Stand-out Q – 3rd party contributions…
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High earning spouse decides to fund her husband’s pension, he being a basic rate tax-payer. How much can she pay and who gets the tax relief?
There are two issues to perhaps consider; one is the tax relief and the other is the annual allowance. To enjoy full tax relief on the contribution, the husband would have to have relevant UK earnings at least equal to the gross contribution made by his wife, as it is he who would receive the relief and not the payee. Additionally, the contribution counts towards the individual’s pension input amount, and therefore he would have to have sufficient annual allowance to cover the contribution, otherwise he would have an annual allowance charge to pay.
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