This week, we’re covering redundancy sacrifice into a pension, cash ISA allowance reductions, evening up finances between spouses and much more - it’s another MM Q&A!

Shownotes: https://meaningfulmoney.tv/QA21 

 

00:55  Question 1

Dear Pete & Roger,

My question regards Redundancy Sacrifice into a personal pension (SIPP).

In tax year 2024/25, I had "relevant UK earnings" of £44,000.

I contributed the full amount (inclusive of tax relief) to my SIPP; as a Personal Contribution this used up 100% of my Annual Allowance.

In addition, I received a £20,000 tax-free lump sum Redundancy Payment.

Because it was below £30,000, it did not constitute "relevant UK earnings", as such, I requested it be paid directly into my SIPP via "Redundancy Sacrifice".

(My understanding is that it would be treated as an Employer Contribution, not benefit from tax relief and, therefore, not limited by my Annual Allowance - please correct me if wrong).

However, due to an administrative error, it was paid to me.

Subsequently, I transferred it to my pension provider, together with the necessary paperwork (completed Employer Contribution form and Settlement Agreement detailing the source of funds).

My pension provider has rejected the transfer designating it as a Personal Contribution because it was made from my personal bank account.

Q. Does HMRC require Redundancy Payments be paid from business bank accounts? My understanding is that the rules are different from normal Salary / Bonus Sacrifice.

(Disclaimer: I understand that in answering my question you are not providing financial advice).

Kind regards,

Ross

07:00  Question 2

Hi,

There’s increasing headlines that Rachel Reeves might be planning reforms to reduce cash ISA allowances from 20k to 4k.

My understanding is that this will only affect new ISA’s so for me and my wife we can continue to invest 20k per year maximum.

Is this assumption correct?

My main question though is planning for my kids.

If they don’t yet have any ISA open - what is the best way to start them off to hold onto the 20k annual allowance for potentially accessing cash