Pension contributions from a limited company?
Discussion
You'll need to speak to an IFA or Accountant for details and your specific circumstances.
However, I believe you can set up a company pension scheme, then pay a percentage into it based on the salary you draw and also have the company make contributions. If you draw a dividend at the end of a period maybe make an IVC.
However, I believe you can set up a company pension scheme, then pay a percentage into it based on the salary you draw and also have the company make contributions. If you draw a dividend at the end of a period maybe make an IVC.
http://www.pensionsadvisoryservice.org.uk/Personal...
go to the bit that says 'limits'...
unless you are looking at putting in some serious blooming money, the limits are pretty high...
go to the bit that says 'limits'...
unless you are looking at putting in some serious blooming money, the limits are pretty high...
Chaps,
Thanks for your answers. They are all slightly different ...
becker-on-ph - Thanks. Is the amount a percentage of the salary that I draw from the company then? I am drawing a very small salary, and taking most of the profits as dividends.
JakeR - As above, my salary is low. Under "Limits" on that page you directed me to, the suggested limit is 100% of salary or £3600 ... that would be a very low limit, but feels as if it is aimed at people who are on PAYE. Does the later comments about "Annual Allowance" have more bearing in this case?
IamMorewood - is this flat advice, whcih applies in my scenario?
Thanks again.
Oli.
Thanks for your answers. They are all slightly different ...
becker-on-ph - Thanks. Is the amount a percentage of the salary that I draw from the company then? I am drawing a very small salary, and taking most of the profits as dividends.
JakeR - As above, my salary is low. Under "Limits" on that page you directed me to, the suggested limit is 100% of salary or £3600 ... that would be a very low limit, but feels as if it is aimed at people who are on PAYE. Does the later comments about "Annual Allowance" have more bearing in this case?
IamMorewood - is this flat advice, whcih applies in my scenario?
Thanks again.
Oli.
It is possible for companies to pay into pension schemesw on behalf of their directors/employees - without the director/employee suffering any sort of taxable Benefit in Kind.
The important thing is that the pension scheme is set up SPECIFICALLY to be handled this way.
Merely using company money to pay into your personal pension will not work.
The important thing is that the pension scheme is set up SPECIFICALLY to be handled this way.
Merely using company money to pay into your personal pension will not work.
the limits of £3600 or salary are for PERSONAL contributions....if you set up a scheme for the company to pay on your behalf you are very unlikley to run into limits (if you can afford to hit those limits you'd have an accountant on speed dial and not be asking here 
)
talk to an IFA...if you can find one that wants regular pension business!
)talk to an IFA...if you can find one that wants regular pension business!
Chaps,
Thanks again for the answers.
Eric - as PH resident accountant your comment is particularly helpful. What sort of pension scheme do you refer to when you talk about one set up specifically for this sort of thing? Or, putting it another way, the pension scheme in question is one set up with an IFA. I *think* it's a SIPP, but don't have the documentation here to be sure of this (will look it up tonight).
IanMorewood - thanks. I won't be busting that particular limit, but am chasing those "other conditions" you mention.
Tiggsy, thanks also. As mentioned above, the scheme was set up for the company to pay into, but I don't have the details to hand at the moment. The IFA in question is a little hazy about the details as to what can be done in terms of paying in from a company; his line is that he is happy to "Produce a report outlining my options." Cost of such a report? Just shy of a grand. There must be a simpler (/cheaper) answer.
Oli.
Thanks again for the answers.
Eric - as PH resident accountant your comment is particularly helpful. What sort of pension scheme do you refer to when you talk about one set up specifically for this sort of thing? Or, putting it another way, the pension scheme in question is one set up with an IFA. I *think* it's a SIPP, but don't have the documentation here to be sure of this (will look it up tonight).
IanMorewood - thanks. I won't be busting that particular limit, but am chasing those "other conditions" you mention.
Tiggsy, thanks also. As mentioned above, the scheme was set up for the company to pay into, but I don't have the details to hand at the moment. The IFA in question is a little hazy about the details as to what can be done in terms of paying in from a company; his line is that he is happy to "Produce a report outlining my options." Cost of such a report? Just shy of a grand. There must be a simpler (/cheaper) answer.
Oli.
zcacogp said:
Chaps,
Thanks again for the answers.
Eric - as PH resident accountant your comment is particularly helpful. What sort of pension scheme do you refer to when you talk about one set up specifically for this sort of thing? Or, putting it another way, the pension scheme in question is one set up with an IFA. I *think* it's a SIPP, but don't have the documentation here to be sure of this (will look it up tonight).
IanMorewood - thanks. I won't be busting that particular limit, but am chasing those "other conditions" you mention.
Tiggsy, thanks also. As mentioned above, the scheme was set up for the company to pay into, but I don't have the details to hand at the moment. The IFA in question is a little hazy about the details as to what can be done in terms of paying in from a company; his line is that he is happy to "Produce a report outlining my options." Cost of such a report? Just shy of a grand. There must be a simpler (/cheaper) answer.
Oli.
Company schemes must be approved schemes i.e. they are specifically set up with Revenue approval to allow a company/employer to make contributions on behalf of a director/employee.Thanks again for the answers.
Eric - as PH resident accountant your comment is particularly helpful. What sort of pension scheme do you refer to when you talk about one set up specifically for this sort of thing? Or, putting it another way, the pension scheme in question is one set up with an IFA. I *think* it's a SIPP, but don't have the documentation here to be sure of this (will look it up tonight).
IanMorewood - thanks. I won't be busting that particular limit, but am chasing those "other conditions" you mention.
Tiggsy, thanks also. As mentioned above, the scheme was set up for the company to pay into, but I don't have the details to hand at the moment. The IFA in question is a little hazy about the details as to what can be done in terms of paying in from a company; his line is that he is happy to "Produce a report outlining my options." Cost of such a report? Just shy of a grand. There must be a simpler (/cheaper) answer.
Oli.
Your IFA should be aware of such schemes and which ones would be appropriate for your company.
The one thing you should NOT do is simply start using company funds to pay into a Personal Pension Scheme you already have in place.
Eric Mc said:
Company schemes must be approved schemes i.e. they are specifically set up with Revenue approval to allow a company/employer to make contributions on behalf of a director/employee.
Your IFA should be aware of such schemes and which ones would be appropriate for your company.
The one thing you should NOT do is simply start using company funds to pay into a Personal Pension Scheme you already have in place.
Eric, Your IFA should be aware of such schemes and which ones would be appropriate for your company.
The one thing you should NOT do is simply start using company funds to pay into a Personal Pension Scheme you already have in place.
One again, thanks. It sounds like we are getting to the nub of the question, and the answer, here.
Sounds like I need to go back to the IFA to ask whether this is an "Approved" scheme or not. I fear it isn't, in which case I'm in a bit of a pickle. (Especially as I have paid directly from the company into it before. Although, having said this, I would HOPE that the IFA would have been aware of this and prevented me from making such payments previously into a non-approved scheme. And, thinking about it, the scheme was set up around 6 years ago in order to recieve pension payments from the company, and the first payment made into it, the day it was set up, was from the company. Ho humm.)
OK, so a conversation with my IFA is next on the agenda. What specifically am I asking? What is the name or type of approval which the pension scheme should have? I guess I am worried that if I call up and ask "Is the pension scheme you have set up an approved one?" the answer may not be very clear.
Also, what if I find out that it isn't an approved scheme? I will then have made payments from the company into it - will this stick me in hot water?
Thanks again for your help Eric.
Oli.
You may be OK.
There were a number of "simplifications" to the approval process a couple of years ago but I would still check with the IFA that everything is in order.
Businesslink says the following -
"Choose the right pension scheme
Unregistered pension schemes for directors and owners
There are a variety of unregistered pension options available to directors and owners, but they don't benefit from all the tax advantages of a pension scheme registered with HM Revenue & Customs (HMRC). These are specialist areas and you should obtain advice before setting up one of these types of scheme".
The Revenue seems to have swapped the word "Registered" for "Approved" - which is a subtle, but important change
There were a number of "simplifications" to the approval process a couple of years ago but I would still check with the IFA that everything is in order.
Businesslink says the following -
"Choose the right pension scheme
Unregistered pension schemes for directors and owners
There are a variety of unregistered pension options available to directors and owners, but they don't benefit from all the tax advantages of a pension scheme registered with HM Revenue & Customs (HMRC). These are specialist areas and you should obtain advice before setting up one of these types of scheme".
The Revenue seems to have swapped the word "Registered" for "Approved" - which is a subtle, but important change
Edited by Eric Mc on Wednesday 19th August 11:00
Eric,
Once again, thanks.
I'll go and have a look at the businesslink website and familiarise myself with the relevant terminology, and call the IFA later on today.
I'll keep you posted with the outcome. (If it does turn out not to be an 'approved' scheme then I'll not be best pleased as it was the scheme that they recommended me to open. But that's getting into the realms of "if" and "perhaps", and such hypotheticals aren't usually terribly helpful.)
Oli.
Once again, thanks.
I'll go and have a look at the businesslink website and familiarise myself with the relevant terminology, and call the IFA later on today.
I'll keep you posted with the outcome. (If it does turn out not to be an 'approved' scheme then I'll not be best pleased as it was the scheme that they recommended me to open. But that's getting into the realms of "if" and "perhaps", and such hypotheticals aren't usually terribly helpful.)
Oli.
Eric Mc said:
It is possible for companies to pay into pension schemesw on behalf of their directors/employees - without the director/employee suffering any sort of taxable Benefit in Kind.
The important thing is that the pension scheme is set up SPECIFICALLY to be handled this way.
Merely using company money to pay into your personal pension will not work.
Eric,The important thing is that the pension scheme is set up SPECIFICALLY to be handled this way.
Merely using company money to pay into your personal pension will not work.
Does this mean that the pension must be non-contributory on the part of the director, as this is what I do, for two reasons; one, to build my pension (obviously), and also to reduce my Corporation Tax bill at year end. Hope that I've read read the rules correctly!
AdeTuono said:
Does this mean that the pension must be non-contributory on the part of the director, as this is what I do, for two reasons; one, to build my pension (obviously), and also to reduce my Corporation Tax bill at year end. Hope that I've read read the rules correctly!
Precisely the situation I am in. Same two reasons. Oli.
Why do you think your not in an ‘Approved Pension Scheme’?
Most life insurance company schemes have shell approval, most off the shelf self invested personal pensions have similar shell approval, most company schemes seek approval at setup. A very few unapproved schemes are set up each year, these tend to be because the rules for an approved scheme cant be met with what the client/company is wanting to do.
Regards your IFA is he a ‘pensions specialist’ and what experience/relevant qualifications does he have, reason I ask is that the tomes of paper you have to wade through to pass the relevant exams/reassessment and keep unto date are enough to sink a small boat, one of the reasons I don’t classify myself as a pensions specialist, (the other being we have one in our practice already).
Most life insurance company schemes have shell approval, most off the shelf self invested personal pensions have similar shell approval, most company schemes seek approval at setup. A very few unapproved schemes are set up each year, these tend to be because the rules for an approved scheme cant be met with what the client/company is wanting to do.
Regards your IFA is he a ‘pensions specialist’ and what experience/relevant qualifications does he have, reason I ask is that the tomes of paper you have to wade through to pass the relevant exams/reassessment and keep unto date are enough to sink a small boat, one of the reasons I don’t classify myself as a pensions specialist, (the other being we have one in our practice already).
brokenfather said:
Eric Mc said:
Are there any pension policies left where, if the employer was paying into the scheme on behalf of an employee/director, the employee could end up being assessed on a Benefit in Kind?
Unregistered schemes do exist, but I have no direct experience with them so don't know when the tax charge arises I'm afraid. Because of the establishment costs they arent sold to the mass market though, and I would think if someone established one they would know all about it.Follow-up. The IFA has confirmed that the pension scheme is "Approved" and "Registered", so I can put in the larger sums without the tax implications.
(As an aside, this is another point of disapproval of the aforementioned IFA; he has previously told me that I can only put as much into my pension as I take in salary each year. And yet, when I asked him directly on the telephone whether the scheme is registred, he tells me that it is and therefore I can put in as much as I like. This is the last in a moderately long list of not-great experiences I have had with this particular company ... )
Oli.
ETA: Thanks again for your help chaps - Eric in particular.
(As an aside, this is another point of disapproval of the aforementioned IFA; he has previously told me that I can only put as much into my pension as I take in salary each year. And yet, when I asked him directly on the telephone whether the scheme is registred, he tells me that it is and therefore I can put in as much as I like. This is the last in a moderately long list of not-great experiences I have had with this particular company ... )
Oli.
ETA: Thanks again for your help chaps - Eric in particular.
Edited by zcacogp on Wednesday 26th August 14:04
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