Company contributions to personal pensions
Company contributions to personal pensions
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Gordon Brown

Original Poster:

11,838 posts

265 months

Sunday 7th October 2007
quotequote all

I get confused about the tax situation with pension contributions made by a company on behalf of a director.

I see people suggesting there are personal tax incentives for pension cobntributions but surely that applies only to money I put in myself, not what my company contribute?

How can I use surplus profits in the company to fill my pension in a tax efficient way?



Exigeowner

873 posts

231 months

Sunday 7th October 2007
quotequote all
I dont have the answers for you but I know that my accountant is ALWAYS going on about my pension ( which I dont have ) and how all manner of things can be added into it including work premises if you own them and as you mention surplus profits within the company.

I guess you can pay it directly in and not pay any tax at all but I would suspect there is an upper limit.

Not wanting to hikack your thread but it would be interesting to expand others thoughts on pensions, I want to live by the motto that I dont wanna be saving for things now that I wont see any return on for 30 years, If I buy a house with funds at least I can sell it whenever I want and realise the funds, likewise with banking it I can always get my hands on it should I need to.

Maybe that is not the point and the real point is if you dont need the money now then why let the taxman get their hands on it.

2 sMoKiN bArReLs

32,038 posts

265 months

Sunday 7th October 2007
quotequote all
Tax allowable to company, tax free to individual. Not many things qualify for that!

DavidY

4,492 posts

314 months

Sunday 7th October 2007
quotequote all
I have owned/co-owned various businesses over the last 10 years, all of them have made tax exempt contributions to my pension plan, ie sponsored personal pension. I have never made any contributions out of 'my salary' though you might in some instances say that there was an element of salary sacrifice!

I have fought and won with an NI inspector and a Tax inspector who didn't know how to intepret their own rules, they believed NI was due on these payments (which is wrong), and those to employees of the business concerned.

It is a very efficient method of drawing funds from a company, however you don't get the benefit until you retire, so you have to weigh up how much you want now against how much in the future.

davidy




Gordon Brown

Original Poster:

11,838 posts

265 months

Sunday 7th October 2007
quotequote all
DavidY said:
I have owned/co-owned various businesses over the last 10 years, all of them have made tax exempt contributions to my pension plan, ie sponsored personal pension. I have never made any contributions out of 'my salary' though you might in some instances say that there was an element of salary sacrifice!

I have fought and won with an NI inspector and a Tax inspector who didn't know how to intepret their own rules, they believed NI was due on these payments (which is wrong), and those to employees of the business concerned.

It is a very efficient method of drawing funds from a company, however you don't get the benefit until you retire, so you have to weigh up how much you want now against how much in the future.

davidy
I can live with that. We have reserves and will hopefully continue to get work to keep us ticking over so

BTW there is an article in the Sunday Times money section from the employees perspecyive which alludes to some of this. I think in the past my acountant has been cautious because we were a relatively new comopany and the stock market has having a turbulent time.

JD247

47 posts

229 months

Sunday 7th October 2007
quotequote all
You can pay contributions to a Personal Pension up to the limit of your annual salary or £3600 p.a. whichever is the greater. (or a ceiling of £215000 if you are lucky enough that you earn in excess of that, this limit will being going up gradually over the years)

As an owner/employer you could possibly pay more though the rules are still not set in stone. If you want more detail, feel free to pm me.

JD

Edited by JD247 on Monday 8th October 10:34