My wife doesn't pay tax but I hear that there is still a tax gain to be found.....

spakkaman

Am I right in thinking that you can make a small pension contribution and get some tax relief? My wife has a few old pensions - very small - and doesn't earn much now - we save for her via ISAs. But I have been told that you can save a small amount into a pension and get some form of relief. Can anyone clarify?

mania112

100% of salary up to £40k.

OR if no earned income - £3,600 gross (£2,880 from the pocket).

These are annual amounts.

molerat

http://www.hmrc.gov.uk/incometax/relief-pension.htm

What happens if you don't pay tax? If you don't pay tax you can still pay into a personal pension scheme and benefit from basic rate tax relief (20 per cent) on the first £2,880 a year you put in. In practice this means that if you pay £2,880 the government will top up your contribution to make it £3,600. There is no tax relief for contributions above this amount.

westy22

You can contribute up to £3,600 per year Gross (£2,880 Net) even as a non-taxpayer. Therefore you can pay in up to £240 per month and get automatic tax relief to take that £240 up to £300.

atush

and given she has a personal allowance re Tax, and isn't using it in full now or in retirement you would do well to make sure she earns 4-10K in pension income when it comes in, and for now to make sure any assets not in a tax wrapper like ISA or penson are in her name so as to pay no tax under her current allowance.

mania112

It seems there will soon be legislation which allows a spouse to share £1k of their personal allowance - saving you £200 pa.

Worth looking out for.

atush

It will be worth looking out for when they make it all of the PA lol.

spakkaman

Our non-ISA assets are in her name.
Can I do contributions of £240/month retrospectively?
What sort of pension should I set up? I am thinking of a SIPP with Fidelity as that is where I am creating a SIPP of my own and consolidating two main pots. Logically I will pull together her three small pots as they are not growing where they are.

westy22

spakkaman wrote: »

Our non-ISA assets are in her name.
Can I do contributions of £240/month retrospectively?

What sort of pension should I set up? I am thinking of a SIPP with Fidelity as that is where I am creating a SIPP of my own and consolidating two main pots. Logically I will pull together her three small pots as they are not growing where they are.

Yes, you can make a lump sum payment at any time during the tax year provided your net contribution in that year does not exceed £2,880.

Yes, this would work but you could also consider a personal pension rather than a SIPP for your wife. An inexpensive way to do this is through Cavendish Online http://www.cavendishonline.co.uk/pensions/

atush

SIPPs can be more expensive as they include assets like singel shareas and commercial property.

If you wont' be using these for your wife, a PP could be cheaper.

CKhalvashi

westy22 wrote: »

Yes, this would work but you could also consider a personal pension rather than a SIPP for your wife. An inexpensive way to do this is through Cavendish Online http://www.cavendishonline.co.uk/pensions/

Was just going to mention that.

CK