Paying £2880 into pension when retired

Dorian1958

Thanks Dazed, thought it might be too good to be true.

Dazed_and_confused

You would still be getting a pension pot of £3,600 for a payment of £2880 so not all bad!

jamesd

Dorian1958 wrote: »

Thanks Dazed, thought it might be too good to be true.

Unfortunately you've been incorrectly told that there is no benefit for you when there is a £180 benefit.

When you take the pension money, 25% is normally tax free, won't be taxed by the pension firm and doesn't need to be declared to HMRC. So you get one quarter of the £720 as your tax gain.

Dorian1958

Thanks jamesd, it all helps!

Mothman

Have just transferred my wifes small stakeholder pension of £11.5K to HL for drawdown.

As she has an unused personal allowance for 2017/18, if she was to crystalize £10k and withdraw it in March does anyone know if the emergency tax code would mean that she would be taxed on £7.5K which she would then have to reclaim, or would all £10K be received tax free as it been taken in the last month on the tax year?

Dazed_and_confused

The emergency code would almost certainly be used for the first payment but she doesn't have to reclaim it, HMRC will refund it automatically as part of their process of reviewing things after the tax year end.

If her total taxable income is low enough she may also be able to apply for Marriage Allowance for 2017:18, no benefit to her but could potentially save you £230!

Mothman

Thanks for the reply and good news that any refund would be done automatically. Have not been able to claim the Marriage Allowance prevously but looks like I may just sneak under the threshold this tax year.

Dazed_and_confused

Marriage Allowance doesn't have an income threshold. All that matters (from your perspective) is that you aren't a higher rate payer.

You could easily have income of say £50k but with pension contributions not be a higher rate payer.

caveman38

Dazed_and_confused wrote: »

The emergency code would almost certainly be used for the first payment but she doesn't have to reclaim it, HMRC will refund it automatically as part of their process of reviewing things after the tax year end.

If her total taxable income is low enough she may also be able to apply for Marriage Allowance for 2017:18, no benefit to her but could potentially save you £230!

Useful information D&C re. Marriage Allowance. Can you increase allowance only be used to save tax at the standard rate then?

Dazed_and_confused

Getting Marriage Allowance does not entitle you to any additional allowances at all.

The person applying is effectively agreeing to a reduction in their personal allowance in order that you get a fixed amount knocked of your tax bill as a result, £230 (if youre due to pay that much tax) this tax year and £238 next year.