PAYE and contracting on top

[pintofale]

Hi,

I work full time at a PAYE job but I also do some contracting on the side through my own company (keeps me busy). I am into the 40% tax band with my PAYE job, and I have so far not taken any money from my business, partly because I don't really need to, and partly because I don't want to have to do payroll (I have no accountant, do it myself), and partly because I don't want to lose half of it in tax. Anyway, I was planning to stick most of it into my personal pension (SIPP) as an employer contribution, and leave just enough to declare a bit of profit, pay 19% CT on it and then take the rest as a dividend, which will be less than 2k so I don't have to rock the boat with HMRC. But I am a bit nervous about sticking a lot of money in the pension and then getting some weird tax interpretation followed by a large tax bill. Is there any problem with taking a pension contribution as remuneration when there is no associated salary? Everything I read suggests I should be ok but the risk is such that I thought it best to seek the wisdom of those who have gone before, so if you have any reassurances or cautions please let me know!

Cheers,
pintofale.

[Chart Accountancy]

Hi,

I work full time at a PAYE job but I also do some contracting on the side through my own company (keeps me busy). I am into the 40% tax band with my PAYE job, and I have so far not taken any money from my business, partly because I don't really need to, and partly because I don't want to have to do payroll (I have no accountant, do it myself), and partly because I don't want to lose half of it in tax. Anyway, I was planning to stick most of it into my personal pension (SIPP) as an employer contribution, and leave just enough to declare a bit of profit, pay 19% CT on it and then take the rest as a dividend, which will be less than 2k so I don't have to rock the boat with HMRC. But I am a bit nervous about sticking a lot of money in the pension and then getting some weird tax interpretation followed by a large tax bill. Is there any problem with taking a pension contribution as remuneration when there is no associated salary? Everything I read suggests I should be ok but the risk is such that I thought it best to seek the wisdom of those who have gone before, so if you have any reassurances or cautions please let me know!

Cheers,
pintofale.

You can make employer pension contributions from your company, there are no limits as long as the pension contributions are ‘wholly and exclusively’ for the purpose of the trade.

[northernladuk]

How much are we talking here?

[Craig@Clarity]

How much are we talking here?

One millionnnn dollars!!

Your company can contribute up to £40k without there being any tax issues.

[northernladuk]

One millionnnn dollars!!

Your company can contribute up to £40k without there being any tax issues.

I know that. Just checking the OP does.

[Craig@Clarity]

I know that. Just checking the OP does.

I knew you knew that.

I should have actually said "btw to the OP, your company can contribute up to £40k without there being any tax issues." Couldn't be bothered to go through the edit process. In actual fact, it's probably taken me longer to reply this way. Ah well. It's Friday. Clare needs a cuppa...gotta go!

[northernladuk]

Clare needs a cuppa...gotta go!

Good to see everything is still in order over there

[Craig@Clarity]

Good to see everything is still in order over there