Pension - How much can I put in?
Discussion
Looking for some advice on pensions.
I am self-employed, and pay myself a minimum salary while taking dividends from the company throughout the year. I also have some income from buy to let property, which is included on my tax return.
I want to put some money in to a pension and am aware that there is a limit to how much I can put in.
From what I can see, the limit is 100% of my earnings up to 40k.
Does the 100% of my earnings just include my salary, or does it include my dividends and income from the rental property too?
Thanks in advance for any guidance.
I am self-employed, and pay myself a minimum salary while taking dividends from the company throughout the year. I also have some income from buy to let property, which is included on my tax return.
I want to put some money in to a pension and am aware that there is a limit to how much I can put in.
From what I can see, the limit is 100% of my earnings up to 40k.
Does the 100% of my earnings just include my salary, or does it include my dividends and income from the rental property too?
Thanks in advance for any guidance.
There have been a couple of threads on this recently & the understanding is that you can contribute up to £40,000 when doing so via a PSC. The rental income is not allowable though - it's not 'earned' income.
There is a fair amount of information on this site:
https://www.contractoruk.com/money/can_i_contribut...
There is a fair amount of information on this site:
https://www.contractoruk.com/money/can_i_contribut...
You can technically put in however much you like. The limits are on the amounts you can put in and get tax relief on.
It is also Net Relevant Earnings, which does not include dividends or rental income (even though you pay tax on these).
If you have a company then it may be better to make a company contribution (it very often is) into your pension on your behalf.
Finally, you can use something called Carry Forward to take advantage of any unused pension contributions from the previous 3 tax years (though you must have had a pension in place for each of those years, even if you did not contribute to it - and you don't have to make such contributions to that particular pension).
I hope that helps, just shout with anything else!
It is also Net Relevant Earnings, which does not include dividends or rental income (even though you pay tax on these).
If you have a company then it may be better to make a company contribution (it very often is) into your pension on your behalf.
Finally, you can use something called Carry Forward to take advantage of any unused pension contributions from the previous 3 tax years (though you must have had a pension in place for each of those years, even if you did not contribute to it - and you don't have to make such contributions to that particular pension).
I hope that helps, just shout with anything else!
Generally speaking, employer contributions are the most tax efficient way of contributing, you can pay up to £40k plus any brought forward allowances that you may have. Just bear in mind that with employer contributions, your contributions are 'gross', you obtain the tax relief via reduced corp tax and paying less tax on divis that you would otherwise have taken to make personal contributions.
Short answer is (up to £40k) straight from the company account into your pension. What you pay yourself isn't relevant in this instance.
Providing you are enrolled in a pension scheme you can also carry back 3 years (so potentially £160k).
The benefit is that the contributions are pre-Corporation Tax as has already been mentioned.
Providing you are enrolled in a pension scheme you can also carry back 3 years (so potentially £160k).
The benefit is that the contributions are pre-Corporation Tax as has already been mentioned.
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