Dividing the pension and tax relief

[Lester]

Just a hypothetical question. Lets assume i have £100,000 in my pension pot and this is to be spit 50/50, thus £50k each. If I were to offset ALL my pension in exchange for the equivalent equity from the sale of the family home, leaving me with no pension but £50k extra in cash, could i then reinvest this £50k into my pension AND then claim the 40% tax relief? Thus my pension would then be worth (50 x 1.4) £70k. As opposed to not receiving the extra equity from the house but having £50k in my pension. Has anybody done this?

 

[Jumper85]

Hi Teddy, I'm not entirely sure of the question here. If your pension pot is split, ie your ex is awarded 50%, your pension provider will simply transfer 50% of the value of your pension into a separate pension in your ex's name. Obviously these pensions can't be realised in terms of value until retirement age is achieved. No money is taken out of the pension pots. If you're asking whether from the sale of a property, can you investment £50k into your pension, you have £60,000 annual limit that allows you to invest into a pension. I don't believe you can achieve any tax relief if you're paying the sale proceeds of a property into your pension.

 

[Roblox]

Yeah you don't want to split a pension if possible. It's too messy and costly. Are you considering transferring your pension in entirety to your ex.

If you did have 50k cash from a sale I can't see any issue with making a pension contribution. As mentioned there are annual allowance limits but there's a 3 year carry back so unlikely to be an issue unless a high earner and have made high contributions precviously. You also wouldn't have to make all the contributions in one tax year.

If you made a personal contribution you'd get the basic tax relief at source and then as you mention potential further relief depending on your tax rate.

If that is a good idea though I'm not sure. Annuities seem to have picked up a bit more recently at least.

 

[Liverpool07]

Just a hypothetical question. Lets assume i have £100,000 in my pension pot and this is to be spit 50/50, thus £50k each. If I were to offset ALL my pension in exchange for the equivalent equity from the sale of the family home, leaving me with no pension but £50k extra in cash, could i then reinvest this £50k into my pension AND then claim the 40% tax relief? Thus my pension would then be worth (50 x 1.4) £70k. As opposed to not receiving the extra equity from the house but having £50k in my pension. Has anybody done this?

You can only claim tax relief on what your earnings are. So is your salary £50k?