The Meaningful Money Personal Finance Podcast

Listener Questions, Episode 21

6 snips

Aug 6, 2025

Listeners dive into complex issues surrounding redundancy payments and pension contributions. The hosts unravel the tricky regulations around employer contributions from personal accounts. They emphasize the importance of ISAs versus pensions for tax efficiency. Misconceptions about trusts are addressed, advocating for emotional benefits in financial planning. The importance of small saving habits for generational wealth is highlighted, along with inspiring success stories to encourage others to start their financial journeys.

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ADVICE

Redundancy Sacrifice Pension Transfer

HMRC does not require redundancy payments to be paid from business bank accounts; this depends on pension provider requirements.
If an employer pays redundancy sacrifice erroneously to an individual, consider finding a pension provider willing to accept contributions from a personal bank account.

ADVICE

Cash ISA Allowance Updates

Cash ISA allowance reductions were proposed but recently backtracked by the government.
Plan ISAs based on current rules and consider junior ISAs for kids, especially if access is needed within five years.

ADVICE

Spouse Pension Contributions Advice

It is mathematically better to pay pension contributions into a higher rate taxpayer spouse's pension.
Also, contributing up to £3,600 per year into a no-earnings spouse's pension builds their own pension pot with tax relief.

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This week, we’re covering redundancy sacrifice into a pension, cash ISA allowance reductions, evening up finances between spouses and much more - it’s another MM Q&A!

Shownotes: https://meaningfulmoney.tv/QA21

00:55 Question 1

Dear Pete & Roger,

My question regards Redundancy Sacrifice into a personal pension (SIPP).

In tax year 2024/25, I had "relevant UK earnings" of £44,000.

I contributed the full amount (inclusive of tax relief) to my SIPP; as a Personal Contribution this used up 100% of my Annual Allowance.

In addition, I received a £20,000 tax-free lump sum Redundancy Payment.

Because it was below £30,000, it did not constitute "relevant UK earnings", as such, I requested it be paid directly into my SIPP via "Redundancy Sacrifice".

(My understanding is that it would be treated as an Employer Contribution, not benefit from tax relief and, therefore, not limited by my Annual Allowance - please correct me if wrong).

However, due to an administrative error, it was paid to me.

Subsequently, I transferred it to my pension provider, together with the necessary paperwork (completed Employer Contribution form and Settlement Agreement detailing the source of funds).

My pension provider has rejected the transfer designating it as a Personal Contribution because it was made from my personal bank account.

Q. Does HMRC require Redundancy Payments be paid from business bank accounts? My understanding is that the rules are different from normal Salary / Bonus Sacrifice.

(Disclaimer: I understand that in answering my question you are not providing financial advice).

Kind regards,

Ross

07:00 Question 2

Hi,

There’s increasing headlines that Rachel Reeves might be planning reforms to reduce cash ISA allowances from 20k to 4k.

My understanding is that this will only affect new ISA’s so for me and my wife we can continue to invest 20k per year maximum.

Is this assumption correct?

My main question though is planning for my kids.

If they don’t yet have any ISA open - what is the best way to start them off to hold onto the 20k annual allowance for potentially accessing cash