EY Budget reaction: Pension contributions for spouses or family members

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Graham Farquhar, employment tax partner at EY comments:

“The Chancellor has stated that from April 2013 pension contributions paid into spouses or family members’ registered pension schemes cannot be used to obtain any tax or National Insurance Contribution advantages.  This addresses the recent growing practice where employees who have reached their £50,000 annual cap are diverting contributions from their employer into their spouses or family member's pension funds to obtain tax relief. It also helps to utilize any available spouse’s pension relief. Some employers have been implementing this as part of flexible benefits packages and it would appear that HMRC are concerned that this practice may become more widespread.”