Pension for non tax payer

crumpet_man

I need to help my non tax paying partner to start a pension in order to get the extra 20% tax relief, i.e. pay in £2,880 and HMRC adds £720.  The plan is to add £2880 every year (unless the rules change)

I have a workplace pension and am rather lost in what to look for to help my partner and do not know how the HMRC tax relief is facilitated.  Is there something in the process for opening a private pension where you select "I am a non tax payer" and then HMRC automatically add the tax relief?

Albermarle

The pension provider will add 20% tax relief automatically , whether you contribute £1,000 or £60,000 or £2,880 .
It is assumed you know what you are doing and do not try and claim more tax relief than you are entitled to . If you do, eventually HMRC will catch up with you . So there is no box to tick to say you are a non taxpayer.
Your workplace pension can be different as it depends on how the contributions are taken out of your salary .

macman

You simply open the SIPP, make your payment, and the provider collects the tax relief from HMRC and adds it to your account , it normally takes 4-6 weeks.
There is no distinction needed between taxpayer and non-taxpayer, as both qualify for basic rate relief  (the former as long as their contribution is within the limits set by their taxable income, obviously).
Unfortunately you are now too late to benefit from relief in 2019/20, so you have until 5/4/21 to make your full contribution.

macman

PS: I'd suggest you look at Vanguard for a low-cost SIPP, although the most well known is probably HL.

Albermarle

Or this 
https://www.cavendishonline.co.uk/stakeholder-pension

xylophone

 need to help my non tax paying partner 

Does your partner have any "relevant  earnings"?

If not, then she is indeed limited to a net contribution of £2880 per tax year.

She simply opens the pension and pays in her contribution - the provider will claim the £720 tax relief and add it to her pot.

She can do this up to age 75.

crumpet_man

Thanks for the advice all, I didn't realise that the Pension provider will simply claim 20% even if more than £2880 is paid in.  
We have products with Vanguard already so am probably going to go with them for the pension.
Partner has only small income (below income tax threshold) from benefit payments which are classed as non taxable.

I might start a private pension for myself too as I have unused contributions on my workplace pension because my employer won't let me salary sacrifice below minimum wage and there does not seem to be any option to pay in to it from outside of salary (e.g. debit card payment, bank transfer)

Sibbers123

If your partner has no income, the maximum contributions which obtain tax relief will be £2,880.

you can pay more, but no tax relief will be obtained.

drumtochty

Vanguard as yet only take money in at the moment, they have no mechanism as yet (a drawdown facility) to allow your partner to take the money out her account. I believe that may be a year away but it is up to you to check that.

If you chose Hargreaves Lansdown as the provider ,you may or may not have to keep £1,000 in the account long term to avoid it being closed down but again that is for you to check with HL.

crumpet_man

Thanks all for the advice.  I went with Vanguard as already have an account and products with them and I like the platform.  Pension opened and funded within a few minutes, very easy.

macman

HL has removed the 1K minimum balance (reputedly). But the charges are much higher anyway for most investors.