Making employer contributions to a pension as sole director of LTD

[whiskers]

Hi everyone,

I am aware there is a lot of info on pensions on the forum & the web in general, but I'm a bit overwhelmed by the volume/specificity of it and am looking for some general clarification on where to begin, and am hoping some of you might be able to help me. Most of what I've found discusses the Auto Enrolment Scheme (which I am both ineligible for & exempt from, as far as I'm aware) or the tax benefits of making employer contributions. I have found very little about how to actually make employer contributions outside of the Auto Enrolment Scheme.

My situation: I am the director & sole employee of a recently established LTD. I have a private pension set up by a former employer that has been long-neglected, and I would like to pay into it as an employer as a way of taking money out of my company.

My questions:

1. Do I need to set up a 'pension scheme' for myself in order to make employer contributions? If so, is it simply a matter of registering with HMRC as a pension scheme administrator? If not, is there something else I need to do to enable me to make employer contributions? Note I'm seeking guidance about HMRC/government compliance (i.e. rather than requirements of pension companies).

2. What are the regulatory implications of doing this? My accountant (who has encouraged me to seek guidance elsewhere as she is not an FA) has warned there might be complex filing/regulatory requirements, and/or fees, for setting up a pension scheme as an employer. I do not have an FA, and my calls to HMRC, the Pensions Advisory Service and the Pension Regulator turned up nothing (as they were only able to answer questions about the auto enrolment scheme, and couldn't advise on what to do as a sole director/employee).

I would be grateful for any links to government guidance, and/or threads that already address these aspects (I am aware of the pension sticky on the board, but reading through it I am already lost in all of the acronyms, and most queries seem to deal with the best funds to invest in rather than how to actually pay into a pension).

Thank you for your time in reading & offering your help! It is much appreciated.

[Alchemy Accountancy]

Your accountant is right, in that to set up an employer pension scheme there is likely to be fees etc. If you are the sole director of the company, you do not have any duties under auto-enrolment, other than to submit a declaration of compliance - your accountant should be able to handle this.

I'd suggest finding a private pension that will accept employer contributions (most will) and simply make payments to that (make sure the pension scheme knows they are employer contributions) - there is less cost and administration if you do it this way, and you will get tax relief on the contributions provided they are a trading expense and do not exceed £40k per annum.

[mudskipper]

You don't need to set up schemes etc. Simply set up a SIPP (Self invested personal pension) and make employer contributions direct from yourCo.

I use Hargreaves Lansdown which provide a very easy to use platform and a 'managed portfolio' if you don't want to make your own choices.

YourCo can make both regular and one off contributions.

Hargreaves Lansdown | ISAs, pensions, funds and shares


I like the ease of use, but other providers might be cheaper, so shop around.

[whiskers]

Thanks for the replies!

I already have a pension I can pay into (and have confirmed with my pension provider I can make employer contributions into it).

To confirm I've understood:

1. I do not need to set up a pension scheme in order to pay into my pension as an employer.

2. Aside from notifying the Pension Regulator that I am exempt from the Auto Enrolment Scheme, there are no registration/reporting requirements with either them or HMRC for making employer pension contributions (aside from the standard payroll & business accounts reporting requirements).

Thank you for clarifying!

[mudskipper]

Thanks for the replies!

I already have a pension I can pay into (and have confirmed with my pension provider I can make employer contributions into it).

To confirm I've understood:

1. I do not need to set up a pension scheme in order to pay into my pension as an employer.

2. Aside from notifying the Pension Regulator that I am exempt from the Auto Enrolment Scheme, there are no registration/reporting requirements with either them or HMRC for making employer pension contributions (aside from the standard payroll & business accounts reporting requirements).

Thank you for clarifying!

Yes, that's it (assuming you don't have employees).

And if you're intending to put a lot in, be aware of annual limits and the like.

[craigy1874]

Your accountant is right, in that to set up an employer pension scheme there is likely to be fees etc. If you are the sole director of the company, you do not have any duties under auto-enrolment, other than to submit a declaration of compliance - your accountant should be able to handle this.

I'd suggest finding a private pension that will accept employer contributions (most will) and simply make payments to that (make sure the pension scheme knows they are employer contributions) - there is less cost and administration if you do it this way, and you will get tax relief on the contributions provided they are a trading expense and do not exceed £40k per annum.

You don't have to complete a declaration of compliance if you are exempt due to being a sole director. You only have to submit this if you have employees.

Just incase you are worried, the advice above is incorrect.

[Alchemy Accountancy]

You don't have to complete a declaration of compliance if you are exempt due to being a sole director. You only have to submit this if you have employees.

Just incase you are worried, the advice above is incorrect.

The form is not called a declaration of compliance (as would otherwise be completed), however the company should make a declaration to the pension regulator that they are not an employer - it may be the case that the company is exempt but that does not mean 'don't worry, do nothing'.

[taxevo]

Thanks for the replies!

I already have a pension I can pay into (and have confirmed with my pension provider I can make employer contributions into it).

To confirm I've understood:

1. I do not need to set up a pension scheme in order to pay into my pension as an employer.

2. Aside from notifying the Pension Regulator that I am exempt from the Auto Enrolment Scheme, there are no registration/reporting requirements with either them or HMRC for making employer pension contributions (aside from the standard payroll & business accounts reporting requirements).

Thank you for clarifying!

That's right, all you need to do is make sure the pension provider knows that you will be making employer contributions from your limited company. Then just set up the payment from your business bank account.

As already mentioned, just be aware of the amounts you can pay in. Up to £40k without any personal tax implications. Check with your accountant for specific advice around your circumstances.

[Platypus]

As mudskipper said, setting up a SIPP is so very easy. I'd be wary of putting money into an existing scheme unless you're sure it has all the advantages that a SIPP offers. And check the fees both ways.

I didn't use HL but I found a company recommended to me, and they did the work, if there was any. I handed them a company cheque and next thing I have paperwork confirming my employer contribution into my SIPP. Simples.

[whiskers]

Thank you for all of the feedback!

As mudskipper said, setting up a SIPP is so very easy. I'd be wary of putting money into an existing scheme unless you're sure it has all the advantages that a SIPP offers. And check the fees both ways.

When you say "fees both ways," other than the pension provider's fees, what other fees do you mean?

(Currently have a pension with Aviva; debating paying into it before my end of year to get the tax benefits & sorting out transferring it out later.)