But you can still do other legal things to reduce yor 40% tax bill...

EdInvestor

Gatser wrote: »

If not... any other (legal!) hints & tips please ?

Try and make sure both 10k pa.tax allowances at retirement are used. For instance, it will often be better to plough lump sums into a pension for a non-working or low earning spouse with only a state pension, thus using up his/her full tax free band, than to top up a large existing pension pot for the one with the big salary, perhaps even pushing the pension into the age clawback or higher rate band.

Be aware of the tax thresholds:
age allowance 10k each
age allowance clawback starts at c.22k (taxed at punitive rate to return you to personal allowance level)

Remember income from ISA investments is tax free.It can be sensible to activate pensions early (if you have too many!)and then invest excess funds into ISA to obtain tax- free status for the future income.

Other tax free investments include N&SI index linked certs (30k limit a year each)premium bonds and dividends on shares for basic rate taxpayers (but divi income is counted when computing clawback, so caution is needed there.) ISA may be best used for bond and property fund investments as income on these isn't tax free.

CGT allowance is 9.2k a year each, can be used to cash in directly- held investment gains to provide tax free income.

jamesd

You can transfer part of a pension to a spouse as part of a divorce settlement.