Company contribution to my pension

[tangent]

I know this has been asked before, but I am still a little confused over what is likely to be allowed this year with respect to my company contribution to my personal pension. I have a SIPP which I contributed 20k to last year, drawing a salary of 6k and net dividends of 39.6k. No issues with this so far, but I have yet to file the company accounts and personal tax return!

This year I would really like to increase my SIPP contribution to 50k or more, but am I likely to get into trouble over this? At what level would I ring HMRC alarm bells? e.g. could I get away with 100k? A few years ago I paid myself about 100k salary and paid the lot into a pension as a personal contribution, but I do not want to go down this route again due to the NI hit.

Last year's profit before tax, but after salaries, pension and other expenses was about 120k. This year's should be similar. At the end of last year (March 2010) I had about 107k in my profit and loss account.

[JoJoGabor]

My understanding is that you can't pay in more than your salary. So in your case £6k per annum. i was advised by my accountant a few months ago to increase my salary as i wanted to put in more pension payments.

[Scrag Meister]

As far as I knew the thresholds for company contributions to personal pensions were as follows

2009/10 £245,000
2010/11 £255,000
2011/12 £50,000

Pensions info

All IMHO.

[tangent]

Hi JoJoGabor, the salary limit only applies to your personal contribution. Your LTD company contribution to your pension is not constrained by your salary.

Scrag Meister - thanks for this, I had not realised about next year's reduction.

I know that in principal these are the contribution limits, but there are also a horribly subjective set of rules called the "Wholly and exclusively test" which appear to allow HMRC to make up anything they like in order to constrain pension contributions. I tried speaking to HMRC a few years ago, but got nowhere. They were exceptionally unhelpful - kept saying "We cannot give advice", to which I replied that I did not want advice, I just wanted to know what the rules meant in practice. In the end I chickened out, took a 100k bonus and paid this in to my SIPP.

On doing a bit more research, I think I would be within the rules if I were to contribute between 50k and 100k from my company this year, but do not want to do anything that would make me appear on HMRC's radar. I do not consider that I am not doing anything wrong, no taking the p*** expense claims or dodgy Montpelier type schemes for instance, but just do not want the hassle of an inspection and possible arguments about IR35, etc.

[Fred Bloggs]

My understanding is that you can't pay in more than your salary. So in your case £6k per annum. i was advised by my accountant a few months ago to increase my salary as i wanted to put in more pension payments.

You need to get a different accountant, I believe. Your company can put in what it likes upto the maxima stated above.