Pension payment to spouse director?

[Stumped]

Hi - hopefully a simple question and a simple answer...

As well as my Ltd. Co making a direct contribution to my pension fund, is it permissible for the Ltd. Co. to make a similar direct contribution to my fellow director's (spouse) pension fund.

Thanks
S

[Greg@CapitalCity]

Yes, the same pension rules apply to both Directors.

[Hex]

But doesn't this give a problem if the spouse is doing little or no work for the company? I understood that HMRC were prepared to allow Company Pension payments where they were part of the remuneration that an employee of the company received, but that they may be dissallowed if that employee had done little work. Paying your spouse 50K a year pension for simply being a director is surely a no-no. Paying yourself that 50K pension is probably OK. That's what I understood.

[northernladuk]

I think this is another one where the letter of the law says yes but bend it to suit the way we work as a 1 man small business which then opens all sorts of situations the law didn't envisage.

Similar to paying your spouse £7k for effectively nothing and splitting dividends 50/50. All possible by the letter but in our situations I would argue is clearly taking the piss. We are happy to sit on it until we get investigated and that is when the problems will happen.

I am sure you can pay pension as she is a director but as Hex says, giving your partner £600 pensions for no other reason she is your director is again taking the piss. I guess you have already considered paying her £7k and giving divis?

Depends on how much insurance you have against an investigation as to whether or not you follow this one up but for me it's too risky for too little extra return.

[Greg@CapitalCity]

But doesn't this give a problem if the spouse is doing little or no work for the company?

Yes, it does create a problem. If any Director is actually doing little or no work for the business, it would be very hard to justify paying them a salary. Since pension contributions get wrapped up in the overall remuneration package of a Director, the same also applies to pensions. Just like salary, pension contributions need to meet the "wholly, exclusively...." test. If you cannot justify paying a Director a salary, you cannot justify paying them a pension.

[Stumped]

thanks

Thanks everyone for your responses and clarification.
S.