Executive Pension Plans

[NeilShadrach]

So contractors with company pension plans will now be paying tax and NI on their pension contributions?

[SueEllen]

What the hell are you on about?

[northernladuk]

Oh dear oh dear.

[eek]

So contractors with company pension plans will now be paying tax and NI on their pension contributions?

you need to give us a bit more information to explain your jumps in logic.

You will be being paid after Employers NI has been paid by the agency (potentially from your income) and after Employees NI and income tax has been withheld and paid on your behalf by the agency.

How your company then pays into your pension plan (for I suspect that is what you mean by an Executive Pension Plan) is an entirely separate issue but the income your company is receiving is tax deducted ready to be paid directly into your personal bank account as tax paid income.

[SueEllen]

There is nothing stopping you joining an umbrella, joining their pension scheme and paying into that before tax and employees NI.

[eek]

There is nothing stopping you joining an umbrella, joining their pension scheme and paying into that before tax and both employers and employees NI once the umbrella has deducted their fee and paid you the minimum living wage.

FTFY

[NeilShadrach]

There is nothing stopping you joining an umbrella, joining their pension scheme and paying into that before tax and employees NI.

True. Just as there's nothing stopping me becoming a permanent employee. Rather misses the point though.

[NeilShadrach]

you need to give us a bit more information to explain your jumps in logic.

You will be being paid after Employers NI has been paid by the agency (potentially from your income) and after Employees NI and income tax has been withheld and paid on your behalf by the agency.

How your company then pays into your pension plan (for I suspect that is what you mean by an Executive Pension Plan) is an entirely separate issue but the income your company is receiving is tax deducted ready to be paid directly into your personal bank account as tax paid income.

Your first paragraph simply confirms what I said. I don't see any 'jumps in logic'.

Previously payments into the pension scheme would have been made before tax and NI deductions, in future they will be made after. So effectively tax and NI are paid on the pension contributions which was not the case before. It's not an "entirely separate issue" at all. Someone did suggest that the tax may be reclaimable at a later point during self-assessment but I've no idea if this is so.

[eek]

Your first paragraph simply confirms what I said. I don't see any 'jumps in logic'.

Previously payments into the pension scheme would have been made before tax and NI deductions, in future they will be made after. So effectively tax and NI are paid on the pension contributions which was not the case before. It's not an "entirely separate issue" at all. Someone did suggest that the tax may be reclaimable at a later point during self-assessment but I've no idea if this is so.

The jumps in logic are:-

1) My contract is now inside IR35
2) The contract is in the public sector with tax withheld and paid on your behalf by the agency
3) I'm going to continue using my limited company
4) I don't have any income outside of the contract that is inside IR35

Now the thing to remember is that all HMRC cares about - is how you are pay in tax and making sure that your income (from that inside IR35 contract) is properly taxed - they are not concerned about how your pension works - they want what they see as the correct amount of NI paid.

Being NI of course that money is not recoverable as far as anyone can confirm but the income tax would be.

Hence why I'm asking for more information because using a limited company for an inside IR35 contract with large pension contributions is insane. This link to a post in the umbrella section shows how much better using an umbrella in your circumstances probably would be http://forums.contractoruk.com/umbre...ributions.html

[WordIsBond]

Hence why I'm asking for more information because using a limited company for an inside IR35 contract with large pension contributions is insane.

I know we're in the Public Sector section, but just to be clear, this statement is only necessarily true for Public Sector. In the private sector it may not be true at all.