Pensions and maximising higher rate tax, salary sacrifice

[A900ss]

My situation is my wife will retire about about three years before I do and get a decent tax free lump sum as part of her pension payout. I am a higher rate player and can sacrifice £40,000 per year into my pension pot with savings of 40% tax +2% national insurance.

So my workings means I can sacrifice £40,000 gross of my salary into my pension, which after tax and national insurance is £23,200 net less wages per year.

So my thinking is to make the salary sacrifice and my wife to use her lump sum to cover the £23,200 per year for our joint budget expenses.

My theory is we could do that for three years until I retire. Therefore my pension pot will increase by £120,000, 3 years at £40k extra (Plus or minus the stock market changes) and the 'cost' to us would be £69,600, 3 years at £23,200, plus any investment benefits that capital would’ve given us.

I can then withdraw the £69,600 tax-free as part of my 25% allowance to give that back to my wife. Net incremental money of over £50k, £120k more in pension less the £69,600 less in savings.

Rules may change but as it stands, I think this works and I’m still under the £60k per annum max into pension and above minimum wage.

Many thanks.

Edited by A900ss on Wednesday 26th February 22:30