Any IFAs out there?
By my reading of FA 2004, in order for a registered pension scheme to accept a contribution from an individual, the individual must:
- be UK resident, and
- be under 75, and
- have "relevant earnings" (of any amount > £0) chargeable to income tax (which might then be covered by the personal allowance).
So if a child is, say, entitled to a £1 share of the profits from a furnished holiday let, then a contribution of £3,600 can be made "by or on behalf of" that child. The pension fund can accumulate and grow tax-free until the child retires or dies.
Is that right?
Let's call the child Sam and assume he's currently 3.
Sam's parents have money to burn and want to make the best possible provision for Sam. He has a Child Trust Fund or Child ISA to which they make the maximum annual contribution (of £3,600?).
Does a £3,600 pension contribution make any sense?
If it does, what would happen to the pension fund if Sam died in his minority? and what would happens to it if he died in his majority but without dependents?