Q for Eric Mc OR Ginge R

[dingg]

quick question if I may :-

my Son works at sea - merchant seaman , so doesn't pay any tax whatsoever and hasn't for the past 10 years or so , works about 3 months on 3 months off. Doesn't pay any national insurance at all.

so the q is can he set up a private pension pot for himself and will he receive the extra 20% to his fund from the guberment , even though he pays no tax?

Its time he thought about the future and I need to nag him into doing something soon

thanks in advance

[Eric Mc]

I'm pretty certain that for the UK government to subside a persons pension pot, the individual should be paying UK tax.

[Ozzie Osmond]

• SIPPs are available to anyone aged under 75 who is resident in the UK for tax purposes.

Sounds like a "no" to me..

[oop north]

Anyone, whether employed or not, can get up to £3,600 into a pension with the gift contributing 20% of that - no earnings history is required for that. When I say anyone, I am not sure what the terms are with respect to domicile, residence and other tax terminology I don't quite understand

Came in under the Stakeholder pension provisions over 10 years ago (I think)

[Ozzie Osmond]

".....resident in the UK for tax purposes."

[Jockman]

I started a pension for my 1 month old grandson last year. He receives basic rate tax relief on it despite having no earnings, let alone paying tax. He is permitted to make £2,880 contributions pa and gets £720 pa from the govt.

Your son does pay tax, just not income tax. Unless he has an exemption on VAT, IPT, Stamp Duty, VED etc....

[pacoryan]

dingg said:

quick question if I may :-

my Son works at sea - merchant seaman , so doesn't pay any tax whatsoever and hasn't for the past 10 years or so , works about 3 months on 3 months off. Doesn't pay any national insurance at all.

so the q is can he set up a private pension pot for himself and will he receive the extra 20% to his fund from the guberment , even though he pays no tax?

Its time he thought about the future and I need to nag him into doing something soon

thanks in advance

Where does he live in his 3 months off? I'm guessing he is UK resident and eligible for the Seafarer's Earnings Deduction to get relief on his earnings? More Eric's area than mine frankly.

If UK resident he should be able to contribute £3,600 gross including 20% relief. Not much, but free money is free money.

[dingg]

he is resident in the uk for tax purposes , but as he is a Seaman and works outside of the uk on foreign going ships for half the year doesn't have to pay any tax. Thats the rules .

IF he can get any pension payment he makes , made up with another 20% from the gov. even though he's not liable to pay any income tax on his earnings then I could persuede him to kick off a fund I think.

Still not 100% clear for me from the answers so far what the situation will be, but keep them coming chaps

tia

[dingg]

thanks paco ^^ thats cleared things up for me

so stick in £2880 pa is the way forward.

Edited by dingg on Thursday 9th July 16:31

Edited by dingg on Thursday 9th July 16:41

[Ozzie Osmond]

dingg said:

he is resident in the uk for tax purposes, but as he is a Seaman and works outside of the uk on foreign going ships for half the year doesn't have to pay any tax. Thats the rules.

Excellent result! [So long as he's in UK when not working.]

[megaphone]

dingg said:

he is resident in the uk for tax purposes , but as he is a Seaman and works outside of the uk on foreign going ships for half the year doesn't have to pay any tax. Thats the rules .

The rule is that he needs to be working outside of UK waters for 183 days of the year. His tax rate is then zero. He should be filling out the appropriate forms and submitting them to HMRC every year. He should also be filling out a self assement.

https://www.gov.uk/seafarers-earnings-deduction-ta...

[Popeyed]

As he is a UK resident and assessed for tax in the UK, and is fulfilling the criteria for the seafarers 100% income tax deduction he can pay into a private pension in the UK with tax relief.

I know, I've done it.

[dingg]

Popeyed said:

As he is a UK resident and assessed for tax in the UK, and is fulfilling the criteria for the seafarers 100% income tax deduction he can pay into a private pension in the UK with tax relief.

I know, I've done it.

Even better than I thought then!

[megaphone]

dingg said:

Popeyed said:

As he is a UK resident and assessed for tax in the UK, and is fulfilling the criteria for the seafarers 100% income tax deduction he can pay into a private pension in the UK with tax relief.

I know, I've done it.

Even better than I thought then!

But is he assessed for tax? Is he doing a self assessment each year? See my post above. If he's not then he needs to think what might happen if HMRC start asking questions re how he's been living for the past 10 years.

[dingg]

he is all within the seafarers rules , someone (seatax) looks after his tax affairs and all is above board.

[Ginge R]

Question well and truly answered.

The only thing I would add is that contributing to the pension wrapper 'gross' (ie, without attempting to claim tax relief) *can* be advantageous if you're engaged in some aspects of financial estate/ planning. IHT409 refers, and without advice, at your peril though!