Sole director -? SIPP or own company pension
Discussion
Season's Greetings All
As a sole director (only employee)of a limited company I understand I do not have to auto enrol for a pension.
But I was wondering if there is any benefit in having a company pension just for me?
I have a SIPP and occasionally pay money into it from my income. I was wondering whether this is the best way to invest for the future? or are there tax benefits in doing it another way...
Thanks for your suggestions and advice
Sparky
As a sole director (only employee)of a limited company I understand I do not have to auto enrol for a pension.
But I was wondering if there is any benefit in having a company pension just for me?
I have a SIPP and occasionally pay money into it from my income. I was wondering whether this is the best way to invest for the future? or are there tax benefits in doing it another way...
Thanks for your suggestions and advice
Sparky
Lots of reasons why, it all depends how you eventually want to extract the money when you stop working and what your legacy issues are, amongst many factors. If a pension is a good way to go, make sure it's a cost effective one. Sorry for being vague, there are lots of factors.
Season's greetings, too!
Season's greetings, too!
Sorry Ginge R not sure what you mean "lots of reasons why" ... I have no complicated plan just wanting to save as much as I can to be able to retire with good pension.
Thought better to be putting more money into SIPP or pension set up by company ie another SIPP (but through company) rather than ISA's to maximise tax benefits
Thought better to be putting more money into SIPP or pension set up by company ie another SIPP (but through company) rather than ISA's to maximise tax benefits
Ok, to give you an idea - if you save like hell via a pension wrapper, either as 'you' or as a contribution from your company to mitigate corporation tax, you might get a decent uplift through tax relief, but you might also be taxed needlessly and/or excessively when you take it out again, after you stop working. It's not what you make, it's what you keep. Your own circumstances will dictate whether it's a good idea or not.
This might be useful. These folk are particularly experienced at fielding questions and you don't pay a penny for good, basic info: 0300 123 1047
http://www.pensionsadvisoryservice.org.uk
"TPAS is an independent organisation that is grant-aided by the Department for Work and Pensions (DWP). We have a workforce of paid pensions specialists, supported by hundreds of expert volunteer advisers across the UK, who have many years experience working in the pensions industry. They give their time and expertise for free to help others with their pensions.
TPAS provides information and guidance to help make you make informed decisions about your pensions and retirement plans. Based upon what you tell us, we will always try to help you get the answers you need or identify the people you need to speak to.
All the information and guidance provided by TPAS is an opinion in good faith based upon the documents and information made available to us. We will not provide any information or guidance that could be construed as regulated financial advice and any opinions expressed by TPAS should not be regarded as grounds for legal action."
This might be useful. These folk are particularly experienced at fielding questions and you don't pay a penny for good, basic info: 0300 123 1047
http://www.pensionsadvisoryservice.org.uk
"TPAS is an independent organisation that is grant-aided by the Department for Work and Pensions (DWP). We have a workforce of paid pensions specialists, supported by hundreds of expert volunteer advisers across the UK, who have many years experience working in the pensions industry. They give their time and expertise for free to help others with their pensions.
TPAS provides information and guidance to help make you make informed decisions about your pensions and retirement plans. Based upon what you tell us, we will always try to help you get the answers you need or identify the people you need to speak to.
All the information and guidance provided by TPAS is an opinion in good faith based upon the documents and information made available to us. We will not provide any information or guidance that could be construed as regulated financial advice and any opinions expressed by TPAS should not be regarded as grounds for legal action."
Generally pensions are a good thing.
Tax free going in.
Tax free growth.
25% tax free lump sum.
75% assessed under PAYE at time of payment.
IHT exempt.
The biggest downsides are you can't access until age 55 (currently) and the Government has an awful habit of moving the goalposts before your game has finished.
Tax free going in.
Tax free growth.
25% tax free lump sum.
75% assessed under PAYE at time of payment.
IHT exempt.
The biggest downsides are you can't access until age 55 (currently) and the Government has an awful habit of moving the goalposts before your game has finished.
PurpleMoonlight said:
Generally pensions are a good thing.
Tax free going in.
Tax free growth.
25% tax free lump sum.
75% assessed under PAYE at time of payment.
IHT exempt.
The biggest downsides are you can't access until age 55 (currently) and the Government has an awful habit of moving the goalposts before your game has finished.
You have said before that it is better for a company to make the contributions rather than the individual. I think OP is asking if this still stands??Tax free going in.
Tax free growth.
25% tax free lump sum.
75% assessed under PAYE at time of payment.
IHT exempt.
The biggest downsides are you can't access until age 55 (currently) and the Government has an awful habit of moving the goalposts before your game has finished.
Yes as Jockman queries, it would be helpful to know whether it is more tax efficient to pay more into my pension as an employer than an employee. I gave IPAS a call and they said I would have to be careful of the "wholly and exclusively for the purposes of trade test" which the HMRC can apply in determining whether contributions as an employer are reasonable and are not being used to avoid tax.....still none the wiser
If you are a shareholding Director HMRC take little interest in how you draw your remuneration between salary and pension contributions.
Employer pension contributions are usually the preferred method for business owners as personal contributions only attract tax relief up to the tax you pay on earned income (setting aside the diminimus allowance), so if you wish to make meaningful personal contributions you need a higher salary which would attract employee and employer NI. Why pay the NI if the company can make the contribution direct?
Employer pension contributions are usually the preferred method for business owners as personal contributions only attract tax relief up to the tax you pay on earned income (setting aside the diminimus allowance), so if you wish to make meaningful personal contributions you need a higher salary which would attract employee and employer NI. Why pay the NI if the company can make the contribution direct?
Its generally much better to let your LTD make pension contributions. Everyone is different though.
I think what Ginge is saying is that pensions on the whole need a lot of thought.
As for RA 55 its basically 58 for anyone under 40 now and likely to be 60 by the time we get to 2025.
I think what Ginge is saying is that pensions on the whole need a lot of thought.
As for RA 55 its basically 58 for anyone under 40 now and likely to be 60 by the time we get to 2025.
Edited by red_slr on Thursday 29th December 18:32
Sparkysea said:
Season's Greetings All
As a sole director (only employee)of a limited company I understand I do not have to auto enrol for a pension.
You do need to respond to their letter though & inform them that you have no employees. Crackers really, as HMRC will know this, shame they can't be a bit more joined up.As a sole director (only employee)of a limited company I understand I do not have to auto enrol for a pension.
PurpleMoonlight said:
2 sMoKiN bArReLs said:
You do need to respond to their letter though & inform them that you have no employees. Crackers really, as HMRC will know this, shame they can't be a bit more joined up.
Don't, they issue auto enrollment letters to pension schemes too ....Happy New Year all!
re enrolment - I received a letter addressed "Dear Employer" from the pensions regulator stating their records showed my business does not employ any staff and therefore I do not have any automatic enrolment duties. It also said " if this is still the case then you don't need to take any further action at this time".
So it looks as though I don't have to do anything
Sparky
re enrolment - I received a letter addressed "Dear Employer" from the pensions regulator stating their records showed my business does not employ any staff and therefore I do not have any automatic enrolment duties. It also said " if this is still the case then you don't need to take any further action at this time".
So it looks as though I don't have to do anything
Sparky
Sparkysea said:
Happy New Year all!
re enrolment - I received a letter addressed "Dear Employer" from the pensions regulator stating their records showed my business does not employ any staff and therefore I do not have any automatic enrolment duties. It also said " if this is still the case then you don't need to take any further action at this time".
So it looks as though I don't have to do anything
Sparky
Exmellent! Saves you a job.re enrolment - I received a letter addressed "Dear Employer" from the pensions regulator stating their records showed my business does not employ any staff and therefore I do not have any automatic enrolment duties. It also said " if this is still the case then you don't need to take any further action at this time".
So it looks as though I don't have to do anything
Sparky
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