Paying into wife's SIPP

frankfish

Afternoon

Looking for some advice,

Planning to start taking some DB pensions next year and will be able to get around £50K as a tax free lump sum.
Also have a DC pot, with around £280K.

Mrs Fish has a couple of small DB Pensions that will pay out around £5k pa, currently not working or started taking her pensions.

Initial plan was to invest the £50k to provide some income along with my DC pot until SP kicks in, however as most of the assets are in my name , can I gift the £50k to my wife to reduce my tax liability ?

Are we able to put any into my wife's SIPP - I seen the max amount if not working is £2,880, but is this the max to get tax relief or the total she can pay in any year ?

Thanks

Dazed_and_C0nfused

frankfish said:

Afternoon

Looking for some advice,

Planning to start taking some DB pensions next year and will be able to get around £50K as a tax free lump sum.
Also have a DC pot, with around £280K.

Mrs Fish has a couple of small DB Pensions that will pay out around £5k pa, currently not working or started taking her pensions.

Initial plan was to invest the £50k to provide some income along with my DC pot until SP kicks in, however as most of the assets are in my name , can I gift the £50k to my wife to reduce my tax liability ?

Are we able to put any into my wife's SIPP - I seen the max amount if not working is £2,880, but is this the max to get tax relief or the total she can pay in any year ?

Thanks

How would giving your wife the £50k TFLS reduce your tax liability?  Or do you mean not add to your existing tax liability?

As a non earner your wife can add £2,880 each tax year and get £720 in basic rate tax relief added to her net contributions. Whether she pays any tax or not is irrelevant.

And no, in her current situations, she cannot use carry forward of unused annual allowance. 

Nor can she turn back time and make contributions in a tax year that has already ended.

Presume you realise if you give her £50k she could invest it wisely or add some to a pension.  But she could also put it all on the 3.30 at Uttoxeter.

Isthisforreal99

Do you mean gifting the £50k to your wife so the income generated is your wifes? If so, assuming you have maxed out ISA and your own personal savings allowance it's a good idea.

Wife's SIPP - £2880 is the max you can get tax relief on and you will find difficulty finding a provider who accepts non-relievable contributions. Is there much point if no tax relief?

May also need to read up on the lump sum recycling rules, not sure who it works for someone else's pension.

Cobbler_tone

frankfish said:

1. can I gift the £50k to my wife 

2. Are we able to put any into my wife's SIPP - I seen the max amount if not working is £2,880, but is this the max to get tax relief 

1. Yes,nice gift.

2. Correct, that is the max.

Lots left over for nice handbags, or an ISA, Premium bonds or some regular saver accounts, or highest rate saving account you can find. If you haven't already, you can also have some of her tax allowance.

dunstonh

 can I gift the £50k to my wife to reduce my tax liability ?

There is no tax on capital (cash) shifting between spouses.  What your wife does with the £50k will dictate if there is any tax for her or not.

Are we able to put any into my wife's SIPP - I seen the max amount if not working is £2,880, but is this the max to get tax relief or the total she can pay in any year ?

£3600 is the maximum for a non-earner to get tax relief.   £2880 is the amount after tax relief. Not before.

af1963

Done the calculations about whether taking the lump sum is better than having a higher regular pension ?  ( or is it a lump sum that you are forced to take ?)

Worth also looking at whether your wife can get money out of her pension(s) while she has no other taxable income - drawdowns from her SIPP rather than from your DC, or possibly by taking her DB early.  Depends on how the figures work out for you, but she could get some pension fully tax free for a few years.  More tax efficient to have two people taking smaller incomes rather than one on a single larger income.

frankfish

Thanks for all the comments

The intention is to try and make the most of our tax allowances to try and reduce the amount of tax we pay.
The options suggested have given me food for thought.

In addition to the £50K also the potential to take the 25% TFLS from my DC and to increase my wife's investments.
She is not one for designer handbags or horses, but she does like to go and see Sting !,so might need to keep an eye on things !

Dazed_and_C0nfused

frankfish said:

Thanks for all the comments

The intention is to try and make the most of our tax allowances to try and reduce the amount of tax we pay.
The options suggested have given me food for thought.

In addition to the £50K also the potential to take the 25% TFLS from my DC and to increase my wife's investments.
She is not one for designer handbags or horses, but she does like to go and see Sting !,so might need to keep an eye on things !

Well it will be front row seats with a meet and greet package and goody bag from now on 😉

Albermarle

Are we able to put any into my wife's SIPP - I seen the max amount if not working is £2,880, but is this the max to get tax relief or the total she can pay in any year ?

It is the max amount she can get tax relief on .
However there is no point adding more without tax relief, as withdrawals from a pension are potentially taxable .
If she wants to invest more than £2880, then a Stocks and shares ISA is the best route. Limited to £20K per tax year, but any growth is tax free.