New to SIPP, some questions New to SIPP, some questions - Page 2
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  1. #11

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    Quote Originally Posted by cwah View Post
    I think (but not sure) that you can only pay into your SIPP from profit.

    So if your £40k is from retained earnings, then you may not be able to pay as you'd declare loss in that case.
    Really? If you aren't sure don't post rubbish - there have been multiple posts where using a pension to draw down money to below £25k before closing the company has been discussed. We even had one last week.
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  2. #12

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    Quote Originally Posted by eek View Post
    Really? If you aren't sure don't post rubbish - there have been multiple posts where using a pension to draw down money to below £25k before closing the company has been discussed. We even had one last week.
    If you know the legal requirement, why don't you share?

  3. #13

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    Quote Originally Posted by cwah View Post
    I think (but not sure) that you can only pay into your SIPP from profit.
    that's not true.
    Profit is calculated after expenses.
    Pension payments are expenses.

    You do need cash that is not owed to someone else though.
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    Quote Originally Posted by cwah View Post
    I think (but not sure) that you can only pay into your SIPP from profit.

    So if your £40k is from retained earnings, then you may not be able to pay as you'd declare loss in that case.
    I think (and am sure) you are wrong.

  5. #15

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    So you guys are saying you can pay into the SIPP with £0 profit?

    Basically, the company director can take a $40k loan, pay it to the SIPP as expense. Then close the company?


    Or with retained earning, pay the £40k in the SIPP, then claim for loss in future years?

  6. #16

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    Quote Originally Posted by cwah View Post
    So you guys are saying you can pay into the SIPP with £0 profit?

    Basically, the company director can take a $40k loan, pay it to the SIPP as expense. Then close the company?
    No, no-one said that. You said payments could not be made from retained earnings. It can (assuming you actually mean retained profits).

    Do you understand the difference between a profit and retained profits?

    Quote Originally Posted by cwah View Post
    Or with retained earning, pay the £40k in the SIPP, then claim for loss in future years?
    You can make payments from retained profits, but this is where you should engage your accountant based on your specific circumstances.
    Last edited by Paralytic; 10th November 2020 at 12:59.

  7. #17

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    Quote Originally Posted by cwah View Post
    So you guys are saying you can pay into the SIPP with £0 profit?
    sigh.......

    suppose you have £20k revenue.
    And pay yourself a £10k salary.
    You now have £10k of "profit". It's not actually profit yet as you've not finished your calculations.

    Pay that into a SIPP and you have £0k profit.
    You have now made £0k profit and paid £10k into a SIPP.
    So yes you can pay money into a SIPP without profit.

    I think you don't know what profit is in the accurate sense that an accountant might use.

    Profit Definition
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  8. #18

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    Quote Originally Posted by win10 View Post
    Thanks for the input.
    So I set up my personal SIPP and transfer up to £40k from the company to it. Ideally before end of LTD's TY (Nov 2020)to save on corp tax. Is that it in brief?
    Or...

    Assuming the company has £40k pre-tax profit to play with after paying all other expenses.

    Say the company makes a £10k contribution to your SIPP for this company year. At year end it then has £30k pre-tax profit. Minus 20% CT (£6k) it is left with £24k retained profit. In the next company year, but still same tax year (for you), the company contributes £30k to your SIPP. So next year profit is reduced by £30k, and CT for that is reduced by £6k, effectively putting it where it would have been had it made a £40k contribution in the first year, albeit that HMRC had your £6k for a year.

    Now, if all the company has for next year is the £24k retained profit, it can still contributes £30k to your SIPP. This results in a £6k loss which the company can offset against the previous year. So, if you ask nicely, HMRC will pay back the £6k to YourCo, again leaving it where it would have been had it made a £40k contribution in the first year.

    These are large sums though, so take professional advice. Also don't let the tax tail wag the dog.

    Other question: wife is a employee (contract and all, £8k/y) of LTD. Can she have £40k put in her SIPP as well or this is only for directors?
    HMRC would likely take a dim view of that, unless she's a direct fee earner for the company. Her effective £48k remuneration package would deemed a tax dodge. For you however it's not a problem, assuming you're the only fee earner.

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    Quote Originally Posted by Contreras View Post
    Or...

    Assuming the company has £40k pre-tax profit to play with after paying all other expenses.

    Say the company makes a £10k contribution to your SIPP for this company year. At year end it then has £30k pre-tax profit. Minus 20% CT (£6k) it is left with £24k retained profit. In the next company year, but still same tax year (for you), the company contributes £30k to your SIPP. So next year profit is reduced by £30k, and CT for that is reduced by £6k, effectively putting it where it would have been had it made a £40k contribution in the first year, albeit that HMRC had your £6k for a year.

    Now, if all the company has for next year is the £24k retained profit, it can still contributes £30k to your SIPP. This results in a £6k loss which the company can offset against the previous year. So, if you ask nicely, HMRC will pay back the £6k to YourCo, again leaving it where it would have been had it made a £40k contribution in the first year.

    These are large sums though, so take professional advice. Also don't let the tax tail wag the dog.



    HMRC would likely take a dim view of that, unless she's a direct fee earner for the company. Her effective £48k remuneration package would deemed a tax dodge. For you however it's not a problem, assuming you're the only fee earner.
    Thanks for that.
    It is clear my wife earns small part of the fees for the company (I'd say 5-7%) through her doing the admin and book keeping. So is there any (broad) guide from HMRC on how much an employee like this can have as pension contribution to a SIPP.

    Can anyone suggest any SIPP provider (besides vanguard)? What do I need to look for? Fees?
    If I open a SIPP now I suppose I dont have a minimum sum to put in. Or some of them want a minimum payment. Really green on this topics.

  10. #20

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    Quote Originally Posted by win10 View Post
    Thanks for that.
    It is clear my wife earns small part of the fees for the company (I'd say 5-7%) through her doing the admin and book keeping. So is there any (broad) guide from HMRC on how much an employee like this can have as pension contribution to a SIPP.
    You're wife's admin/bookeeping brings in 5-7% of revenue to the company?

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