FANTASTIC PERK
Business people and professional workers can take advantage of a Government loophole that can be worth about seven thousand pounds annually that entitles them and their spouses to free state pensions worth thousands of pounds.
The state payouts come about by replacement of the state earnings related pension scheme ( i.e. serps ) by the state 2nd pension (i.e. S2p ).
From now on anyone earning at least £4004 a year will be treated for S2p purposes as if they earned £10800 giving them a state pension entitlement worth thousands of pounds over a working lifetime.
This extra benefit was intended to help the less well off but many richer households will be able to take advantage, all they have to do is beat IR35, nullify Section 660A with their business planning so that they can employ themselves and their spouses within their business and pay each a basic salary of at least £4004 a year.
The benefit is payable even though those earning less than £5225 do not have to pay income tax or national insurance, giving them a free pension.
The system is complex but effectively means that S2p will pay out 40% of the difference between actual earnings (subject to £4004 minimum) and £10800, so that on retirement those earning £4004 throughout their working lives could be entitled to S2p payments equivalent to 40% of £6796 a total of £2718.
Benefit is linked to the years in work.
Thousands of business people, Self Employed and Freelance workers who can avoid IR35 and Section 660A could be expected to use the loophole, all they need are the circumstances to verify that payment to the spouses are made.
It is a fantastic perk already being used by many business people who employ members of their family simply to use their annual tax free allowance, but now the tactic as well as saving tax will now pay free pensions.