Passing 'Surplus To Requirements' Pension To Grandchildren

loiner

https://forums.moneysavingexpert.com/discussion/comment/81967081#Comment_81967081

Great idea. Just had a quick look at this. One question - does the taxman's contribution go straight into the pension or does it offset the contributor's tax bill?

loiner

https://forums.moneysavingexpert.com/discussion/comment/81966891#Comment_81966891

Yes, I do keep thinking I'm 'cutting off my nose to spite my face' as we used to say, by taking money from my father and increasing my own IHT liability. I am conscious that my wife and I might need money for care costs in the future so I'm not doing anything too drastic at the moment, although we both currently appear to be in reasonable health.

re the insurance to pay off IHT, I'm hoping that with astute planning I can keep our estate value within the £650K threshold so would be reluctant to take out insurance at the moment.

Marcon

https://forums.moneysavingexpert.com/discussion/comment/81968036#Comment_81968036

Straight into the pension. Your grandchildren would get the benefit of a tax top up despite being non-taxpayers and if your father funds the contributions, it would reduce his estate for IHT purposes where the contributions are gifts out of surplus income.

For the avoidance of doubt, the maximum (gross) pension contribution each child could receive in a tax year is £3,600 (£2,880 + the tax top up at basic rate), so beware if their parents - or other friends/relations - are doing anything in respect of the children's pensions.

loiner

https://forums.moneysavingexpert.com/discussion/comment/81968102#Comment_81968102

Thanks a lot

dharm999

As a further option, your father could contribute in to a pension for you and your siblings, if any. I’m assuming that you haven’t reached the maximum amount allowed to be paid in to a pension, of £60k, and you and siblings, if applicable, have enough pensionable earnings to be able to get the tax relief on the contributions. You would get tax relief at the highest rate of tax paid by yourself and siblings.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81968050#Comment_81968050

Assuming you own your home worth in excess of £350k, you and your wife have £1 million in NRBs not £650k, so perhaps you don't have as much of a personal IHT exposure as you think?