Gross Member Contributions.

QrizB

RippleM said:

I thought that as well to the extent I asked them to check again before I transfer the cash.HL confirmed you can put 40k but only get tax relief on the earnings. The remaining 20k is called gross member contributions.
I seem to remember JamesD commenting on this recently as well.

Sorry; I read your post as meaning you hoped to carry forward tax relief.

RippleM

jamesd said:

It's fine. Don't be surprised that many will be unfamiliar with the idea because it's quite uncommon for people to be in your situation and see value in placing the money into trust and outside your estates in this way. Few will be familiar with the gross member contribution and quite a lot of pensions might not even offer the possibility.

Just to restate what HL have told you and you already know:

1. Gross contributions up to her gross pay will receive basic rate tax relief, delivered by adding 25% to the amount paid in within this range.
2. Above this gross contributions can be used. There will be no annual allowance charge on these provided she has enough annual allowance this year and carried forward unused annual allowance from the past three years to cover the amount. So for 80k she'd have 20k unused this year after her pay contribution and would need a total of at least 60k of annual allowance unused in the last three years as well.
3. It's also possible to go over the annual allowance available and pay the annual allowance charge on the excess. Not typically a good idea but it's permitted.

My own personal preference is to avoid inheritance tax by giving while still alive, potentially using term life insurance to cover the risk of dying before it's done, since insurance can be written to have the desired beneficiaries, subject to them having some interest in your life.

Thanks James,I agree with giving while I am alive.I only have one son ( only 20 ) and need to be careful on how that is done as too much money can ruin young lives.I have already passed a 100k inheritance on to him ( he doesn’t know ) which is 80% in a S/S ISA and 20% in a Pension.

Alexland

As part of your estate planning have you considered transferring some of your ISA into an AIM portfolio ISA? The fees are not cheap and fairly high risk but that could perhaps be offset by compensating changes to the rest of the ISA portfolio. https://www.wealthclub.co.uk/aim-iht-isas/

RippleM

Many thanks Alexland.I was unaware of this and certainly worth reviewing.