Making a pension lump sum - benefits maths

[Ken Figenus]

Could put a chunky sum into my company pension (SSAS) following sale of a house – porting it in to the business via a director’s loan I assume and thus avoiding some corp tax as the loan will be then repaid from business profits before corp tax? The sum also gets 20% on top from the taxman as it goes into the SASS doesn't it?

Only thing is this cash is currently totally tax free and so I then volunteer 75% of it to be taxed when drawing it out down the line (minus personal allowance £12k and the 25% of pot tax free drawdown permitted - CURRENTLY).

Can generally keep pers tax away from hitting the 40% rate - if we couldn't this question wouldn't arise I guess!

There are IHT benefits as a bonus in going into a pension too I believe as pension pots are outside IHT?

Any thoughts welcome as need to act before my IFA gets back from hols really

[Rufus Stone]

Ken Figenus said:

Could put a chunky sum into my company pension (SSAS) following sale of a house – porting it in to the business via a director’s loan I assume and thus avoiding some corp tax as the loan will be then repaid from business profits before corp tax? The sum also gets 20% on top from the taxman as it goes into the SASS doesn't it?

Only thing is this cash is currently totally tax free and so I then volunteer 75% of it to be taxed when drawing it out down the line (minus personal allowance £12k and the 25% of pot tax free drawdown permitted - CURRENTLY).

Can generally keep pers tax away from hitting the 40% rate - if we couldn't this question wouldn't arise I guess!

There are IHT benefits as a bonus in going into a pension too I believe as pension pots are outside IHT?

Any thoughts welcome as need to act before my IFA gets back from hols really

Some points to note while you wait to talk to your IFA.

It will be an employer contribution so no 20% top up from the tax man. It will be an expense of the company for corporation tax calculation though.

Repaying the loan capital is not an expense of the business for corporation tax calculation, but any interest you charge is. You would need to declare that interest to HMRC.

[Ken Figenus]

Thanks - v useful.

[The Ferret]

Assuming you draw some kind of salary from the company, surely its better to salary sacrifice a portion of it into the pension each month and use this cash to replace the salary.