Paying £2880 into pension when retired

xylophone

http://www.taxvol.org.uk/about-tax/entitled-10-band-savings-interest/

moneyfoolish

xylophone wrote: »

http://www.taxvol.org.uk/about-tax/entitled-10-band-savings-interest/

Thanks but I did see that already and am still not completely certain which is why I posted the exact scenario.

jamesd

Moneyfoolish, you're right. Her reduced personal allowance is £10,350, subtract the state pension of £7,000 leaving £3,350 of income that will still be within her personal allowance.

On top of that she will get up to £1,000 personal savings allowance and £5,000 starter rate for savings tax free for interest only. That includes peer to peer lending and corporate bond fund interest.

She also has the £2,000 a year tax free dividend allowance available.

Dazed_and_confused

Providing it's pension, wages etc then yes £3,350 is correct for 2017:18.

As jamesd says she would also have the £5000 and £1000 savings bands where the tax rate is 0% and the similar dividend rate of £5000 at 0% (the change to £2000 seems to have been put on hold pending the election next week).

Remember though you don't get an extra £1,150 allowance from your wife. Your tax position is the same as normal, allowance of £11500, but you get to knock £230 off whatever tax you need to pay for the year (marriage allowance of 1150 at fixed rate of 20%).

bigadaj

jamesd wrote: »

Moneyfoolish, you're right. Her reduced personal allowance is £10,350, subtract the state pension of £7,000 leaving £3,350 of income that will still be within her personal allowance.

On top of that she will get up to £1,000 personal savings allowance and £5,000 starter rate for savings tax free for interest only. That includes peer to peer lending and corporate bond fund interest.

She also has the £2,000 a year tax free dividend allowance available.

Dividend free allowance is still £5000 and the planned changes have been stopped by the election. It's in place for this financial year and subject to the whims of the new government as to whether this changes to £2000 or any other figure.

jamesd

Yes, it's still £5,000 for now but it could be reduced to £2,000 just after the election if the new government wants to do that and has majority support for its post-election finance bill.

s4mmy

I have read through the posts from beginning to end and now hopefully have grasped the concept. If my only source of income is a very small pension of less than £7500 a year I can invest the £2880 - receive £720 TR
and would be ok to withdraw £3500 (leaving £100 to rinse and repeat)
This would be ok to repeat each year until I receive my state pension.

Dazed_and_confused

In what context are you asking if it's ok, recycling, contribution levels, tax payable or something else?

s4mmy

Sorry not to explain things too clearly but was hoping for affirmation regarding no Tax payable and contribution levels.
Thanks x

Dazed_and_confused

Personal Allowance is £11,500 this tax year so if existing pension is £7500 and you have no other taxable income then you could take upto £4000 additional pension without having to pay any tax (you may well be taxed by the pension provider and have to claim a refund but ultimately no tax would be paid).