Should my husband defer one of his pensions and can I collect mine early?

29 July 2014


My husband is due to collect his state pension in December when he reaches 65. He has a private pension and when he receives his state pension this will take him into the higher tax bracket. Is there anything he can do to reduce this? I am due to receive a private pension in 2015 but could I collect it a year earlier at age 59 instead of 60?


Your husband could consider deferring his state or private pension if he hasn't started drawing it already. This may result in an increase in pension and will depend on the scheme rules and a comparison of the two would be needed to decide which scheme is best deferred.

You can collect your pension earlier provided you are aged 55 or older and your pension fund scheme rules allow. As you are 59, then there are no onerous tax consequences of doing so. However, your pension will be smaller if you draw it early.

Gift Aid donations can sometimes increase the entitlement to the age-related personal allowance and provide additional relief in that way.

By making a Gift Aid donation, you can claim the difference between the higher rate of tax at 40% and the basic rate of tax at 20% on the gross value of your donation to the charity. For example, if you donate £100, the gross value of your donation to the charity is £125 so you can claim back £25 if you pay tax at the higher rate.

You can give quoted shares, land and buildings to charities and offset the value of the donation for income tax or capital gains purposes. Because they are gifts to charities, they are free of inheritance tax and free of capital gains tax. Note that income tax relief is not available if you are giving land, property or shares to a community action sports club but capital gains tax relief is.

Income tax relief is also available to individuals who subscribe for shares in an Enterprise Investment Scheme or Venture Capital Trust. Relief is at 30% of the cost of the shares, to be set against the individual's income tax liability for the tax year in which the investment was made.

David Wesley-Yates is a chartered tax adviser at Red & Black Accountancy