Am I reading this right?

Mnd

I'm not talking about contributions made through the employer, if she is in a auto enrolment scheme we don't know if it a net pay or relief at source, but normally you can make additional contributions either through direct debit or 1 off payments which will certainly qualify for tax relief

Dazed_and_confused

That's not how you explained it in your earlier post at 11:07

It may be worth not opening a new fund, just pay additional contributions to her work scheme

Mnd

To clarify. She could pay in to her existing pension fund or a sipp or similar
She is not restricted to 2880..she is restricted to her annual salary (8k)minus any auto enrolment contributions
Whatever she pays in will be increased by 25% (unless I'm mistaken as dazed and confused seems to think, my apologies if I'm wrong)
She will be able to take out 25% tax free plus the rest up to her personal allowance
If she does the second bit she will then be restricted to paying in 4k. Per annum.

That is how I understand it.

Mnd

Dazed, where do you get 18000 as a small pot. I can't work that one out

Mnd

Sorry, I see now..5 years time..

gsh5112

Hi Dazed
There isn't a need to take it all in one go. I was just trying to compare doing it annually or letting it roll over and I was under the misapprehension that with it being a 'small pot' you could take the lot without tax.... doh!
All I'm trying to do is to allow her to maximise her modest savings. By getting a £720 'top-up' on a £2880 investment didn't seem like a bad return. Lets be honest... occasionally paying a couple of pound a month into the government pension at 55 is hardly going to buy her a couple of coffee's a week. £500 pa if she's lucky???
As you've no doubt gathered,,, bit of a newbie with good intentions. I'm open to any better suggestions....
Thanks again

xylophone

Not according to the pensions regulator (when its auto enrolment) and they should know!

This would depend on whether the pension provider uses "relief at source" or "net pay".

See

https://www.gov.uk/workplace-pensions/managing-your-pension

‘Net pay’
Your employer takes your contribution from your pay before it’s taxed. You only pay tax on what’s left. This means you get full tax relief, no matter if you pay tax at the basic, higher or additional rate.

The amount you’ll see on your payslip is your contribution plus the tax relief.

You won’t get tax relief if you don’t pay tax, for example because you earn less than the tax threshold.

‘Relief at source’
Your employer takes your pension contribution after taking tax and National Insurance from your pay. However much you earn, your pension provider then adds tax relief to your pension pot at the basic rate.

And see re NOW ("NET PAY")


https://www.nowpensions.com/help-centre/faqs/general-information/whats-the-difference-between-net-pay-and-relief-at-source

and NEST ("Relief at Source")

https://www.nestpensions.org.uk/schemeweb/NestWeb/public/helpcentre/contents/how-should-i-calculate-tax-relief-with-my-earnings-basis.html

Mnd

As you rightly say, you do need to do a bit more thinking, can I suggest that you disregard this 2880 figure as a start point..I think you have got that in your head as a definitive amount

That is the figure that a non earner can pay in (me, next year) not a non tax payer like your partner

The figure you can work on is up to 8000 (gross) thats 6000 from her therefore boosting her savings by 2000
It doesn't have to be that figure, just allow for any other contributions to workplace pensions, and work out what you want to put in.

I hope I have been some help

xylophone

See also

https://www.nestpensions.org.uk/schemeweb/NestWeb/public/helpcentre/contents/how-will-i-know-which-workers-are-eligible-for-tax-relief.html

The maximum amount of contributions on which a worker can claim relief is whichever of the following is greater:

the basic amount - currently £3,600 including tax relief

the amount of the individual’s UK earnings for the tax year.

This means that a worker who has no relevant UK earnings may still qualify for tax relief on contributions into a registered pension scheme up to the basic amount.

The tax relief is available even if the worker is a non-taxpayer.

gsh5112

Hi all
Thanks for all your help and input. I obviously need to do more reading as its not as simple as me...lol
I'll carry on and no doubt you'll see me on here again when I've tried to get head around it all.
Merry Christmas