Questions re: SIPP payments

SpeedSouth

Hi,

Couple of questions that came out of another thread I started specifically relating to SIPP's so figured I'd come for help here.

Will be opening a SIPP for the missus so have a couple of questions:-

1. Do the monthly contributions have to come from her bank account, or could it be my account?
2. She is soon to leave work on Maternity leave. I've been told the maximum she can invest when not in employment is £2,880 Net.
But whilst she is receiving maternity pay can the contributions be the same as if she was earning that amount? So for the next 12 months could be contribute £300 for example considering she will earn statutory maternity pay only?

kidmugsy

She can contribute £3600 gross (=£2880 net) in a tax year, or her earnings if bigger. Whether her maternity pay counts towards her earnings for this purpose I don't know. Is her maternity pay taxable?

I assume that the money could come from your account if more convenient (years ago I contributed to a pension for a child from my account), but I suggest that you confirm with your provider. Or check on the Hargreaves Lansdown website - they usually explain things well.

dunstonh

1. Do the monthly contributions have to come from her bank account, or could it be my account?

The money should be sourced from an account in her name or it gets treated as a third party payment.

2. She is soon to leave work on Maternity leave. I've been told the maximum she can invest when not in employment is £2,880 Net.

£3600 gross is correct. That currently equates to £2880 net. However, that assumes that her annual income will not exceed £3600. Maternity leave does not mean her annual income will be less than £3600

SpeedSouth

dunstonh wrote: »

£3600 gross is correct. That currently equates to £2880 net. However, that assumes that her annual income will not exceed £3600. Maternity leave does not mean her annual income will be less than £3600

Well actually her annual income would be more than £3600. She has a rental property earning £7800 p/a (before tax and mtg payments) Does this count? So we could contribute £7800 if we wanted?

As well she will receive £544 per month in maternity pay. If this can be counted towards earnings for the year then we are at £14328.

To be honest we won't exceed contributions above her £7800 she earns on the house.

arbster

dunstonh wrote: »

The money should be sourced from an account in her name or it gets treated as a third party payment.

Just double-checking that a joint account in my wife's name and mine is ok?

xylophone

Rental income does not count as "relevant earnings" for pension purposes.

https://www.curtisbanks.co.uk/assets/downloads/guides/guide-contributions.pdf

"Tax relief is given on contributions based on “UK relevant earnings” as defined by the government.
Earnings for this purpose include UK salary, bonus, benefits-in-kind and self-employed earnings and
profits, but not dividend or rental income."

http://www.rossmartin.co.uk/private-client-a-estate-planning/1034-relevant-earnings-for-pensions-purposes

"The following earnings are relevant UK earnings:

.............and Statutory Maternity Pay (SMP) provided it is paid by the employer and chargeable to tax under Section 7(2) ITEPA 2003"

mania112

arbster wrote: »

Just double-checking that a joint account in my wife's name and mine is ok?

yeah that's fine

claire111

Do the monthly contributions have to come from her bank account, or could it be my account?


Dunstonh Quote:The money should be sourced from an account in her name or it gets treated as a third party payment.

Hi, how are third party payments treated differently ?

Many thanks

Claire

xylophone

Hi, how are third party payments treated differently ?

Doesn't seem to be much difference?

http://adviser.royallondon.com/technical-central/information-guidance/contributions-and-tax-relief/pension-contributions-the-basics/

http://www.pruadviser.co.uk/content/nav/about/26674/pghome/49880/52677/52680/220383/

dunstonh

Hi, how are third party payments treated differently ?

Money laundering checks, PEP and sanctions searches need to be carried out on the payer as well as the pension holder. So, its just increased admin.

atush

You say your OH is 'soon' to leave work. Which means she is still working. So if you want to put more into her pension than 3600, this is the year to do it.

As you can put in her entire work income. Unless it is over 40K