Hello.
This is my first post on AccountingWeb so apologies if this is the not right forum to ask the question.
I have a query re. my wife's pension contributions for the current tax year.
She was employed from April 2021 until recently as a Teacher and had a Total Taxable Pay to Date of approx. 18k
The Tax Paid to Date is £2.5k.
During this employment, she contributed £2k to TPS; The Employer Pension to Date is £44.5k
She has since then contributed £16k into a SIPP, to which a £4k tax relief has been added.
My questions are:
1] Are her relevant earnings to date £18k or £20k (18+2))?
2] Is her personal pension contribution to date £22k (2k + 16k+4k) or some other figure?
2] Is the additional allowance available to her for the current year £13.5k (40k - 4.5k -2k - 16k - 4k) or some other number?
3] She will be working from next month in our Ltd Co. Can the Ltd Co. make further contributions into her SIPP up to the limit of £40k regardless of her monthly salary?
Many thanks for any suggestions/thoughts you may have.
Replies (9)
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Assuming it’s a defined benefit scheme, actual employee contributions are - as far as I am aware - irrelevant in determining annual allowance use.
I doubt many accountants are expert in this; you need an IFA.
There might be some useful information on the Pensions Advisory Service website.
Agreed ... far too much info for a public forum (and yet not nearly enough for anyone to provide a detailed analysis of individual options). Pensions Adviser needed.
What I can confirm is that TPS (Teachers' Pensions scheme) is an (extremely generous) public sector DB scheme ... and so quite separate from any calcs and/or investments relating to the personal SIPP (which will be a DC scheme).
Annual allowance and pension tax relief have totally separate rules and can be complex, particularly around Defined Benefit schemes.
Pru have some comprehensive guides, this is a good place to start,
https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/inte...
Get her to ask her own questions.
Women who get their husbands to do this really annoy me. Men who allow them too annoy me just as much. Pushes equality rights back by about 50 years.
Absolutely agree, but sometimes in a relationship one partner is more able to deal with the finances and the other better at other tasks.
The question relates to a teacher, so it may be reasonable to assume the partner is more financially aware... those that can, do, those that can't teach!
We have a division of labour in our household , the wife does all the cooking, cleaning, shopping etc and I do all the important stuff !
Or so you think. Having someone else doing all those ‘non-important’ things enables you to have the time to do the other stuff.
Can the Ltd Co. make further contributions into her SIPP up to the limit of £40,000 regardless of her monthly salary?
Depends on the circumstances and how much “up to” works out as. If it’s £1 no problem; £35,000 possible issue.
"She will be working from next month in our Ltd Co. Can the Ltd Co. make further contributions into her SIPP up to the limit of £40k regardless of her monthly salary? "
Will she be doing work such that, if she were not your wife, you would consider paying £40k into a pension of her behalf? If not, you might find HMRC querying whether the payment was W&E for the purpose of the company's trade.