Pension Contributions

[JoJoGabor]

I want to setup Pension contributions direct from the corp account. I have been given this advice from my accountant:

"Although the guidance is not set in stone on this, it would appear that HMRC will accept the contributions
are for the purpose of trade, if the overall remuneration package of the employee/director is reasonable.
This means that the salary and pension package as a whole should be considered and provided this does
not cause the company to make a tax loss in any given year, the contributions should qualify for tax relief;
this also assumes that contributions are not ‘excessive’."

Anyone got any idea of what excessive is. I pay myself £12k per year in Salary and want to pay £1000/month contributions. Is that classed as excessive?

[Craig@Clarity]

In my opinion, I don't think so. Your company can contribute up to £50,000 in this tax year.

[Fred Bloggs]

MyCo contributes a £1000 a month into my SIPP for me and has done for the last ~5 years. It is a great way to IR35 proof that money too.

[Greg@CapitalCity]

Not excessive

Sounds fine. To be sure your pension payments are wholly and exclusively for business you might also want to set up some board minutes that explains your overall salary package (in that your package also includes for £1000/mth pension payments). To get your pension contributions wrapped up formally like this will just give you a little extra certainly.

For a single Director company, you are most likely on safe ground.

[JoJoGabor]

Thanks all, good advice

[Scrag Meister]

I want to setup Pension contributions direct from the corp account. I have been given this advice from my accountant:

"Although the guidance is not set in stone on this, it would appear that HMRC will accept the contributions
are for the purpose of trade, if the overall remuneration package of the employee/director is reasonable.
This means that the salary and pension package as a whole should be considered and provided this does
not cause the company to make a tax loss in any given year, the contributions should qualify for tax relief;
this also assumes that contributions are not ‘excessive’."

Anyone got any idea of what excessive is. I pay myself £12k per year in Salary and want to pay £1000/month contributions. Is that classed as excessive?

I too pay salary of 12k , and am currently putting away £1500 per month into my pension. There have been no questions over the few years I have been running this.

I understand that the limit has recently been reduced to 50k per annum, I think it was approx 250k.

IMHO £1k per month is easily acceptable.

[psychocandy]

I always thought there was no advantage to getting company to pay your pension contribs?

Either way you dont pay tax on it? Or am I wrong?

[Craig@Clarity]

I always thought there was no advantage to getting company to pay your pension contribs?

Either way you dont pay tax on it? Or am I wrong?

There's no tax but if you pay it personally, it comes out of tax income.

[JoJoGabor]

I think there's 0.5% difference between the two - negligible, I believe you can only pay personal contributions up to your annual salary, which I may want to increase in the future. i also like the comfort of receiving a small basic salary each month, regardless of how much work is coming in

[SimonMac]

I always thought that there was some sort of extra relief for a company to pay it? Or is it just that they won't be paying Corp Tax on the amount as it wouldn't be counted towards profits?