Pensions and accountants - am I going daft?

[the_rangdo]

Ignoring the obvious answer yes

I'm asking my accountant if there are any general guidelines regarding the amount my LtdCo contributes to my SIPP given I only pay myself a salary of £11k, just with a view to avoiding any possible investigations if I dump loads more than my salary.

All I'm being told is a standard type of "can't advise, speak to a financial advisor or your pension provider" answer.

I know the monetary limits you can pay into a pension generally, I just want to avoid suspicions if I have a low salary yet £1000's are going into my pension.

Shouldn't my accountant be able to tell me that - I'm not asking for specific amount, just rough guidelines.

[malvolio]

Another reason to look at EPPs, which are for directors of companies, not individuals. OK, so the management fees are a bit higher, but payments in do not have to relate to your personal salary.

Then again, I am not an IFA - perhaps people should speak to a real one!

[Zen Contracting]

If you were my client I'd advise you to pay yourself a salary of £5,435 to avoid all NIC and tax payments. It would not raise any suspicions at HMRC as it is normal practice and quite legitimate.

Secondly I advise my client that I can't give them financial advice but I do give them an overview of what is and is not allowed in terms of pension payments. Tis article might be of interest to you: http://www.taxationweb.co.uk/tei/article.php?id=310

Regards.

David.

[the_rangdo]

Still don't see why an accountant that's supposed to be guiding me through all matters financial can't tell me if HMRC will take a dim view or not depending on my contribs.

I'd speak to an IFA if I had a lump of money and wanted to know where to invest it, not to ask how much to invest first to avoid a potential tax bill.

[s2budd]

Your accountant has probably not answered the question because it does not have a single answer. The amount that you can contribute toward your pension depends on the local tax office giving guidence for which there are no hard rules. A better question to ask of your account is what do your other clients contribute towards a pension who are in a similar position. The answer that I have received is upto 1k per month and various add hock amounts up to about £30-40K per year at year end.

[ASB]

If you do a search then you'll find it's been covered quite a lot of times - but you wont get a yes/no answer.

The general limit for contributions is (cue correction) 205,000. There is a general view that as a director it's not a problem, any contribution will pass the wholly for business test (and thus be entitled to a corporation tax deduction). Of course this also assumes that your SIPP will take company contributions (and I have no idea if this is even possible). And also that you are intending corporate contributions to be made rather than personal ones. [It does appear these assumptions are correct based on your original posting].

There is also a school of thought that suggests salary sacrifice is potentially safer. Here the employer makes contributions from your sacrificed salary - though this is probably only relevant if you are trying to get an umbrella to make employer contributions.

In this case you would (for sake of argument) agree a salary of 61k. Agree to sacrifice 50k for pension contributions. End result is 50k to pension 11k in salary. If your accountant won't even give you general guidance then I'd seriously consider whether you wish to remain with them.

[the_rangdo]

Thanks, that sort of answer would have covered it, I told them I was only asking for a guideline not an absolute.

Given they advised on the amount of salary to take in the first place, and they've recommended minimum values for e.g. home working amounts below which Hector wouldn't normally bother looking at, just a ball-park "Don't pay in more than x times your salary as an approx guide" would have been o.k. and was all I wanted.

My accountant just says speak to a pension advisor, will that pension advisor bother about local tax office guidance? I feel it's more likely they'll say speak to your accountant.

Seems to me I'm left to investigate stuff on the www

[the_rangdo]

If you do a search then you'll find it's been covered quite a lot of times - but you wont get a yes/no answer.

Being pedantic, I wasn't actually asking the forum to answer my pension questions - I know how to search

I'm asking if I'm being unreasonable expecting an accountant to give me advice regarding the financial matters of my LtdCo and it's employees/directors.

But, you've given me more information for free than someone I'm paying for - that can't be right, can it (and don't tell me to search for the answer to that )

[Alan @ BroomeAffinity]

As an accountant myself, I'd be inclined to agree that we are not regulated or insured to provide this advice so it'd be difficult to do so but as it is more information rather than advice we'd be providing then I don't think we'd be breaking any rules. In general the info ASB has given in his post would be basically what I'd say.

And I would imagine that the IFA would probably call me to confirm everything's ok with the contributions.

Like most things financial - there's no black and white only lots of grey.

[pmeswani]

Thanks, that sort of answer would have covered it, I told them I was only asking for a guideline not an absolute.

Given they advised on the amount of salary to take in the first place, and they've recommended minimum values for e.g. home working amounts below which Hector wouldn't normally bother looking at, just a ball-park "Don't pay in more than x times your salary as an approx guide" would have been o.k. and was all I wanted.

My accountant just says speak to a pension advisor, will that pension advisor bother about local tax office guidance? I feel it's more likely they'll say speak to your accountant.

Seems to me I'm left to investigate stuff on the www

One possible reason why is down to them not being able to offer impartial advice or be able to obtain any commission from the advice they could offer you.

When I started contracting, I went through Parasol Umbrella. I was encouraged to use Parasol's own branded EPP (by their own IFA arm), which I disagreed with as I would not be in control of the pension investments. They insisted that the best way was to go into Parasol's EPP as I could contribute more into the scheme via employer & employee contributions (in terms of tax relief), etc. I did try and tell them that this can also be achieved in a SIPP... but they kindly ignore that. I wasn't impressed with their independance. So it does pay to speak to someone that is independant to your accountant.