Back paying into a pension

[fellatthefirst]

I am booking in for a meeting with an IFA next week but i thought i would come on here and ask before...

Im a company director and want to set up a pension for myself. I have never had a pension before.

I heard on the grapevine that i would be able to back pay up to 3 years. Does anyone know if this is still the case?

Also what is the maximum amount i can pay in, in 1 year?

[Jockman]

There is no maximum, but there is a maximum on which you receive tax relief.

Yes 3 years clawback of £50k + £40k + £40k + £40k (current year).

[Jockman]

Will the company pay the contributions? If so it will receive corp tax relief. If not you will receive personal tax relief so long as you have relevant earnings to back up these contributions.

[PurpleMoonlight]

If you have no existing pension provision whatsoever you cannot use the three year carry forward facility. You need something no matter how small or how accrued from more than three years ago to be able to do so.

[Jockman]

PurpleMoonlight said:

If you have no existing pension provision whatsoever you cannot use the three year carry forward facility. You need something no matter how small or how accrued from more than three years ago to be able to do so.

Yes.

[fellatthefirst]

PurpleMoonlight said:

If you have no existing pension provision whatsoever you cannot use the three year carry forward facility. You need something no matter how small or how accrued from more than three years ago to be able to do so.

I have also heard this and this is what i was hoping not to be true.

It looks like i wont be able to back pay becasue i didnt previously have a pension set up.

[Jockman]

There is also the 'wholly and exclusively' test for allowing business contributions to be tax deductible as a business expense.

[Ozzie Osmond]

Jockman said:

£40k (current year).

If you have an OH there are various tunes which can be played, including,

• £3,600 gross - a payment of £2,880 to which the taxman adds £720, or
• Their own earnings. (Talk to your accountant if OH is currently non-working)

.... and don't forget you (and the OH) can max out your ISA as well.

[PurpleMoonlight]

fellatthefirst said:

I have also heard this and this is what i was hoping not to be true.

It looks like i wont be able to back pay becasue i didnt previously have a pension set up.

It's a ridiculous rule and had no logic, bet hey, that's the Government for you.

[bogie]

I thought also you had to have paid the tax in the first place to claim it back ? i.e you need to have paid >£40k in tax per year, in order to claim relief on £40k going into your pot.

[PurpleMoonlight]

bogie said:

I thought also you had to have paid the tax in the first place to claim it back ? i.e you need to have paid >£40k in tax per year, in order to claim relief on £40k going into your pot.

Not quite but almost.

For personal contributions you cannot claim more tax relief than the tax you have paid in the tax year (ignoring the diminimus rule).

Employer contributions are an expense of the business so obtain corporation tax relief.