An individual may, subject to certain limitations and restrictions, receive tax relief at his or her marginal income tax rate for pension contributions made from:
(i) remuneration from his/her relevant office or employment to an occupational pension scheme; and
(ii) "relevant earnings" to an non-occupational pension scheme.
"Relevant earnings" means income from a non-pensionable office or employment or from carrying on a trade or profession but does not include unearned income such as rental income or deposit interest.
Where only one spouse is working but both spouses are contributing to pension schemes, the working spouse cannot claim tax relief in respect of the non-working spouse's pension contributions for a number of reasons—
(a) for those in occupational pensions schemes, the tax relief on an individual's pension contributions is due only against the remuneration for that individual's office or employment; and
(b) for those not in occupational pensions schemes, the tax relief for pension contributions is granted only by reference to an individual's relevant earnings and the legislation provides that an individual's relevant earnings cannot be treated as including the relevant earnings of his/her spouse for this purpose even where the couple are jointly assessed for tax purposes.
Where an individual contributes to a pension and that individual would, but for the insufficiency of his/her relevant earnings or employment remuneration in a particular tax year, be entitled to tax relief in respect of such contributions in that year, the individual concerned may seek tax relief on those pension contributions in a later tax year for which he/she has relevant earnings or employment remuneration (subject, of course, to the normal age-related and overall earnings limits for tax relief in respect of pension contributions).
Many pension schemes provide for a pension, not alone for the holder, but also for the surviving spouse should the holder predecease the spouse. Pension contributions to a pension scheme that provides for widows/widowers and orphans also qualify for tax relief in the normal manner.
The purpose of funding pension arrangements is to enable an individual to provide an adequate income in retirement for him or herself and family dependants relative to his or her pre-retirement income. The current arrangements for providing tax relief on pension contributions are supportive of this aim and are both generous and flexible. I have no plans to amend them in the manner suggested by the Deputy.