confused over tax relief

neil1960

Hi - I would like to set up a SIPP for my wife. She currently has a part time job earning approx £4.5k and a pension of approx £1.5k. Does this mean if we pay in £6k HMRC will add £1.2k? I've read that this tax relief can be claimed back for the last 3 years, is this true? If she leaves her job next (financial) year can we still pay in £3.6k and get a tax contribution of £720? or £5.1k (£3.6 + 1.5) and get a tax contribution of £1020.

Dazed_and_confused

No.

Tax relief can only be claimed in the current tax year and I think her contribution will be limited to £3,600 (which becomes a gross contribution of £4,500 with the basic rate relief the provider will add).

Pension income doesn't count when working out how much can be paid into a pension.

In years where she has lower or no earnings her contribution will be limited to £2,880 (which gets grossed up to £3,600 with the basic rate tax relief).

This assumes she isn't in a pension scheme with her current employer.

maximumgardener

she can have a personal pension (or sipp) and can put her "earnings" into that (up to 40K) and get tax relief added in. however she cannot put the pension element in as thats not allowed .{ its not eligible earnings .....its a pension.}

maybe HL can help get it set up and explain your options. they seem quite good at this level
and you speak to real people

neil1960

thanks for the replies. I think I'm clear now.

Mnd

I'm in exactly the same situation and agree with the advice given above..