The Lemon Fool

Asking for my brother.

His only income at the moment is carer's allowance (no other benefits as his savings are slightly too high).

He currently pays £2,880 into his pension each year. Someone has mentioned that he should be able to pay extra, up to the amount of CA received (approx £3,500) - is this right? (I can see that CA counts as income in some cases and not in others but haven't found anything relating to payments into a pension where there's no other income.)

He's 53 and is in England, if it's relevant.

Regards and TIA
Ann

ouzo wrote:He currently pays £2,880 into his pension each year. Someone has mentioned that he should be able to pay extra, up to the amount of CA received (approx £3,500) - is this right?

I've no idea if carer's allowance counts as earnings (which is what is relevant) or not, however what he is currently paying into his pension is £2,880 net which the taxman grosses up to £3,600 gross.

So, as you say it's his only income, and hence is well inside the personal allowance, the £3,500 he gets must be gross so, no, he can't pay in any more anyway as the £2,880 net he's paying in is £3,600 gross which is already more than his gross earnings.

Thanks mc2fool - perfect (and quick) answer (until CA exceeds the pension contribution limit, which will take years!).

Cheers
Ann

ouzo wrote:Thanks mc2fool - perfect (and quick) answer (until CA exceeds the pension contribution limit, which will take years!).

LOL, the pension contribution limit is the lower of your earnings and £40,000pa (gross)! However, if you earn less than £3,600pa gross you can make gross contributions of up to £3,600 (i.e. £2,880 net) each year anyway.

But do note that it's not income that counts for this but earnings. There are all sorts of things that count as income -- e.g. state pension, bank interest, dividends from shareholdings, etc, etc -- that don't count as earnings. As to whether carer's allowance does, I find no answer on a cursory search, so I'll leave it as an exercise for the reader ...

mc2fool wrote:

ouzo wrote:Thanks mc2fool - perfect (and quick) answer (until CA exceeds the pension contribution limit, which will take years!).

LOL, the pension contribution limit is the lower of your earnings and £40,000pa (gross)! However, if you earn less than £3,600pa gross you can make gross contributions of up to £3,600 (i.e. £2,880 net) each year anyway.

But do note that it's not income that counts for this but earnings. There are all sorts of things that count as income -- e.g. state pension, bank interest, dividends from shareholdings, etc, etc -- that don't count as earnings. As to whether carer's allowance does, I find no answer on a cursory search, so I'll leave it as an exercise for the reader ...

The HMRC website says it goes in the same box as pensions, annuities and benefits so it certainly would not form part of the earnings figure on which the pensions contribution limit is calculated.

https://community.hmrc.gov.uk/forums/cu ... 20benefits.