Diverting £50k of salary into pension fund to claim welfare benefits

brasso

2sides2everystory wrote: »

Oh I see. And why would his retirement need to be subsidised in the first place? Let me give you a clue - many retired people live off less in a year than said taxpayer thinks is fair to spend on week's skiing.

How do we know what he thinks is fair to spend on ski-ing at Davos? Does he go ski-ing? You puzzle me.

There is only one thing hurtling downhill at the moment, and that's the logic of your argument.

tartanterra

brasso wrote: »

There is only one thing hurtling downhill at the moment, and that's the logic of your argument.

And picking up speed!:)

BigAunty

xylophone wrote: »

...

Notional income also includes income that you are treated as having received, even though you may not have.

It may include


• Income that you have deprived yourself of to get tax credits or more tax credits

Paying masses of income into a pension isn't cited as an example of an abuse. These examples are provided on the link you gave. I know they are there for illustrative purposes and aren't exhaustive but there's nothing explicit to indicate that large pension contributions are considered as deliberate deprivation of income.

**************

It may include

• Trust income that, under income tax rules, is treated as the income of another person. For example, investment income of a minor child where trust funds have been provided by a parent and the amount exceeds £100. For tax credits we also treat it as belonging to another person
• Income that you have deprived yourself of to get tax credits or more tax credits
• Income that you were entitled to but did not apply for. For example, a social security benefit or allowances paid to local government councillors or civic dignitaries. This does not apply to
- a deferred state pension
- a deferred personal pension
- a deferred retirement annuity, or
- compensation for personal injury
• Income you lost out on because you worked for less than the going rate (or for nothing) if the person you are working for, or to whom you are providing a service, has the means to pay. This does not apply to
- voluntary work (for example, helping out in a charity shop or Citizens Advice Bureau, or
- employment or training programmes.

tartanterra

xylophone wrote: »

Notional income also includes income that you are treated as having received, even though you may not have.

It may include


• Income that you have deprived yourself of to get tax credits or more tax credits

Surely, when you pay income into a pension scheme, you are delaying the benefit of it?
If you were depriving yourself of it, then you would never receive it.

jamesd

xylophone wrote: »

James D Yes - I understand the rules regarding pensions! I just don't quite see however how the following doesn't apply to the proposal

It doesn't apply because what is proposed is specifically permitted by the rules: you can make whatever pension contributions you like and that reduces your income for tax credits. Maybe it won't for some other benefits, though.

xylophone wrote: »

As HMRC administer the pension regime and tax credits, wouldn't there be an investigation into what is proposed

No, because it is specifically permitted by the rules.

xylophone wrote: »

I don't know - perhaps somebody familiar with the system does?

You mean you still don't believe it after specific quotes saying it's a permitted deduction from the guidance for filling out the form and after me telling you what the WTC helpline told me?

Instead of wondering and posting more misleading FUD, how about just calling the WTC helpline and asking them? Then you'll know and can go back and edit your posts to reflect what they tell you...

Just ask "Someone one around 65k income has written about planning to use salary sacrifice to make additional pension contributions that will take their PAYE income down to minimum wage, then claim tax credits. Is this really allowed? Really not counted as deprivation of income?" Nice and simple and the will tell you it's all fine.

property.advert

jamesd wrote: »

...Just ask "Someone one around 65k income has written about planning to use salary sacrifice to make additional pension contributions that will take their PAYE income down to minimum wage, then claim tax credits. Is this really allowed? Really not counted as deprivation of income?" Nice and simple and the will tell you it's all fine.

Or ask them whether you can divert £200k of your income into a pension to which you contributed nothing over the last three years.

I'm going to duck now to avoid the backlash at the thought of such largesse :rotfl:

xylophone

What does FUD mean? I haven't come across this abbreviation (?) before and would be glad to be enlightened if it is commonly used on the forum.

It is not a question of belief! I said (and I still say) that it seems to me that pension or no, this scheme could still be described as deliberate deprivation of income to get credits or more tax credits.

I must however bow to your superior knowledge and expertise - clearly you have experience of these matters which I lack!

jamesd

FUD = Fear, uncertainty and doubt. Even predates the internet. Pretty commonly used to refer to posting things which might scare people when there's no real basis for those fears.

So you writing about deprivation in respect of something which is specifically permitted and hence can't be deprivation would qualify as trying to scare people away with misleading information if you knew it was misleading. If you just didn't know it'd be easily misinterpreted as FUD even though it wasn't deliberate.

Please just call the helpline. Then you'll know as well. You may not like it but at least you'll be sure it's all above board according to current law. Beats just believing or wondering about what I've written - they are a nice authoritative source.

property.advert wrote: »

Or ask them whether you can divert £200k of your income into a pension to which you contributed nothing over the last three years. ... I'm going to duck now to avoid the backlash at the thought of such largesse :rotfl:

Don't forget to add another pension with a different pension input period so you can do another £50k into that one.

So far as I know that's completely lawful the way the law and rules are written. Bit extreme but I'm not going to knock anyone who's so determined to put money away for retirement. They'll hit the lifetime allowance cap soon enough... and if they get too keen they will pay major tax penalties for going over it.

gadgetmind

jamesd wrote: »

Don't forget to add another pension with a different pension input period so you can do another £50k into that one.

It really really isn't that simple, in fact, it's one of those areas where financial planning meets Alice in Wonderland.

BigAunty

I would love to see the OP post their intentions on the Discussion Time board - many members there have a ferocious dislike of the benefit system, so it would be fun to see it all kick-off their, albeit the responses are not likely to be particularly constructive in terms of unearthing regulations from the HMRC and so forth.