Pension for spouse

peeablo

Hi Newbie here and needing help. 

High tax earner who would like advice on how I can contribute to my spouses pension.
They are self employed (not eligible for UC because of me) and earn below £4k/year.
They don’t have a pension (SIPP) and I’d like to contribute to their pension and make this tax efficient.
How far back can I go and how much can I contribute?

Thank you all in advance and appreciate the support

Pabs

Sarahspangles

You can’t go back to previous tax years, but she could contribute up to her relevant UK earnings, or £3,600, whichever is the larger. What you actually do is contribute 80% of that amount to a personal pension or SIPP and the provider claims the other 20% tax relief. As it’s per tax year, you have until 5th April to set up and make your first contribution, and can then make your next contribution on 6th April. If her income is uncertain, you can certainly contribute 80% of the £3,600 in April and make up the difference later.

dunstonh

How far back can I go and how much can I contribute?

You can't go back.  It is this tax year only (and then future tax years)
You can contribute 100% of earnings or £3,600, whichever is higher (assuming sole trader is the status).

Contributions shown here are gross.  What is paid will be 80% of the gross contribution.

DRS1

If you want to do something for this tax year you should get a move on.

The most a non earner can contribute is £3600 pa (ie 2880 from her and a 25% top up from the tax man).

Is her self employed income more than £3600?

You can't go back

lisyloo

Their maximum allowance is the greater of their salary & £3600.

DRS1

You can contribute 100% of earnings or £3,600, whichever is lower  

I think @dunstonh means higher

DRS1

lisyloo said:

Their maximum allowance is the greater of their salary & £3600.
Carry forward is the last 3 tax years 2021/2022, 2022/2023, 2023/2024

I doubt if carry forward is relevant here - unless she was a high earner and had a pension in those years.

SacredStephan

Have you checked your and your spouse's State Pension forecast by logging into your Personal Tax Account?

Secret2ndAccount

Make a purchase of goods or services from your wife's self employment business to take her profits up to £6,800.
With profits above £6,725 she will receive a free year of NI credit. She can then pay (80% of) £6,800 into a SIPP.
Or make a bigger purchase and take her profits up to £11,000. Presumably she has transferred the £1,260 marriage allowance to you. So keep her profits below £11,310 and she will pay no tax. She can pay 80% of her profit into a SIPP, and receive the other 20% as a free top-up. 
Of course, if your wife sells cakes, she'd better make you a pretty nice cake. If she paints fingernails you might have some explaining to do if the tax-man makes enquiries.

Marcon

DRS1 said:

lisyloo said:

Their maximum allowance is the greater of their salary & £3600.
Carry forward is the last 3 tax years 2021/2022, 2022/2023, 2023/2024

I doubt if carry forward is relevant here - unless she was a high earner and had a pension in those years.

Wouldn't help. She needs to have sufficient earnings in the tax year in which carry forward related contributions are made ie £60K+++ and have been a member of a pension scheme (any UK registered pension scheme) in the years to which carry forward related.

OP - the maximum your wife can contribute is 80% of £4K (ie the profits of her self employed business), so £3,200, to which the pension provider will add basic rate tax relief - they will claim on her behalf and add it to her pension 'pot'. Easiest way is for you to give her the loot - no tax on gifts from spouse to spouse - and let her pay it in to her pension.

TimeToEatCake

SacredStephan said:

Have you checked your and your spouse's State Pension forecast by logging into your Personal Tax Account?

This - and if you have children under 12, is your spouse registered for child benefit (even if you don't receive payments) as they would receive NI credits for state pension purposes?

Also if under-40, could set up a LISA in addition to a SIPP and pay in £4,000 each tax year until age 50.  This would receive a 25% bonus and they would be able to withdraw tax free from age 60.