Using spouse's tax allowances

ludovic_2

I am looking to retire next year at 60 and am fortunate enough to have a pension pot of a little over £1M. This should provide an income of about £50k on a draw-down basis. That would put me in the higher rate tax bracket.

My wife is younger than me and will retire at 55 in 4 years time. She has little in the way of pension provision or savings, certainly not enough to use her her personal allowance let alone her basic rate tranche.

I'm thinking of taking the maximum tax-free cash sum and giving it to my wife... As I see it that would reduce my income to below the higher-rate threshold and give her the opportunity to make some provision for a post-retirement income in her own right.

Any thoughts on the basic concept and, if you think it would work in achieving a better tax outcome, how would you recommend I go about it, e.g. putting it into a personal pension for her or investing it while moving it gradually into ISAs?

This is my first question on MSE, though I've read quite a lot, so be gentle with me!

Ludo

dunstonh

She has little in the way of pension provision or savings

Bit late now but that indicates poor retirement planning. You should have been paying into a pension in your wife's name each year to build up an income that at least uses up the personal allowance. Still not too late as she has an annual limit she can use each and every year.

Any thoughts on the basic concept and, if you think it would work in achieving a better tax outcome, how would you recommend I go about it, e.g. putting it into a personal pension for her or investing it while moving it gradually into ISAs?

Not an answer that can really be given without knowing a lot more facts. Pensions, ISAs, bonds (offshore/onshore), unit trusts, NS&I could all apply depending on what you are looking to achieve in future. Almost certainly a combination of these things.