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Pension Pot/Higher rate tax
spexs
Posts: 345 Forumite
Can I use my pension pot to buy an annuity for my wife to save higher rate tax
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Comments
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No. Pensions fall under your own NI number (like ISAs).I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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You could consider taking 25% out of your pension pot as cash, which you can do tax free, and investing that 25% in your wife's name.
And/or investing the cash in an ISA in your own name from which you can draw income without liability to higher rate tax.0 -
Assuming you're taking out the max 25%, there isn't much else you can do. You can defer your state pension as there are tricks you can do with the lump sum backlog when you do claim it, and you could always divorce so she gets half the pension and then remarry.
I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
gadgetmind wrote: ».. you could always divorce so she gets half the pension and then remarry.
That is not as daft a solution as it may first appear. I for one would be fine with such a work around to stick two fingers up to the taxman
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Only thing to bear in mind there is the cost of the pension sharing order.
The company I used to work for as an administrator charged as follows:
For active or deferred members:
Produce Transfer Value Quotation: first in a year is free, then £250 each
Transferring the benefits allocated to ex-spouse within the scheme: £3,000
Transferring the benefits allocated to ex-spouse to an alternate arrangement: £2,000
For a pension already in payment:
Produce Transfer Value Quotation: £1,000
Transferring the benefits allocated to ex-spouse within the scheme: £3,250
Transferring the benefits allocated to ex-spouse to an alternate arrangement: £2,500
This was for a final salary scheme, and I've rounded the numbers a little - but this was the price 5 years ago. I suspect it may be higher now. The document also mentions that if there is additional information required, or if the Pension Sharing Order is not worded properly, then there will be additional charges to cover the scheme's costs in providing the information or challenging the Order.
It may be that you'd still be better off after taking all of these costs into account, but they're definitely worth bearing in mind.
And all of this is not taking into account any court costs, lawyer fees, etc.0
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