Paying £2880 into pension when retired

Dazed_and_confused

I am still slightly confused. My wife already has income from another pension of about £9.3K per year. I was hoping she could take out the £2600 with £650 of that being tax free and the other £1950 being within her personal allowance.

If she has applied for Marriage Allowance for 2018:19 then she will end up having £118 tax to pay.

jamesd

Yes, since there's no plan to work in the future it's fine to take the £2600 via UFPLS.

vixen1500

Could someone please clarify what I should do next.
Am I doing it right?

Paid in the £2880 to get tax relief

Once tax relief added I can withdraw all but £1000 - but there appears to be various ways to do this - which way would be best?

Next tax year I can pay in the £2880 + the equivalent amount of my earnings for the 2019/19 tax year

Then again once tax relief added withdraw money (but being 2nd year no longer need to keep the full £1000).

I can continue to do this untl 75 or the rules changed.

What happens to the £1000? Does it just sit as a cash sum? I assume it does grow whilst there.

Sorry if this is covering old ground but the more I read over this thread the more confused I seem to get.

Beginning to think this is a little bit beyond my financial knowledge

AlanP_2

vixen1500 wrote: »

Could someone please clarify what I should do next.
Am I doing it right?

Paid in the £2880 to get tax relief

Once tax relief added I can withdraw all but £1000 - but there appears to be various ways to do this - which way would be best?

Next tax year I can pay in the £2880 + the equivalent amount of my earnings for the 2019/19 tax year

Then again once tax relief added withdraw money (but being 2nd year no longer need to keep the full £1000).

I can continue to do this untl 75 or the rules changed.

What happens to the £1000? Does it just sit as a cash sum? I assume it does grow whilst there.

Sorry if this is covering old ground but the more I read over this thread the more confused I seem to get.

Beginning to think this is a little bit beyond my financial knowledge

Is this with HL? They get mentioned on here a fair bit for this aspect as they do not charge a fee if contribution is left in cash and not invested? You do need to keep £1000 in there to avoid account closure and a fee.

So if £1k is kept in cash no fee to pay but also no investment growth.

vixen1500

AlanP wrote: »

Is this with HL? They get mentioned on here a fair bit for this aspect as they do not charge a fee if contribution is left in cash and not invested? You do need to keep £1000 in there to avoid account closure and a fee.

So if £1k is kept in cash no fee to pay but also no investment growth.

Yes with HL

Thanks

MallyGirl

vixen1500 wrote: »

Next tax year I can pay in the £2880 + the equivalent amount of my earnings for the 2019/19 tax year

If you have earnings then you can contribute up to those earnings (gross). The £2880 is only relevant if you have no earnings.
You cannot contribute earnings plus £2880.

etienneg

vixen1500 wrote: »

Next tax year I can pay in the £2880 + the equivalent amount of my earnings for the 2019/19 tax year

This is not correct. The rule is that you can contribute up to your gross earnings (maximum £40,000), OR £3,600 (gross), whichever is higher. Note: it's OR, not AND.

What is confusing to people is that amounts contributed to a pension are always given as gross amounts. So, if you have no earnings, you can contribute up to £3,600. This means you handing over £2,880 and HMRC adding £720, so £3,600 is added to your pension.

If you earn (say) £20,000, you can contribute up to £20,000. This means you handing over £16,000 and HMRC adding £4,000, so £20,000 is added to your pension.

vixen1500

etienneg wrote: »

This is not correct. The rule is that you can contribute up to your gross earnings (maximum £40,000), OR £3,600 (gross), whichever is higher. Note: it's OR, not AND.

What is confusing to people is that amounts contributed to a pension are always given as gross amounts. So, if you have no earnings, you can contribute up to £3,600. This means you handing over £2,880 and HMRC adding £720, so £3,600 is added to your pension.

If you earn (say) £20,000, you can contribute up to £20,000. This means you handing over £16,000 and HMRC adding £4,000, so £20,000 is added to your pension.

Thanks

So as I only earn around £3000 per year can I contribute the same as someone without earnings, upto £3600 by paying in the £2880 the same as I have done this year?

MallyGirl

yes - that is right

vixen1500

MallyGirl wrote: »

yes - that is right

Well, now how much I can pay in next year is sorted

Thanks

Just need to sort out how to get the £2600 out again.

I assume that depends on when the tax relief is added.

If not till after 6th April, will I still be able to pay in again next year?

Also does this money count as income? When I submit my tax return.