Always thought you could only do up to salary level into a pension - but this implies differently from CUK articles see below:
So, can anyone let me know if I can make a big payment into my own SIPP from the company without any grief (say 20k or so ) or does it have to be a different type of pension ?
'With the end of the 2012-13 tax year fast-approaching, the ContractorUK Money Club explores how limited company contractors can reduce a large tax bill using a company pension with Tony Harris of freelancers’ IFA ContractorMoney.
If you have built up a pot of retained profits in your limited company, then you could invest them directly into a pension and avoid a hefty corporation tax bill. While this will mean delaying getting your hands on the cash until you reach age 55, it does represent a very tax-efficient method of transferring funds from company to personal hands. At 55, you can choose to release up to 25% of your pension as a tax-free lump sum with the remainder left to grow or used to provide an income.
As long as your day-to-day expenses are covered and you have taken any salary or dividends that you require, you should be able to invest as much of your remaining income and current year profits into a pension as you would like because there is no relationship between salary and the size of a company contribution. As funds are transferred directly, there is no personal income tax or national insurance deduction and you also save on the corporation tax that you would otherwise have paid on this year’s profits.
A company contribution into a pension fund can be made directly from retained profits held in a contractor's limited company account. In addition, current year's profits can be transferred and these are no longer liable for corporation tax. This enables the company's owner to reduce their corporation tax bill considerably, as they will only be charged tax at 20% on profits left in the company at the end of the trading year.
Alternatively if you would prefer to make a personal contribution then you can take a larger than usual dividend and invest personally to save on income tax. It is worth remembering, however, that personal contributions are limited to 100% of salary (which is probably already low) whereas company contributions are unlimited.'
So, can anyone let me know if I can make a big payment into my own SIPP from the company without any grief (say 20k or so ) or does it have to be a different type of pension ?
'With the end of the 2012-13 tax year fast-approaching, the ContractorUK Money Club explores how limited company contractors can reduce a large tax bill using a company pension with Tony Harris of freelancers’ IFA ContractorMoney.
If you have built up a pot of retained profits in your limited company, then you could invest them directly into a pension and avoid a hefty corporation tax bill. While this will mean delaying getting your hands on the cash until you reach age 55, it does represent a very tax-efficient method of transferring funds from company to personal hands. At 55, you can choose to release up to 25% of your pension as a tax-free lump sum with the remainder left to grow or used to provide an income.
As long as your day-to-day expenses are covered and you have taken any salary or dividends that you require, you should be able to invest as much of your remaining income and current year profits into a pension as you would like because there is no relationship between salary and the size of a company contribution. As funds are transferred directly, there is no personal income tax or national insurance deduction and you also save on the corporation tax that you would otherwise have paid on this year’s profits.
A company contribution into a pension fund can be made directly from retained profits held in a contractor's limited company account. In addition, current year's profits can be transferred and these are no longer liable for corporation tax. This enables the company's owner to reduce their corporation tax bill considerably, as they will only be charged tax at 20% on profits left in the company at the end of the trading year.
Alternatively if you would prefer to make a personal contribution then you can take a larger than usual dividend and invest personally to save on income tax. It is worth remembering, however, that personal contributions are limited to 100% of salary (which is probably already low) whereas company contributions are unlimited.'
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