Pension recycling

Albermarle

The annual fee from HL for £27K would be £121 and for Fidelity £94.50 .
AJ Bell would be £67.50 and Vanguard £40.50 .
A typical low cost multi asset fund would cost in addition another £60 approx.

caro69

jamesd said:

Excellent news! HL will even pay him  to transfer.

On decisions please read the part of this post before "The AVCs". You're on the right track.

Even not working he can pay in £3,600 gross, £2,880 net, and should. He gets the tax rellief on the money even if paying no tax.

So James, just to clarify having read the post, most of which went over my head I must admit.  Are you saying that hubby could transfer his pension, then withdraw his 25% tax free amount and give it to me to put in my pension?  We could keep the contributions to mine below £7500.   He could also start another pension of his own?  I apologise in advance if I'm making a muddle of this.  

Albermarle

caro69 said:

jamesd said:

Excellent news! HL will even pay him  to transfer.

On decisions please read the part of this post before "The AVCs". You're on the right track.

Even not working he can pay in £3,600 gross, £2,880 net, and should. He gets the tax rellief on the money even if paying no tax.

So James, just to clarify having read the post, most of which went over my head I must admit.  Are you saying that hubby could transfer his pension, then withdraw his 25% tax free amount and give it to me to put in my pension?  We could keep the contributions to mine below £7500.   He could also start another pension of his own?  I apologise in advance if I'm making a muddle of this.  

He could withdraw the tax free amount and then keep adding to the same pension, especially if it was a modern pension.
So if his pot was £27K , he could withdraw £6750 and the remaining £20, 250 would remain as crystallised funds .
Anything withdrawn from those would be taxable ( whether he actually paid any tax would depend on his income at the time) and would limit any future contributions to £4Kpa.
He could then add to this same pension again and these funds would be uncrystallised and at some point he could take 25% of these tax free

jamesd

Albermarle said:

The annual fee from HL for £27K would be £121 and for Fidelity £94.50 .
AJ Bell would be £67.50 and Vanguard £40.50 .
A typical low cost multi asset fund would cost in addition another £60 approx.

If the money was invested. But that's not really the plan for him, which now and soon after 6 April involves withdrawing as much as she can reinvest within the limits. That timescale means cash and if she can use 16.67k in the two tax years the total HL charges for transfer, holding in cash and withdrawing will be nil.

jamesd

caro69 said:

Are you saying that hubby could transfer his pension, then withdraw his 25% tax free amount and give it to me to put in my pension?  We could keep the contributions to mine below £7500.   He could also start another pension of his own?

Yes. No need to keep the contributions to yours below £7,500 because that just relates to tax free money for the same person. He can continue paying into the HL pension.

But assuming he won't work again (or will  accept a 4k contribution cap) or can use the small pot rule he can take out taxable money too.

I don't know what your gross pay is, which sets your limit, nor whether he has other taxable income or will return to work, I'll assume not for the last two.

In that case he can transfer to HL and tell them this tax year that he wants to make a UFPLS withdrawal of £16,666. 25% tax free and the rest not liable to income tax because it's within his personal allowance. Then another UFPLS on or soon after 6 April to use next year's personal allowance. That's up to £33,332 taken out with no income tax due or HL charges at all. He hasn't got that much there yet but £3,600 gross (£2,880 net) this year and next will do it. Personal allowance is use it or lose it so best to use it unless there's a reason not to.

If my assumptions are wrong please fill in the wrong assumptions and I or someone else can tweak as needed.

While no tax will be due, HL will have to charge emergency tax on the first withdrawal and he can fill in a form to reclaim it from HMRC.