Private Pension, Inheritance and Working tax/ Child Tax Credits

UKSBD

NedS wrote: »

Yes, if you earn £10K gross, then you can contribute a maximum of £10K gross to any pensions in that tax year (so you can pay in £8K and get £2K tax relief making a total £10K gross contribution).

Wouldn't she have to be a tax payer to do that?

NedS

UKSBD wrote: »

Wouldn't she have to be a tax payer to do that?

No, you just can not pay more into a pension than you earn (or £3600 if you do not earn anything). The OP stated she earns £10K per year so on that basis she can pay £10K per year into a pension, and receive tax relief even though she pays no tax.

NedS

german_keeper wrote: »

Help to Save might be of interest to you, just google it. It is a government scheme aimed at people on TC or UC. Sorry, I'm a bit of a Luddite, if I knew how to put a link up I would.
It's not silly amounts of money but you can invest £50 per month for 4 years, a total of £2,400 and get a 50% tax free bonus added, so £1,200 if you invest the full £50 per month.

Good point, and if there are two of you (a couple) then you can open an account each and double up

NedS

Puffalump_13 wrote: »

I have spoken to the pension company today they couldn’t confirm whether this is a income or capital payment, just told me it’s a Lump sum death benefit, my ex husband was 56 years old, so there’s no tax to pay on it and isn’t subject to inheritance tax because the letter states this. But I still have no idea what this payment classed as ?

I'm guessing here, but if it's tax free then I'm assuming it's not classed as income, as income would almost certainly be taxable at your normal rate.

Puffalump_13

Thank you ! Yes I’m thinking that too, as I’m not drawing from a pension.
Also thanks for the savings account information, I have seen that I’m going to do that too.

xylophone

The OP stated she earns £10K per year so on that basis she can pay £10K per year into a pension, and receive tax relief even though she pays no tax.

On a "Relief at Source" basis, the OP would make a payment of £8000 and the provider would claim tax relief of £2000 and add it to the pot.

The OP does mention a workplace pension - presumably contributions are still being made into this so she needs to subtract what she has contributed to the workplace pension before contributing to a personal pension.

It might be possible for her to make an additional contribution to her existing workplace pension rather than starting a personal pension.

parking_question_chap

zagfles wrote: »

Also pension contributions reduce your income for tax credits purposes, so this could increase your tax credits! Google TC825

This is incorrect advice. Please seek advice from an IFA for profesional help on the matter.

xylophone

Re pension contributions and tax credits

https://www.entitledto.co.uk/help/tax-credit-pension-contributions

atush

Did you get a pension sharing order when you divorced? it sounds as if he had a valuable DB pension.

The lump sum you received should be treated as Capital. So tuck as much away into a pension as you can, and do so each year saving only a small amount to boost your savings. if you are up to the savings limit for your benefits, put it all into pension over the next 4 years.

Puffalump_13

Thank you for your help
No I got it after his death on the grounds of the court order of the divorce, he died few months ago, I just need to do the final paperwork, god bless him, yes I plan to into a pension over the next 4 years, as I have received no maintenance for our 3 children for 3 years, due to he hasn’t worked, so I couldn’t add to my work place pension, because I couldn’t afford too, this is the most sensible thing to do with it