Pension contributions into wife's plan

Dazed_and_C0nfused

Grumpy_chap said:

Dazed_and_C0nfused said:

No, it's her allowance.  And your choice if you wish to gift £2880 to her.

I am currently looking to do this for my wife.  She is not currently working.

I just want to understand how the £2,880 (£3,600) is impacted if she gets a job?
Easy if she gets a job, say 1st July and then works through to the end of the tax year.  Contributions capped at annual earnings (she won't be near annual allowance).

What if she pays in the £2,880 now but gets a job in, say, March 2023 so only one month's earnings before the end of the tax year?  Pension contributions exceed total earnings.  Is that allowed?

Yes, she is still able to contribute £3,600 (gross) if her earnings are less than that.  Just the same as a non earner could contribute £3,600 (gross).

NedS

Grumpy_chap said:

Dazed_and_C0nfused said:

No, it's her allowance.  And your choice if you wish to gift £2880 to her.

I am currently looking to do this for my wife.  She is not currently working.

I just want to understand how the £2,880 (£3,600) is impacted if she gets a job?
Easy if she gets a job, say 1st July and then works through to the end of the tax year.  Contributions capped at annual earnings (she won't be near annual allowance).

What if she pays in the £2,880 now but gets a job in, say, March 2023 so only one month's earnings before the end of the tax year?  Pension contributions exceed total earnings.  Is that allowed?

Yes, she could conceivably exceed the limits if she has already contributed £2880 and then gets a job and makes a further contribution into the employer's pension scheme (maybe through auto-enrollment) without having gross earnings in excess of £3600 to cover the contribution. In which case she would need to notify the pension provider and advise them that a contribution has been made which does not qualify for tax relief.

zagfles

Dazed_and_C0nfused said:

Grumpy_chap said:

Dazed_and_C0nfused said:

No, it's her allowance.  And your choice if you wish to gift £2880 to her.

I am currently looking to do this for my wife.  She is not currently working.

I just want to understand how the £2,880 (£3,600) is impacted if she gets a job?
Easy if she gets a job, say 1st July and then works through to the end of the tax year.  Contributions capped at annual earnings (she won't be near annual allowance).

What if she pays in the £2,880 now but gets a job in, say, March 2023 so only one month's earnings before the end of the tax year?  Pension contributions exceed total earnings.  Is that allowed?

Yes, she is still able to contribute £3,600 (gross) if her earnings are less than that.  Just the same as a non earner could contribute £3,600 (gross).

Yes but the problem is if she's already paid £3600 gross into a SIPP and then gets a job in March with a pension with employee contributions taken by RAS or net pay, then if she earned eg £2000 in March and pays £100 into the workplace pension she's paid pension conts of £3700 with earnings of £2000.

This might be OK with net pay if she's not used her PA, as no tax relief is actually obtained. It's definitely not OK with RAS. Sal sac would be OK as that's employer conts. Might be able to claim a refund from the SIPP or workplace pension.

If there's a chance of getting a job with a pension it might be best not to put the whole £3600, and top it up in March. Or wait till March before putting the whole lot in.

Dazed_and_C0nfused

zagfles said:

Dazed_and_C0nfused said:

Grumpy_chap said:

Dazed_and_C0nfused said:

No, it's her allowance.  And your choice if you wish to gift £2880 to her.

I am currently looking to do this for my wife.  She is not currently working.

I just want to understand how the £2,880 (£3,600) is impacted if she gets a job?
Easy if she gets a job, say 1st July and then works through to the end of the tax year.  Contributions capped at annual earnings (she won't be near annual allowance).

What if she pays in the £2,880 now but gets a job in, say, March 2023 so only one month's earnings before the end of the tax year?  Pension contributions exceed total earnings.  Is that allowed?

Yes, she is still able to contribute £3,600 (gross) if her earnings are less than that.  Just the same as a non earner could contribute £3,600 (gross).

Yes but the problem is if she's already paid £3600 gross into a SIPP and then gets a job in March with a pension with employee contributions taken by RAS or net pay, then if she earned eg £2000 in March and pays £100 into the workplace pension she's paid pension conts of £3700 with earnings of £2000.

This might be OK with net pay if she's not used her PA, as no tax relief is actually obtained. It's definitely not OK with RAS. Sal sac would be OK as that's employer conts. Might be able to claim a refund from the SIPP or workplace pension.

If there's a chance of getting a job with a pension it might be best not to put the whole £3600, and top it up in March. Or wait till March before putting the whole lot in.

Good point 🙂

GazzaBloom

Dazed_and_C0nfused said:

zagfles said:

Dazed_and_C0nfused said:

Grumpy_chap said:

Dazed_and_C0nfused said:

No, it's her allowance.  And your choice if you wish to gift £2880 to her.

I am currently looking to do this for my wife.  She is not currently working.

I just want to understand how the £2,880 (£3,600) is impacted if she gets a job?
Easy if she gets a job, say 1st July and then works through to the end of the tax year.  Contributions capped at annual earnings (she won't be near annual allowance).

What if she pays in the £2,880 now but gets a job in, say, March 2023 so only one month's earnings before the end of the tax year?  Pension contributions exceed total earnings.  Is that allowed?

Yes, she is still able to contribute £3,600 (gross) if her earnings are less than that.  Just the same as a non earner could contribute £3,600 (gross).

Yes but the problem is if she's already paid £3600 gross into a SIPP and then gets a job in March with a pension with employee contributions taken by RAS or net pay, then if she earned eg £2000 in March and pays £100 into the workplace pension she's paid pension conts of £3700 with earnings of £2000.

This might be OK with net pay if she's not used her PA, as no tax relief is actually obtained. It's definitely not OK with RAS. Sal sac would be OK as that's employer conts. Might be able to claim a refund from the SIPP or workplace pension.

If there's a chance of getting a job with a pension it might be best not to put the whole £3600, and top it up in March. Or wait till March before putting the whole lot in.

Good point 🙂

Don't most new jobs have a probation period before new employees get invited into the pension scheme? It was 3 months for my kids.

Albermarle

GazzaBloom said:

Dazed_and_C0nfused said:

zagfles said:

Dazed_and_C0nfused said:

Grumpy_chap said:

Dazed_and_C0nfused said:

No, it's her allowance.  And your choice if you wish to gift £2880 to her.

I am currently looking to do this for my wife.  She is not currently working.

I just want to understand how the £2,880 (£3,600) is impacted if she gets a job?
Easy if she gets a job, say 1st July and then works through to the end of the tax year.  Contributions capped at annual earnings (she won't be near annual allowance).

What if she pays in the £2,880 now but gets a job in, say, March 2023 so only one month's earnings before the end of the tax year?  Pension contributions exceed total earnings.  Is that allowed?

Yes, she is still able to contribute £3,600 (gross) if her earnings are less than that.  Just the same as a non earner could contribute £3,600 (gross).

Yes but the problem is if she's already paid £3600 gross into a SIPP and then gets a job in March with a pension with employee contributions taken by RAS or net pay, then if she earned eg £2000 in March and pays £100 into the workplace pension she's paid pension conts of £3700 with earnings of £2000.

This might be OK with net pay if she's not used her PA, as no tax relief is actually obtained. It's definitely not OK with RAS. Sal sac would be OK as that's employer conts. Might be able to claim a refund from the SIPP or workplace pension.

If there's a chance of getting a job with a pension it might be best not to put the whole £3600, and top it up in March. Or wait till March before putting the whole lot in.

Good point 🙂

Don't most new jobs have a probation period before new employees get invited into the pension scheme? It was 3 months for my kids.

I think usually yes, but probably not always. Seems sensible to follow Zagfles's advice and wait until March, when the full situation with his wife's employment status is clearer.

westv

GazzaBloom said:

Dazed_and_C0nfused said:

zagfles said:

Dazed_and_C0nfused said:

Grumpy_chap said:

Dazed_and_C0nfused said:

No, it's her allowance.  And your choice if you wish to gift £2880 to her.

I am currently looking to do this for my wife.  She is not currently working.

I just want to understand how the £2,880 (£3,600) is impacted if she gets a job?
Easy if she gets a job, say 1st July and then works through to the end of the tax year.  Contributions capped at annual earnings (she won't be near annual allowance).

What if she pays in the £2,880 now but gets a job in, say, March 2023 so only one month's earnings before the end of the tax year?  Pension contributions exceed total earnings.  Is that allowed?

Yes, she is still able to contribute £3,600 (gross) if her earnings are less than that.  Just the same as a non earner could contribute £3,600 (gross).

Yes but the problem is if she's already paid £3600 gross into a SIPP and then gets a job in March with a pension with employee contributions taken by RAS or net pay, then if she earned eg £2000 in March and pays £100 into the workplace pension she's paid pension conts of £3700 with earnings of £2000.

This might be OK with net pay if she's not used her PA, as no tax relief is actually obtained. It's definitely not OK with RAS. Sal sac would be OK as that's employer conts. Might be able to claim a refund from the SIPP or workplace pension.

If there's a chance of getting a job with a pension it might be best not to put the whole £3600, and top it up in March. Or wait till March before putting the whole lot in.

Good point 🙂

Don't most new jobs have a probation period before new employees get invited into the pension scheme? It was 3 months for my kids.

I thought with auto enrolment it was from starting. It was with my last two jobs.

microcristallina

Not sure how long she hasn't been working for but you can carry forward unused allowance from the 3 previous tax years.

zagfles

microcristallina said:

Not sure how long she hasn't been working for but you can carry forward unused allowance from the 3 previous tax years.

You CANNOT carry forwards the tax relief limit. Carry forwards applies to the annual allowance which is a totally separate thing. Anyone earning under £3600 can only get tax relief on a maximum of £3600. No carry forwards for this.

microcristallina

zagfles said:

microcristallina said:

Not sure how long she hasn't been working for but you can carry forward unused allowance from the 3 previous tax years.

You CANNOT carry forwards the tax relief limit. Carry forwards applies to the annual allowance which is a totally separate thing. Anyone earning under £3600 can only get tax relief on a maximum of £3600. No carry forwards for this.

Thanks that's not how I interpreted it from the gov.uk website. Very useful to know as i was considering doing this for my mum