Saving into retirement schemes when retired

penwise

I'm looking for clarification about tax relief when making contributions into a pension scheme when completely retired .

For example -

if u had a final salary pension and state pension of @25000 total u would be paying tax on @15000 .

Can u still put 15000 in to the scheme and get tax relief on it ?

if this is not the case can your OH put his money into your scheme if he is sill working and u would get the tax relief on this put into your scheme?

Thanks

jem16

penwise wrote: »

I'm looking for clarification about tax relief when making contributions into a pension scheme when completely retired .

For example -

if u had a final salary pension and state pension of @25000 total u would be paying tax on @15000 .

Can u still put 15000 in to the scheme and get tax relief on it ?

if this is not the case can your OH put his money into your scheme if he is sill working and u would get the tax relief on this put into your scheme?

Thanks

No you wouldn't be able to claim tax relief as pension income is not considered relevant earnings for tax relief on pension contributions.

The most you would be able to contribute would be £3600 gross.

Your husband would also not be able to gain tax relief for you.

jamesd

There are two caps on how much you can pay into a pension each year and get tax relief:

1. £40,000
2. your total earned income, which essentially means income from employment.

The lower of the two applies. If you are fully retired you will have no earned income so these rules would allow nothing.

For those with no earned income there is an alternative limit of £3,600 gross a year and that will be your limit. Worth using it. Your OH can't circumvent this limit by paying in.

You could give money to your OH and they could put money into a pension in their own name, getting whatever tax relief is appropriate for them.

I think that it is probably not appropriate for you but I'll mention it anyway just in case you do have the investing experience and total assets needed. Venture Capital Trusts pay 30% tax relief once you tell HMRC you've bought them in a new issue. That tax relief is capped at the income tax actually payable in the year, which for £15,000 would be £3,000 at basic rate. You have to repay that 30% if you sell within five years, doesn't apply if your estate is selling. There's a general type called early exit that tends to be relatively low risk as VCTs go, average or high on normal scales. If the tiny companies that these invest in are suitable for you, you could buy £10,000 worth of VCTs, claim £3,000 in tax relief from HMRC that they would deliver by changing your tax code for your pension. That would eliminate all of your basic rate income tax liability and leave you with the £10,000 personal allowance plus the £3,000 in tax refund as tax free income. Five years later, better 7-8, you could sell to get the £10,000, or whatever the value is at the time of sale, that could be less and probably would be less if you sold exactly at five year rather than a few years later. Meanwhile you would probably receive about 5-6% tax free income each year from the VCTs.

VCTs are not suitable for most people and you shouldn't really consider them unless you have plenty of other assets and income, perhaps via your OH, or investment experience.

Linton

You only get tax relief on earned income. Pension income isnt classified as earned. Your OH paying into your pension is the same as if the money was gifted to you and you put it into your pension so that doesnt work either I am afraid.

There is a special case for non tax payers put that doesnt apply to you.

penwise

Thanks for that.

At least I now know that I can put 3600 gross in and that anything above that will not get tax relief (until they change the rules again that is!).

Once I am more knowledgable about investments I will look at VCTs to see if it is worthwhile under my circumstances.

I remember reading in one of the threads something about if u took a certain amount of money from your pension ( even if still working) it could limit how much u can put in after that (something like dropped to 10000 a yr max you could put in).

Quite a few people where discussing this and I would like to re-read it

I have searched and can't find this thread, does anyone remember this?

Thanks for all the help on this forum, I have only started thinking about pension planning and realise at this late stage it is important to get as much right as possible.

jem16

penwise wrote: »

I remember reading in one of the threads something about if u took a certain amount of money from your pension ( even if still working) it could limit how much u can put in after that (something like dropped to 10000 a yr max you could put in).

Quite a few people where discussing this and I would like to re-read it

I have searched and can't find this thread, does anyone remember this?

I think it would be this thread.

https://forums.moneysavingexpert.com/discussion/5026941

penwise

Yes that's the thread. Thanks for that