Hopefully a simple question about making pension contributio
Discussion
Hello. I have a Ltd Company. It has made a 16k surplus profit last year that I haven't taken in dividend.
I'd like my Company to pay this money into a pension scheme in my name as an Employer's contribution. Surely this will reduce my corporation tax liability as it will be a Company's expense.
How do I go about doing this as we have nothing set up - I really don't care which pension provider we do it with as I just want to get rid of that money now or I will be dicking about for another 10 years.
Any decent providers you know of who offer this service ? (a Company pension scheme for the benefit of a Director)
Thanks a lot.
Nick
I'd like my Company to pay this money into a pension scheme in my name as an Employer's contribution. Surely this will reduce my corporation tax liability as it will be a Company's expense.
How do I go about doing this as we have nothing set up - I really don't care which pension provider we do it with as I just want to get rid of that money now or I will be dicking about for another 10 years.
Any decent providers you know of who offer this service ? (a Company pension scheme for the benefit of a Director)
Thanks a lot.
Nick
Too late to reduce last year's corp tax liability and you are not entitled to use carry back if you had no scheme in place.
We have set up SIPPs with Suffolk Life but there are cheaper providers out there.
Then yer, fill your boots up to your £40k allowance, subject to the usual rules.
We have set up SIPPs with Suffolk Life but there are cheaper providers out there.
Then yer, fill your boots up to your £40k allowance, subject to the usual rules.
Jockman said:
There is no salary link for an Employer Contribution.
Correct. The main rules which apply are £40k per year and can carry forward 3 years unused allowance as long as a scheme was in place for each year. Payment periods apply to company year end and not April tax years.Set up a SIPP. H&L, Fidelity and many more do no fuss options. I'm with Fidelity and when you set up a contribution they ask for company reg number address etc and then give you a reference to quote on the bank transfer from your Ltd account.
The SIPP is personal and yours to use as you see fit. Bear in mind you won't be able to access it without big tax penalties until 5 years before the state retirement age.
Start a sipp, ltd company just contributes what it likes into your sipp and it comes off the company account like any other expense, can do up to £40k a year,there is some roll over allowed too. You can also contribute personally and get the 25% tax added.
I've just done the same thing.
I've just done the same thing.
Thanks for all the advice - sadly we didn't pay it in time so we got to pay Corporation tax on the profit (same as dividend tax I assume) - the plan is indeed for this to become a regular Company expense moving forward. I have other pension schemes from previous PAYE jobs : is a SIPP the same thing ? I am not very good at picking investments and those schemes suit me as I just choose in broad lines where my money goes.
Nano2nd said:
is there any advantage to the company making the contribution rather than taking the dividend then making the contribution personally and getting the 40% tax relief? won't reducing the profits potentially affect the company value? (lower EBITDA multiplier)
Small company directors aren't engaging in good tax planning if they get into the 40% bracket. So it's a close call between saving the 20% Corp tax or claiming the 25% tax relief. I tend to split the difference.nickfrog said:
Thanks for all the advice - sadly we didn't pay it in time so we got to pay Corporation tax on the profit (same as dividend tax I assume) - the plan is indeed for this to become a regular Company expense moving forward. I have other pension schemes from previous PAYE jobs : is a SIPP the same thing ? I am not very good at picking investments and those schemes suit me as I just choose in broad lines where my money goes.
There are about 3000 funds on the hl and best invest sipp platforms and plenty of advice on what funds to go for, I used to be like you in that I found it all a bit daunting but having spent the time doing research I'm actually quite into it now and pick my funds and investments as a bit of a past time. The main thing to look for is fees, you're going to pay about between 0.3% and 0.45% for the sipp platform and the funds range from 0.01% for a passive index tracker to 2% with specialist managed funds, some have performance fees too... I've tried to blend and mix so my aggregate fee is around 1% on the whole pot, this is what you'd pay for a standard stakeholder pension.FredClogs said:
Small company directors aren't engaging in good tax planning if they get into the 40% bracket. So it's a close call between saving the 20% Corp tax or claiming the 25% tax relief. I tend to split the difference.
unfortunately i'm 40% PAYE so when i comes to directors divis i'm **** out of luck (apart from the £5k obviously)Nano2nd said:
is there any advantage to the company making the contribution rather than taking the dividend then making the contribution personally and getting the 40% tax relief? won't reducing the profits potentially affect the company value? (lower EBITDA multiplier)
Remember dividends are not earned income. You cannot make personal contributions on the back of them alone. Ebitda multipliers are generally performed on net profit i.e. PBIT. Dividends are listed after thus on a P&L.
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