Spouse only has interest income - ISA or pension?

michaels

DW 40s is a SAHM and earns about 10k interest on cash investments, no tax due to isa/allowance and saves all of this in cash ISAs.

Would it make more sense for her to save into a pension instead of an ISA to benefit from the 20% 'tax relief'? On retirement her only pension currently will be state pension plus my pension (say 15k pa) should I pre-decease.

Thoughts?

PeacefulWaters

£2,880 net into pension will become £3,600 overnight. Repeat annually.

£10k interest? That suggest savings of several hundred thousand in cash.

Diversify. Using a stocks and shares ISA wrapper.

michaels

PeacefulWaters wrote: »

£2,880 net into pension will become £3,600 overnight. Repeat annually.

£10k interest? That suggest savings of several hundred thousand in cash.

Diversify. Using a stocks and shares ISA wrapper.

Thanks, that is what I was thinking, is 2880 the max as she has no earned income - ie can't we count the savings income and do more each year?

Large savings match a mortgage we can not pay off for another 4 years of fix hence the advantage of keeping them as cash; even as cash they earn more than the mortgage costs though

michaels

PeacefulWaters wrote: »

£2,880 net into pension will become £3,600 overnight. Repeat annually.

£10k interest? That suggest savings of several hundred thousand in cash.

Diversify. Using a stocks and shares ISA wrapper.

Although of course any pension received from her pension savings will be taxed at 20% if I pre-decease.

kidmugsy

michaels wrote: »

Thanks, that is what I was thinking, is 2880 the max as she has no earned income - ie can't we count the savings income and do more each year?

No - only earnings count.

michaels

kidmugsy wrote: »

No - only earnings count.

Thanks

How about if we bought a BTL, would earnings from that count?

atush

PeacefulWaters wrote: »

£2,880 net into pension will become £3,600 overnight. Repeat annually.

£10k interest? That suggest savings of several hundred thousand in cash.

Diversify. Using a stocks and shares ISA wrapper.

I quite agree. it isn't either/or it is both. And move some cash into S&S isas

atush

michaels wrote: »

Thanks

How about if we bought a BTL, would earnings from that count?

No it is not earned income.

And BTL is very tax inefficient.

kidmugsy

michaels wrote: »

Thanks

How about if we bought a BTL, would earnings from that count?

Nope, that's rent not earnings.

kidmugsy

Come to think of it, I suppose you could set up a BTL business and then employ your wife.