Would HMRC flag this as recycling?

threlkeld53

Thrugelmir said:

threlkeld53 said:

 We are both retired and have no incomes. 

I assume that you are receiving pensions though as you must be living off something. 

 

Yes, state pensions. So we are within our personal tax allowances if we withdraw the £3600

Dazed_and_C0nfused

Albermarle said:

So I can take £7,500 of my TFLS, pay it into my wife's Pension, she'll get 20% tax relief of £1,875 back on it

To do this your wife would have to be earning a minimum £9375 gross( before tax ) . But you said 

We are both retired and have no incomes.

So hers ( and yours ) pension contributions will be limited to £2880 net - £3600 gross 

It was the op who is retired and has no (pensionable) income.
A different poster brought up the £7.5k 🙂

Audaxer

threlkeld53 said:

I have £3.5k cash sitting in a SIPP. I intend to withdraw most of it in April 2021 and to put £2880 of it into my wife's SIPP. Once that is topped up with tax relief, she will withdraw £3600. She will then give me £2880 which I'll put back into my own SIPP, to which £720 will be added. 

The following tax year, I'll withdraw £3600 and once again put £2880 into my wife's. We intend to repeat this process each year until age 75.
 
I'm wondering if this would be flagged up by HMRC as recycling. We are both retired and have no incomes. We do have a joint bank account, so in the event that HMRC deduct tax at source and we reclaim it using P55 forms, I'm wondering if they would spot this? Or if they did, is it likely that they'd deem it as too small amounts to bother with?

The only thing I would be concerned about is if all the transactions are going through the joint bank account. It may be okay, but as you are gifting the money drawn from your SIPP to your wife, I think it would be clearer if it went into a sole account in her name for her then to make the contribution to her SIPP. I recall that this point was made on a previous thread on the subject as a way of being sure the contribution into your wife's SIPP couldn't be deemed to be being made by you, and then vice versa when she draws out the money from her SIPP to go back into your SIPP.

threlkeld53

Audaxer said:

The only thing I would be concerned about is if all the transactions are going through the joint bank account. It may be okay, but as you are gifting the money drawn from your SIPP to your wife, I think it would be clearer if it went into a sole account in her name for her then to make the contribution to her SIPP. I recall that this point was made on a previous thread on the subject as a way of being sure the contribution into your wife's SIPP couldn't be deemed to be being made by you, and then vice versa when she draws out the money from her SIPP to go back into your SIPP.

Yes thanks for that. It was something that was on my mind also. It's not much effort to ensure that my wife uses an account that she has which is solely in her own name. I'll amend the nominated account.

OldBeanz

HL allows payment from a joint account but only with the relevant Debit Card.

where_are_we

My OH and I have been doing an annual £2880 contribution (funded from a joint account) into a SIPP from 2015 and making an UFPLS each year back to the same joint account. We pool everything together with no mention of "gifting to one another". Never had HMRC question anything.

threlkeld53

where_are_we said:

My OH and I have been doing an annual £2880 contribution (funded from a joint account) into a SIPP from 2015 and making an UFPLS each year back to the same joint account. We pool everything together with no mention of "gifting to one another". Never had HMRC question anything.

Are you saying you have a SIPP AND your partner ALSO has a SIPP? So £5760 is passing through the one joint account?

where_are_we

The joint account is a "hub" current account into which goes state pensions, occupational pensions, UFPLS`s and maturing regular savers  and out of it goes bills, and payments to many regular savers, SIPPs, Isa`s etc. Our joint account is probably more complicated than yours (I haven`t included the £1500 in/out to current accounts) and therefore a direct correlation of £3600 going in and £2880 going out at different times of the year is more difficult to prove even if it was possible recycling.