Tax efficient drawdown method

Secret2ndAccount

Quite right. Apologies. The numbers were so neat and tidy I couldn't help myself. Should have been more careful. Particularly as I do this myself every year (and I get it right).

OP, it doesn't change the principal here - your wife should still pay her salary into her pension - just 80% of it, not all of it.

ian16527

236dave said:

Ive discovered my wife earns close to £4k/yr in her part time job.
I think this means she can contribute upto her earnings level and get tax relief?

If we opened a drawdown pension in her name and I contributed an amount equal to her salary, I beileve it would recieve basic rate tax refief.

FYI - My wife is 57 yrs old, but if we left the pension contributions in the scheme, then when she reaches 67 and gets the full state pension, it would use all her personal tax allaowance (I'm assuming with the triple lock state pension growth, it will catch up with the personal tax allowance amount).  So she would end up paying back the tax relief when drawing down her pension.

What if the contributitions where drawn out in the following tax year,
ie, contribute £3200 net grossed upto £4000 with tax relief in say March.
Then withdrew most of it in April (say £3900 withdrawn), leaving a £100 in.

And did the above for each year until she reached state pension age.

Note: she has mentioned that it would be nice to be able to give any profit from tax relief to charity,  ie essentially HMRC would be paying for our charity contributions.

If you want to retire next year, you could fund a SIPP for your wife and drawdown some of this every year to reduce your tax burden.