Unbalanced DC Pot Values Between Couple

german_keeper

I suspect "employing" your wife as your chauffeur might be of more interest to HMRC.

Pat38493

RogerPensionGuy said:

sheslookinhot said:

ader42 said:

You could even use some of your 25% tax free amount and put it in her DC to get Tax Relief on it.

Would that be acceptable to HMRC ?

I cannot see this as any problem. 

So HMRC won't get involved anywhere along doing such stuff.

HMRC has pension recycling guidelines that you should review before putting tax free cash back into a DC pension.  That said, I’m not sure they apply if the tax free cash came from your pension and you put it into your wife’s, but you should double check the guidelines to be sure (there is also a list of criteria that they consider).

One of the criteria is that it has to be pre-planned and intentional, which I suspect is pretty hard to prove by HMRC.

Discussions on this forum have also said that nobody on here has ever heard of HMRC actively enforcing this - at least until today.

Also as I understand it, your wife would have to have enough earnings to cover the full amounts being paid into the pension in that tax year.  If she is still working, keep in mind that taking UFPLS will trigger MPAA which is now 10K.

Linton

Pat38493 said:

RogerPensionGuy said:

sheslookinhot said:

ader42 said:

You could even use some of your 25% tax free amount and put it in her DC to get Tax Relief on it.

Would that be acceptable to HMRC ?

I cannot see this as any problem. 

So HMRC won't get involved anywhere along doing such stuff.

HMRC has pension recycling guidelines that you should review before putting tax free cash back into a DC pension.  That said, I’m not sure they apply if the tax free cash came from your pension and you put it into your wife’s, but you should double check the guidelines to be sure (there is also a list of criteria that they consider).

One of the criteria is that it has to be pre-planned and intentional, which I suspect is pretty hard to prove by HMRC.

Discussions on this forum have also said that nobody on here has ever heard of HMRC actively enforcing this - at least until today.

Also as I understand it, your wife would have to have enough earnings to cover the full amounts being paid into the pension in that tax year.  If she is still working, keep in mind that taking UFPLS will trigger MPAA which is now 10K.

If you put money you have received tax-free into someone else's pension that is not recycling.  It is the same as if you gave them the money and they contributed it to their pension.  However the contribution will still be constrained by their earnings limit and £60K pension allowance.  Also  they would get any tax relief due.

AlanP_2

sheslookinhot said:

ader42 said:

You could even use some of your 25% tax free amount and put it in her DC to get Tax Relief on it.

Would that be acceptable to HMRC ?

We've done it for a couple of years. 

Withdraw from my DC at 15% effective tax rate and increase OHs contributions at 40% tax relief.

Anonymous101

Linton said:

Pat38493 said:

RogerPensionGuy said:

sheslookinhot said:

ader42 said:

You could even use some of your 25% tax free amount and put it in her DC to get Tax Relief on it.

Would that be acceptable to HMRC ?

I cannot see this as any problem. 

So HMRC won't get involved anywhere along doing such stuff.

HMRC has pension recycling guidelines that you should review before putting tax free cash back into a DC pension.  That said, I’m not sure they apply if the tax free cash came from your pension and you put it into your wife’s, but you should double check the guidelines to be sure (there is also a list of criteria that they consider).

One of the criteria is that it has to be pre-planned and intentional, which I suspect is pretty hard to prove by HMRC.

Discussions on this forum have also said that nobody on here has ever heard of HMRC actively enforcing this - at least until today.

Also as I understand it, your wife would have to have enough earnings to cover the full amounts being paid into the pension in that tax year.  If she is still working, keep in mind that taking UFPLS will trigger MPAA which is now 10K.

If you put money you have received tax-free into someone else's pension that is not recycling.  It is the same as if you gave them the money and they contributed it to their pension.  However the contribution will still be constrained by their earnings limit and £60K pension allowance.  Also  they would get any tax relief due.

Unless you both work for a limited company where one partner is giving directors loans and the other is receiving large company pension contributions?

Mrs. Anon and I have skewed pensions, hers mostly DB and mine much larger value DC. I'm thinking of ways to address this to take advantage of tax thresholds 55-65. One of which is to start a business where we both work and Mrs' Anon receive much of the profit into her pension.

Also thinking of mitigating the risk of future policy changes around ISA limits, Pension contribution and LTA reintroduction etc etc. I think as even balance as possible between partners is advisable.

ader42

german_keeper said:

I suspect "employing" your wife as your chauffeur might be of more interest to HMRC.

No different to the MPs that employ their spouses as admin assistants imho.

Linton

Anonymous101 said:

Linton said:

Pat38493 said:

RogerPensionGuy said:

sheslookinhot said:

ader42 said:

You could even use some of your 25% tax free amount and put it in her DC to get Tax Relief on it.

Would that be acceptable to HMRC ?

I cannot see this as any problem. 

So HMRC won't get involved anywhere along doing such stuff.

HMRC has pension recycling guidelines that you should review before putting tax free cash back into a DC pension.  That said, I’m not sure they apply if the tax free cash came from your pension and you put it into your wife’s, but you should double check the guidelines to be sure (there is also a list of criteria that they consider).

One of the criteria is that it has to be pre-planned and intentional, which I suspect is pretty hard to prove by HMRC.

Discussions on this forum have also said that nobody on here has ever heard of HMRC actively enforcing this - at least until today.

Also as I understand it, your wife would have to have enough earnings to cover the full amounts being paid into the pension in that tax year.  If she is still working, keep in mind that taking UFPLS will trigger MPAA which is now 10K.

If you put money you have received tax-free into someone else's pension that is not recycling.  It is the same as if you gave them the money and they contributed it to their pension.  However the contribution will still be constrained by their earnings limit and £60K pension allowance.  Also  they would get any tax relief due.

Unless you both work for a limited company where one partner is giving directors loans and the other is receiving large company pension contributions?

Mrs. Anon and I have skewed pensions, hers mostly DB and mine much larger value DC. I'm thinking of ways to address this to take advantage of tax thresholds 55-65. One of which is to start a business where we both work and Mrs' Anon receive much of the profit into her pension.

Also thinking of mitigating the risk of future policy changes around ISA limits, Pension contribution and LTA reintroduction etc etc. I think as even balance as possible between partners is advisable.

Only personal pension contributions are limited by earned income.   If Mrs Anon is employed by a company the company could make a pension contribution limited by the £60K rules.

 I assume  this is not a real company actually doing something and making profits but rather just a wheeze to get round the pension limits?  If so I suspect you are trying to be too clever.  However private companies and pensions aren't my field.   There may be some requirement that remuneration is appropriate for the role.  Others  may be able to comment. 

Anonymous101

Linton said:

Anonymous101 said:

Linton said:

Pat38493 said:

RogerPensionGuy said:

sheslookinhot said:

ader42 said:

You could even use some of your 25% tax free amount and put it in her DC to get Tax Relief on it.

Would that be acceptable to HMRC ?

I cannot see this as any problem. 

So HMRC won't get involved anywhere along doing such stuff.

HMRC has pension recycling guidelines that you should review before putting tax free cash back into a DC pension.  That said, I’m not sure they apply if the tax free cash came from your pension and you put it into your wife’s, but you should double check the guidelines to be sure (there is also a list of criteria that they consider).

One of the criteria is that it has to be pre-planned and intentional, which I suspect is pretty hard to prove by HMRC.

Discussions on this forum have also said that nobody on here has ever heard of HMRC actively enforcing this - at least until today.

Also as I understand it, your wife would have to have enough earnings to cover the full amounts being paid into the pension in that tax year.  If she is still working, keep in mind that taking UFPLS will trigger MPAA which is now 10K.

If you put money you have received tax-free into someone else's pension that is not recycling.  It is the same as if you gave them the money and they contributed it to their pension.  However the contribution will still be constrained by their earnings limit and £60K pension allowance.  Also  they would get any tax relief due.

Unless you both work for a limited company where one partner is giving directors loans and the other is receiving large company pension contributions?

Mrs. Anon and I have skewed pensions, hers mostly DB and mine much larger value DC. I'm thinking of ways to address this to take advantage of tax thresholds 55-65. One of which is to start a business where we both work and Mrs' Anon receive much of the profit into her pension.

Also thinking of mitigating the risk of future policy changes around ISA limits, Pension contribution and LTA reintroduction etc etc. I think as even balance as possible between partners is advisable.

Only personal pension contributions are limited by earned income.   If Mrs Anon is employed by a company the company could make a pension contribution limited by the £60K rules.

 I assume  this is not a real company actually doing something and making profits but rather just a wheeze to get round the pension limits?  If so I suspect you are trying to be too clever.  However private companies and pensions aren't my field.   There may be some requirement that remuneration is appropriate for the role.  Others  may be able to comment. 

Thanks, that's how I understood it.

Well I'm just running the thought experiment. In theory I could go self employed / freelance and at a point in time wouldn't necessarily need to be drawing an income from that company. So it wouldn't be a wheeze entirely, it would have real customers and be making a profit. Although a large part of the purpose of it would be to even up our finances. I suppose I'm thinking through the extreme's of that arrangement.

Qyburn

Thanks, I'm not going to do anything too whacky. Neither of us are earning now but I guess theoretically I could draw £3,600 extra from my SIPP (£2,880 after tax), and she pays that into hers where it changes back to £3,600. Theres a bit more complication when accounting for tax free remaining in both pots which i haven't yet got straight in my head but I think that probably cancels out as well.

Qyburn

I think might have that straight. Taken as uncyrstalised I take out £3,388.24 to give £2,880 after tax. She ends up with £3,600 added to her pot. I've used some of my tax-free, and she's gained some tax-free.