Can I start a SIPP?
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Is it OK to be employed by your husband's business to do admin work for a small salary of around the amounts being discussed, e.g. £10,000 p.a., so the company can pay my NI, and then I use that tax free income to put into a SIPP and get the 20% top up. I would have no other income.
You can do slightly better. If the company pays you a salary of just over £8k (precise amount, anyone?) you get credited with NI without actually having to pay any NICs. Then you contribute 80% of your salary to a pension. The company can make your income up to the desired £10k by paying you a bit of dividend - if you own shares - or, perhaps simpler, it could add some company money to your SIPP as an employer pension contribution. That's quite tax efficient because it saves 19% corporation tax for the business.Free the dunston one next time too.0 -
http://www.safeworkers.co.uk/employingyourspouse.html
may be worth a look.
http://taxaid.org.uk/guides/information/an-introduction-to-income-tax-national-insurance-and-tax-credits/national-insurance/national-insurance-for-employees-and-employers/national-insurance-thresholds
https://forums.moneysavingexpert.com/showthread.php?p=74881381#post74881381 see post 150 -
Doesn't your husband use an accountant for his business? They should be recommending the best way to go about this and utilizing employER pension contributions etc.0
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Thank you all again this has been very useful!0
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The HMRC site used to say the same!AnotherJoe wrote: »Just for the record, i googled that phrase and its NOT the Pensions Advice Service, its the Money Advice Service, a commercial website AFAICS
https://www.moneyadviceservice.org.uk/en/articles/tax-relief-on-pension-contributions#tax-relief-if-youre-a-non-taxpayer0 -
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You can do slightly better. If the company pays you a salary of just over £8k (precise amount, anyone?) you get credited with NI without actually having to pay any NICs. Then you contribute 80% of your salary to a pension. The company can make your income up to the desired £10k by paying you a bit of dividend - if you own shares - or, perhaps simpler, it could add some company money to your SIPP as an employer pension contribution. That's quite tax efficient because it saves 19% corporation tax for the business.
I have done some searches and cannot find information about the amount "(precise amount, anyone)" kidmugsy mentions for the company to pay me a small salary which means I get credited NI and not having to pay NICs myself.
Does anyone know what this amount is and how that works?0 -
See https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2018-to-2019
If you earn above the LEL (£116 pw this year) you get NI class 1 credits, which could towards the state pension and other stuff like JSA, bereavement benefits etc. But you don't pay NI until you earn above the PT which is a lot higher (£162 pw). Employer doesn't pay till the ST which is currently same as PT. So there's a band where you get credits but pay no NI.
Obviously if you become an employee for your husband you do actually need to do the work to that value (otherwise HMRC could consider it fraud) and employment legislation needs to be complied with (eg minimum wage, leave etc).
But if you do the work anyway you may as well get paid and get NI credits.0 -
The Pensions Advice Service says
If you do not pay Income Tax
You still automatically get tax relief at 20% on the first £2,880 you pay into a pension each tax year (6 April to 5 April) if both of the following apply to you:- you do not pay Income Tax, for example because you’re on a low income
- your pension provider claims tax relief for you at a rate of 20% (relief at source)
I was going to ask a question about this very subject today.
My only income is disability benefits, so well below the Personal Allowance.
As I'm over 55, it looks to me as if I can pay the £2880 into a SIPP, get the tax relief and then withdraw it, with the only cost to me being the management fees.
Surely that can't be right? If it is, it's the only light in an increasingly grim financial tunnel0 -
Yes it's right. Watch out for exit fees, different platforms will have different rules. Since you can do this every year until you are 75 you probably won't want to close the account0
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