SIPP and Carers Allowance

Markdavid1962

Just a question, as I am pondering this.

So the situation is, my wife (age 55) is not retired yet but receives carers allowance for our adult son, she will get a state pension from the child benefit years and us buying National Insurance contributions for a  number of years. She has not worked in the UK.

I know with a SIPP we can pay in £2880 and the Government adds £720 per year for people who dont work (unemployed)

So the question is does that Carers allowance payment (which would be taxed if she worked) position her as an employed person and can we pay more in and get more than the £720 per year.

ob1kinobi

Others may assist on your tax question but are you already aware that if your wife receives carers allowance she should also be eligible for N.I. contributions as a carer (Carers Credit).

www. gov . uk  / carers-credit

If she isn't already receiving this I believe that it needs to be applied for.

Look up national insurance credits for parents and carers cf411a

Sorry I couldn't post a link.

If she qualifies and is expected to be caring long term then it may reduce your costs if paying for gap years in N.I. contributions.

SacredStephan

If your earnings from employment or self-employment or both are under £3600 in a tax year, then you can contribute a maximum £2880 net (£3600 gross) to a SIPP in the same tax year.

Carers Allowance is potentially taxable but is not earnings.

Albermarle

So the question is does that Carers allowance payment (which would be taxed if she worked) position her as an employed person and can we pay more in and get more than the £720 per year.

No, it is the same as with pension income. It is potentially taxable but does not count when making pension contributions.