Pensions Automatic Enrolment for one man Ltd company...
Discussion
I just wondered what the contractors and slightly built mild mannered company directors of PH are planning to do with respect to the auto enrolment legislation, I've just got my letter from the Pensions Regulator. I've already got two ailing and rather measily pensions (one stake holder, one private pension) which barely tick over, can I adopt one of those for this, will it pass muster? Where's the best place to go for advice on this? I asked my accountant a couple of years ago but he was non commital, I'm seeing him this week and will ask again in the light of this new regulation.
Jockman said:
If I'm reading you correctly you should be exempt.
£883 per month seems to be the magic number, the only way to be execpt is to take a salary below that, which is possible for me but I'm not sure with the dividend tax etc... going forward there is going to be much in it as the tax savings on making contributions from the company are going to be worth something, plus I've got to start saving for retirement at some point... Could be the kick up the arse I need to do something (bloody government and their incentives to do the right things)Jockman said:
If I'm reading you correctly you should be exempt.
I believe this is true (and reasonable IMHO), failing that you can send yourself a letter telling yourself you will be enrolled in a designated pension scheme unless you choose to opt out, and send yourself another letter stating you wish to opt out The Pension Regulator has previously stated that single director companies need not register. As ever, it is not quite as simple as that.
The key aspect to consider is whether there is a contract of employment between the company and the individual. With most directors, there isn't. If there is no contract, then there is no need to auto enroll. If there is a contract, then you will have to.
The next question is, how do you know if there is a contract or not? On this, the Pension Regulator offers no advice whatsoever except to provide a link to the HMRC website where they explain THEIR view on contracts of employment.
What HMRC says is that a contract of employment does not have to be a written contract. Therefore, even if no formal written contract exists, an implied contract could exist depending on the arrangements between the company and the director.
Receiving Director's Remuneration (salary etc) on its own is not sufficient to imply a contract of employment exists.
However, don't ignore the letter. Respond to the request but state that it is a single director company and therefore you don't need to register - taking the above points into account, of course.
Hope that helps somewhat.
The key aspect to consider is whether there is a contract of employment between the company and the individual. With most directors, there isn't. If there is no contract, then there is no need to auto enroll. If there is a contract, then you will have to.
The next question is, how do you know if there is a contract or not? On this, the Pension Regulator offers no advice whatsoever except to provide a link to the HMRC website where they explain THEIR view on contracts of employment.
What HMRC says is that a contract of employment does not have to be a written contract. Therefore, even if no formal written contract exists, an implied contract could exist depending on the arrangements between the company and the director.
Receiving Director's Remuneration (salary etc) on its own is not sufficient to imply a contract of employment exists.
However, don't ignore the letter. Respond to the request but state that it is a single director company and therefore you don't need to register - taking the above points into account, of course.
Hope that helps somewhat.
FredClogs said:
£883 per month seems to be the magic number, the only way to be execpt is to take a salary below that, which is possible for me but I'm not sure with the dividend tax etc... going forward there is going to be much in it as the tax savings on making contributions from the company are going to be worth something, plus I've got to start saving for retirement at some point... Could be the kick up the arse I need to do something (bloody government and their incentives to do the right things)
Even with the Dividend Tax it is still just about better to take Dividends.Remember you are contributing to your state pension, worth about £8,000pa.
You are correct to be thinking about it though. Set up a company pension and receive 20% corp tax relief on contributions?
I have just used NEST to set up a pension scheme for a charity. Amazingly clear and simple - you could do worse than auto enrol yourself via that without incurring any advice costs. Of course you should really get independent financial advice
I am pretty sure though that directors are exempt from auto enrolment. And as far as I can make out if you have a scheme that is better than auto enrolment that also exempts you
I am pretty sure though that directors are exempt from auto enrolment. And as far as I can make out if you have a scheme that is better than auto enrolment that also exempts you
Eric Mc said:
Unless you have an employment contract in place.
That is the most fundamental aspect of the legislation -
employment contract = auto enrolment compulsory
no employment contract = auto enrolment optional
What does an employment contract mean in this case?That is the most fundamental aspect of the legislation -
employment contract = auto enrolment compulsory
no employment contract = auto enrolment optional
Is that a contract between yourself and your Limited Company?
Or a contract with the actual company you work at?
FredClogs said:
I just wondered what the contractors and slightly built mild mannered company directors of PH are planning to do with respect to the auto enrolment legislation, I've just got my letter from the Pensions Regulator. I've already got two ailing and rather measily pensions (one stake holder, one private pension) which barely tick over, can I adopt one of those for this, will it pass muster? Where's the best place to go for advice on this? I asked my accountant a couple of years ago but he was non commital, I'm seeing him this week and will ask again in the light of this new regulation.
Are you also an employee of your company or just the director? Former = yes needed, latter = not needed.I'm just the director of my ltd co so not needed, same as most other contractors in my sector.
All that jazz said:
Are you also an employee of your company or just the director? Former = yes needed, latter = not needed.
I'm just the director of my ltd co so not needed, same as most other contractors in my sector.
Directors are not exempt from auto enrolment just by being a Director per se.I'm just the director of my ltd co so not needed, same as most other contractors in my sector.
All that jazz said:
Jockman said:
Directors are not exempt from auto enrolment just by being a Director per se.
If you're not an employee of your own company and don't have any other staff then as Eric has said, there is no requirement and it's entirely optional.Gassing Station | Finance | Top of Page | What's New | My Stuff