Pension Recycling Rules and Gifting

WitsEnd101

I am about to start receiving benefits from my SIPP via UFPLS. I have no immediate need for the funds so am going to gift the money to my wife. 

Should my wife then decide to put some or all of the gifted monies into her SIPP and receive tax relief, would HMRC regard this as pension recycling?

NoMore

No as she’s not recycling her own tax free cash. It’s a check on an individual and their own contributions and their own tax free lump sum. 

Unless you both have taken lump sums and gifting each other money to add to pensions the HMRC might take a dim view of that. 

Marcon

Interesting exchange last month on just this topic: https://thebigtent.paraplannersassembly.co.uk/discussion/2500/tfc-recycling-to-fund-spouses-pension

zagfles

Your wife will be subject to the usual limits which any gift won't affect, ie the tax relief limit of 100% earnings/£3600 and the annual allowance. So eg if you gift £20k and she's earning £10k then she can only put £10k gross into a pension (£8k net). Don't think of it as her putting the gift into a pension, instead she's putting her earnings into a pension and using the gift for whatever she'd normally spend her earnings on. Money is fungible. 

WitsEnd101

I guess it makes sense. After I have gifted her the money it is up to her what she spends it on. Expensive bags and shoes or tax efficient low cost global equity tracker funds.