Non tax paying partner. Will we avoid savings tax threshold if savings accounts in her name?

Dazed_and_C0nfused

RG2015 said:

where_are_we said:

Also put £2880 net grossed up to £3600 in a SIPP if your wife is near 55. When she is 55 she can withdraw and the proceeds will not be taxed unless her total earned income exceeds her annual personal tax allowance minus the marriage allowance. If her earned income was low enough this could result in a gain of £720 on a £2880 contribution.

This sounds interesting. How does it work and where does the figure of £2,880 come from?

It's the net of tax relief amount non earners or those earning less than £3,600 can pay and receive tax relief.  Irrespective of not paying tax in the first place.

For someone with plenty of Personal Allowance available it's an easy £720 each year.

You pay £2,880 and the pension company adds £720 in basis rate tax relief making a gross contribution of £3,600.

Ignoring investment profit/loss (not a factor for plenty who just keep it in cash within the pension wrapper) that becomes £900 TFLS and £2,700 taxable income.

Main thing to watch for is provider fees.  I think they can be avoided but you might need to leave some or all of the money in for a (little while).  Depositing £2,880 and taking the £3,600 out as soon as the tax relief is added can result in fees with some providers I think 

It does seem a worthwhile thing for the ops spouse to look at, particularly as using their Personal Allowance (but no more) won't restrict either the savings starter rate or savings nil rate band from being utilised.

eskbanker

RG2015 said:

where_are_we said:

Also put £2880 net grossed up to £3600 in a SIPP if your wife is near 55. When she is 55 she can withdraw and the proceeds will not be taxed unless her total earned income exceeds her annual personal tax allowance minus the marriage allowance. If her earned income was low enough this could result in a gain of £720 on a £2880 contribution.

This sounds interesting. How does it work and where does the figure of £2,880 come from?

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

If you do not pay Income Tax

You still automatically get tax relief at 20% on the first £2,880 you pay into a pension each tax year (6 April to 5 April) if both of the following apply to you:

• you do not pay Income Tax, for example because you’re on a low income
• your pension provider claims tax relief for you at a rate of 20% (relief at source)

Albermarle

RG2015 said:

where_are_we said:

Also put £2880 net grossed up to £3600 in a SIPP if your wife is near 55. When she is 55 she can withdraw and the proceeds will not be taxed unless her total earned income exceeds her annual personal tax allowance minus the marriage allowance. If her earned income was low enough this could result in a gain of £720 on a £2880 contribution.

This sounds interesting. How does it work and where does the figure of £2,880 come from?

When you have a couple of hours spare, here is a 126 page thread on the subject .
Paying £2880 into pension when retired — MoneySavingExpert Forum