Stand-out Q – 3rd party contributions…

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FRI, 24 MAR 2017

Our Technical Hub provides access to a wide range of pension tax and trust technical resources. Every now and then we post tweets covering stand out questions from our technical content and our answers in case others might also find them helpful. As Twitter’s character restrictions only allow for the bare bones of the Q&A we link to the details here, too.

Question:

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?

Answer:

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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