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  1. #1

    Nervous Newbie

    nefarious has no reputation


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    Question Question from a noobie pensioner

    Hi. I'm sure this will have been answered somewhere but my attempts at searching tend to just throw up stuff about pension contributions etc so here goes...

    I have recently been made redundant after a VERY long time at a single company. As I am over 50, I qualified to take my pension immediately, which I am taking. It's not really enough to provide the lifestyle I wish but does provide enough to subsist.

    What I want to do now is start contracting with a view to providing me and my wife (Company secretary?) a small salary and contribute to a SIPP pension for each of us. I have a friend who is doing the same quite effectively but what I really want to know is, in this scenario, is it worth the bother of trying to stay outside of IR35 if the salary is low and the pension already uses up the basic tax allowances?

    Thanks in advance...

  2. #2

    Fingers like lightning

    BigRed is a permanent contractor


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    Beware of pension recycling rules, look them up or seek financial advice, you may get some free from your old company as part of the redundancy. An ISA may be better than a SIPP.

    You are saying that your tax free income will be covered by the pension. This means all additional salary will be taxed, doesn't this make it more important to stay outside IR35?

    What is your wife's situation regarding NICs?

  3. #3

    Nervous Newbie

    nefarious has no reputation


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    Quote Originally Posted by BigRed View Post
    Beware of pension recycling rules, look them up or seek financial advice, you may get some free from your old company as part of the redundancy. An ISA may be better than a SIPP.

    You are saying that your tax free income will be covered by the pension. This means all additional salary will be taxed, doesn't this make it more important to stay outside IR35?

    What is your wife's situation regarding NICs?
    The financial advice stretched only as far as what redundancy package to take but as I am only taking my defined benefits pension, I am not regarded as having drawn any pension contributions down yet so I am free to contribute the remaining amount of my lifetime allowance - about .25M. My wife, in contrast, only works part-time so she has a lot of headroom to fill. As you also suggest, contributing to her NICs will be a benefit too

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