Tax Year End Planning Ahead of Budget Pension Spouses Pensions

A much-overlooked area of tax year end financial planning is your spouse’s pensions.  In many relationships, one of the partners may have taken time out to be the child/family carer and home worker/caretaker.  This may mean career breaks or part time work and may leave holes in their financial planning and future retirement options.

Topping up Private and Workplace Pensions

• It makes sense that the highest earner should be making the maximum use of tax relief and fund their pension.  If one of you is a 40%/45% taxpayer and the other is a basic rate or non-taxpayer, it makes sense to pay into pensions to claim the maximum tax relief available.
• If you have used up your Annual Allowance for pension contributions, then why not consider topping up any unused allowances for your partner?
• If your partner is working full or part-time, then they too get tax relief on pension contributions up to their own annual allowance (remember Annual allowance is the lower of your earned income or £60,000 pa).
• If your partner is not working, a non-taxpayer and has no earned income, they can still contribute £2,880 pa net + 20% income tax relief = Gross £3,600pa.  This is free tax relief for a non-taxpayer.
• Indeed, if you have used up all your 40% and 45% tax relief options and only have 20% relief left, then you should consider not only topping up your own pensions but also your partners to try and ensure balances of pension funds are spready across both partners.

Topping Up State Pensions

You or your spouse may have gaps in your national insurance contributions (NIC) record, in particular if either you or your spouse has gaps due to being overseas of if time of work was taken meaning no NIC was paid and you did not receive ‘Home Responsibilities Protection ‘ NIC credits for being at home as a carer for children or elderly or disabled relatives.

Check whether you or your partner has gaps in your NIC record by:

• Checking your Personal Tax Account (registration and set up are free) https://www.gov.uk/personal-tax-account
• Contact the Department for Work and Pensions direct to request your NIC record https://www.gov.uk/check-state-pension

Marriage Allowance Transfer Claim Form (MATCF)

• The personal tax allowance is £12,570.
• If you or your legally married spouse/civil partner does not have income at or above £12,570, there may be some unused personal allowance.  This unused allowance does not need to be wasted.
• You can transfer unused personal allowance up to 10% of £12,570 to your spouse/civil partner.
• Complete HMRC form MATCF and where possible, as well as transferring the current tax year’s unused allowance, HMRC can backdate this for 4 years.  Claim Form:
• Online https://www.gov.uk/apply-marriage-allowance
• By post https://www.gov.uk/guidance/apply-for-marriage-allowance-by-post

Action Before Autumn Budget 2025

Whilst we do not think there will be any major changes to the above on 26^th November (Budget Day), there is always the chance that changes could be made that take effect on 6 April 2026.  We suggest you ensure you have visited not only your own pensions, state pensions, and personal tax allowance usage, you need to also check your spouse/civil partner’s position.

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