Is this above board?
Discussion
My wife is no longer working and has some defined contribution pensions which are currently deferred.
I am working and paying into a pension, my marginal tax rate is 40%.
We are both over 55.
Is there anything to stop her drawing £500 (for example) a month out of her pension pot (tax free if we stay within her single persons allowance) and me putting £500 more a month into mine. Our combined monthly income is unchanged and our combined pension pot benefits to the value of 40% of £500. The tax man loses 40% of £500.
I don't care if the tax man didn't intend for people to do this and would be upset but would we be breaking any rules?
I am working and paying into a pension, my marginal tax rate is 40%.
We are both over 55.
Is there anything to stop her drawing £500 (for example) a month out of her pension pot (tax free if we stay within her single persons allowance) and me putting £500 more a month into mine. Our combined monthly income is unchanged and our combined pension pot benefits to the value of 40% of £500. The tax man loses 40% of £500.
I don't care if the tax man didn't intend for people to do this and would be upset but would we be breaking any rules?
IJWS15 said:
My wife is no longer working and has some defined contribution pensions which are currently deferred.
I am working and paying into a pension, my marginal tax rate is 40%.
We are both over 55.
Is there anything to stop her drawing £500 (for example) a month out of her pension pot (tax free if we stay within her single persons allowance) and me putting £500 more a month into mine. Our combined monthly income is unchanged and our combined pension pot benefits to the value of 40% of £500. The tax man loses 40% of £500.
I don't care if the tax man didn't intend for people to do this and would be upset but would we be breaking any rules?
Absolutely nothing whatsoever.I am working and paying into a pension, my marginal tax rate is 40%.
We are both over 55.
Is there anything to stop her drawing £500 (for example) a month out of her pension pot (tax free if we stay within her single persons allowance) and me putting £500 more a month into mine. Our combined monthly income is unchanged and our combined pension pot benefits to the value of 40% of £500. The tax man loses 40% of £500.
I don't care if the tax man didn't intend for people to do this and would be upset but would we be breaking any rules?
You and your wife, although married, are treated as individuals when it come to pension contributions and withdrawals.
So whilst there are strict rules on recycling withdrawals from your own pension scheme(s) this is not what you are doing.
You are simply increasing your contributions. The fact your wife is taking withdrawals at the same level as you are increasing your gross contributions is neither here or there.
I hope this helps.
If you expect to still be a high rate tax payer in retirement and your wife wont be then won’t gaining access to this extra pension be at 40% tax as opposed to your wife’s lower rate? I can’t think through whether you’re still better off doing it this way or neutral.
Presumably maximising your wife’s draw down for tax efficiency is worth doing regardless and might be better to maximise this with lower charges in tax free savings if you’re likely to stay a high rate tax payer. You dont get the 40% added but you don’t lose 40% when you take it out.
Presumably maximising your wife’s draw down for tax efficiency is worth doing regardless and might be better to maximise this with lower charges in tax free savings if you’re likely to stay a high rate tax payer. You dont get the 40% added but you don’t lose 40% when you take it out.
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