Can I get more tax relief than tax paid ?

Dazed_and_C0nfused

We have joint finances are considering putting it all into a private pension as I get an instant 20% boost

It's a 25% boost not 20% i.e. £1,000 from you becomes £1,250 in the pension fund.

I don't want to shove everything into retirement, but would like to put away about £1000 per month.

Will your pensionable income (profit) be sufficient to allow this?  If you contribute £1,000 per month that is £15,000 gross contribution in a tax year.

Albermarle

are you supposed to look into what they invest in? or should I look into how well it performs each year?

Yes you are ( but many people do not ) . Peoples pension offers 9 alternative investment choices and has a reasonable 0.5% annual charge . .https://thepeoplespension.co.uk/investment-funds/

As a very rough guide to investments - the higher % of equities ( shares) the higher potential growth in the long term ( > 10 years ) but the more volatility ( up and down ) you will see along the way .

So for younger people and those with a higher risk tolerance a fund with a high % equity is the usual way .For older people or those with a medium risk tolerance , a fund with say 50% equity might be the right one  If you are close to retiring or have a low risk tolerance then a fund with a lower % equity might be suitable. If you are very nervous there is a cash fund , which is safe but will return approx. zero so you lose out to inflation.

If you have not chosen a fund , it will have chosen one for you , but it might not be what you want , so you need to have a good read .

kuratowski

aznlayer said:

Am I naive in thinking that I should go with a company name that I recognise and hence my money should be safer like legal and general or Aviva ? 

The platform is just a wrapper - it's not impossible for them to fail but client's money is segregated, you would be very very unlikely to lose out.  The risk is really on your investments which will go up and down according to movements in the markets.

The MSE pensions guide lists a few platforms, as DIY investor I think you will be able to find one cheaper than L&G or Aviva.

As you are new to investing I suggest reading some recent threads about investment choices on this board, you see we have regular arguments on the pros and cons of different approaches (there is no one answer for everyone).  You will find the most popular choices are multi-asset funds, and there are a few specific funds which get mentioned very frequently.

aznlayer

Thank you for your posts, things feel so much clearer, but I will continue to read and learn as much as I can!

Dox

Any particular reason why you are going self employed rather than operating through your own limited company?

tigerspill

Albermarle said:

I would actually earn more in tax relief than what I paid in tax. Is this correct or if tax relief capped at what tax I have actually paid? 

Basic rate tax relief  is payable on taxable income , regardless of what your personal allowance is, and what tax you have actually paid.

Might seem a bit odd but it is just the way the system works. 

Are you self employed ?

This has been a revelation to me in the past few days thanks to people on this form.  That I can get tax relief on my £12,500 zero rated tax band - where I haven't paid any tax.  £2500 for free.

Dazed_and_C0nfused

Providing you have pensionable earnings of at least £12,500, it can't be just any type of taxable income.

AlanP_2

Whilst the idea of benefiting from the "unpaid tax" relief of the pension in this case is appealing don't ignore the LISA option without considering it.
You need to choose the investments inside the warpper (so no difference there), you get 25% from the government (limited to £1k a year on a £4k net contribution from you) and you can't access it without penalty until Age 60 BUT no tax to pay on withdrawal at 60+ so could be a nice pot to have alongside the pension.

Triumph13

I was going to suggest LISA too.  A quick calculation shows that if you average 3% real return and retire at 55 (when your partner is 60) then to be able to get everything out tax free you'd need to put no more than about £500 a month into a pension.  Above that you'd be looking at 15% tax on the way out (25% tax free and 20% on the rest).  LISA would beat that easily.  If you retire later then even less would be tax free.