How much can my wife put in to her pension?

Zolablue

Hi

My wife works part time and earns, roughly, £11,000 a year. This is, obviously, below the threshold for paying income tax. She currently pays in to a private pension fund and, in addition, she has a workplace pension that pays in the legal minimum (both her and her employer).

When she pays in to her private pension she gets 25% added by the Government for tax relief - even though she doesn't pay tax.

Hopefully this is enough info for someone to be able to answer my question. If she takes home £11,000 a year, how much of that can she pay into a pension? Is it the full £11,000 or can she only pay in £11,000 less the government contribution? Does she have to make any allowances for the amount that her employer pays in to a workplace pension?

I'm sure that the answer is simple but I just can't seem to get my head around it

Thanks in advance for any assistance that can be offered.

biscan25

The maximum is her taxable pay i.e. £11,000. 
There are circumstances where this might not be the case. If her workplace contributions are made by salary sacrifice then a restriction will be in place to ensure that her pay does not drop below national minimum wage. But seeing that the majority are going to a personal pension, this is not an issue.
There are total Employer/Employee limits (annual allowance) but these are a minimum of £40k so she will not be troubling these.

xylophone

 in addition, she has a workplace pension that pays in the legal minimum (both her and her employer).

 Her contributions are on a "relief at source" basis?

https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/tax-relief-and-your-pension

Zolablue

xylophone said:

 in addition, she has a workplace pension that pays in the legal minimum (both her and her employer).

 Her contributions are on a "relief at source" basis?

https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/tax-relief-and-your-pension

Yes it is. Thanks for the link to clarify

Does that make any difference to the total she can put in to a private pension?

Zolablue

biscan25 said:

The maximum is her taxable pay i.e. £11,000. 
There are circumstances where this might not be the case. If her workplace contributions are made by salary sacrifice then a restriction will be in place to ensure that her pay does not drop below national minimum wage. But seeing that the majority are going to a personal pension, this is not an issue.
There are total Employer/Employee limits (annual allowance) but these are a minimum of £0k so she will not be troubling these.

Is that a typo? 

dunstonh

Does that make any difference to the total she can put in to a private pension?

Depends on what you mean by a private pension.  Despite being frequently used, it isn't a recognised term, and different people use it to mean different things.    Her employer scheme may have a maximum they allow, but her individual scheme will not be handicapped by that.

MX5huggy

Zolablue said:

biscan25 said:

The maximum is her taxable pay i.e. £11,000. 
There are circumstances where this might not be the case. If her workplace contributions are made by salary sacrifice then a restriction will be in place to ensure that her pay does not drop below national minimum wage. But seeing that the majority are going to a personal pension, this is not an issue.
There are total Employer/Employee limits (annual allowance) but these are a minimum of £0k so she will not be troubling these.

Is that a typo? 

Yes £40k it should say. 

Albermarle

So she should calculate how much she is contributing via her workplace scheme, including tax relief.
Subtract this from £11,000 and that is how much more she can contribute gross ( including tax relief)

So as an example if she has £10,000 gross to contribute she needs to add £8,000 and £2,000 tax relief will be added.

Zolablue

dunstonh said:

Does that make any difference to the total she can put in to a private pension?

Depends on what you mean by a private pension.  Despite being frequently used, it isn't a recognised term, and different people use it to mean different things.    Her employer scheme may have a maximum they allow, but her individual scheme will not be handicapped by that.

Ah OK. She has the minimum put in to her workplace pension that is a tax relief at source workplace pension. Her employer pays in the minimum too. They won't put in more whether my wife contributes more or not.

She also has, what I think is called, a SIPP that she contributes in to. We would like her to put in the maximum amount that she can in to this pension pot. So, going by the advice given so far (assuming that I have understood it correctly) she can pay her entire take home pay into her SIPP.

Thanks to all contributors for the advice so far, I really appreciate it

Zolablue

Albermarle said:

So she should calculate how much she is contributing via her workplace scheme, including tax relief.
Subtract this from £11,000 and that is how much more she can contribute gross ( including tax relief)

So as an example if she has £10,000 gross to contribute she needs to add £8,000 and £2,000 tax relief will be added.

Ah, I was in the middle of posting my last post so didn't see this come in first. Therefore my understanding was wrong

So the total going in to her pension pots (once the tax relief is added) can't be more than her actual take home pay. She can only pay in 80% of her take home pay

Albermarle

Zolablue said:

Albermarle said:

So she should calculate how much she is contributing via her workplace scheme, including tax relief.
Subtract this from £11,000 and that is how much more she can contribute gross ( including tax relief)

So as an example if she has £10,000 gross to contribute she needs to add £8,000 and £2,000 tax relief will be added.

Ah, I was in the middle of posting my last post so didn't see this come in first. Therefore my understanding was wrong

So the total going in to her pension pots (once the tax relief is added) can't be more than her actual take home pay. salary  She can only pay in 80% of her take home pay salary.

. It does not matter whether she has ten pensions or one, she can not pay in more than her gross salary in total.
Her take home pay is not relevant to the calculation.