Can I withdraw tax free cash from my pension and transfer to my wife's pension?

JohnnyFlame

https://forums.moneysavingexpert.com/discussion/comment/81871946#Comment_81871946

Many thanks for summarising. On the last point about Carry Forward, my wife cannot do this because she will not have used the maximum £60k allowance this year. Is that correct?

So assuming she has earned £30k this year and contributed £3k to her pension, we can only contribute a total of £27k for this year (including tax relief) and nothing for previous years?

Aretnap

It is worth adding that if she doesn't intend to work beyond March them you want to do this reasonably quickly, as the limit of £25K/30K/whatever it works out at applies to contributions she makes in this tax year, ie before 6th April.

Next tax year she will be limited to contributing £2880 net/£3600 gross, unless she continues in some form of employment.

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/comment/81872004#Comment_81872004

Yes.

Annual Allowance can only utilise carry forward if the full current year AA (£60k) has been utilised first.

However, anyone with earned income less than £60k can rarely(*) utilise the current year AA as their personal pension contributions are capped at whatever their earned income is.

(*) Employer contributions can exceed the earned income cap but still constrained by AA so that is the rare case where an individual can have earned income less than £60k but might still utilise available carry forward.

JohnnyFlame

I just want to say thank you for all your feedback. This is an excellent forum. I've learnt so much today..

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81872006#Comment_81872006

As you may have worked out, she will not know her exact income for tax year 25/26, before she has to make the planned contribution.

So she can either make a slightly smaller contribution to be on the safe side, or if she overestimates and gets a bit more tax relief than she is entitled to, she just needs to inform the provider asap, and they will refund the excess amount ( and give HMRC back the appropriate tax relief.)

Grumpy_chap

Although, as it is only earned income that has to be considered, she might have a very accurate assessment of what her income will be once February payroll has been run.

At that point there will be 11 months of actual data and only the salary due for March to consider. For many people, that is a standard and non-varying figure each month. Obviously not the case if hours worked vary, or there is commission based payment, or bonus or such like.

The other consideration will be the adjustment down to allow for workplace pension etc.

LHW99

https://forums.moneysavingexpert.com/discussion/comment/81872006#Comment_81872006

You could also conribute £2880 to this / another pension each tax year, and get tax relief up to age 75