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    Default Personal pension contributions

    Hi there, has anyone seen any worked examples of the tax/after tax income numbers for a personal pension contribution based on what salary and dividends have been taken? I want to compare it to direct company pension contribution, which is quite a simple calculation. From what I have read there is not much to choose between them but I just wanted to see some worked examples/calculator to compare the two but I can't find anything.

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    Your accountant won't run the numbers for you?
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    What prompted this was my accountant. He has given me information on this but as I can't understand the workings of his numbers and it sometimes feels like we are talking a different language, I am trying to find a worked example for clarification/understanding.

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    Quote Originally Posted by northernladuk View Post
    Your accountant won't run the numbers for you?
    I asked my Accountant a question the other day who sometimes posts on here and she took a week to get back, before answering, 'Have you tried asking NorthernLadUK?'
    What happens in General, stays in General.
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    i recently setup a sipp - after speaking to accountant he said generally its the same cost/benefit paying via ltd or personally, but just a lot simpler to get company to pay directly...assuming your ltd etc then I think its a lot easier paying through company.

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    Quote Originally Posted by slogger View Post
    i recently setup a sipp - after speaking to accountant he said generally its the same cost/benefit paying via ltd or personally, but just a lot simpler to get company to pay directly...assuming your ltd etc then I think its a lot easier paying through company.
    This.

    Also bear in mind personal pension contributions are limited to your "net relevant earnings", which importantly excludes dividends. So for a typical Ltd Co owner this means they'd be limited to ~8k personal contribution, 40k company. Add in the simplicity and the fact that the end tax impact is virtually the same and company makes sense.

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    Surely, the more HMG and HMRC jack up the taxation on divis, NIC and income tax, the more important it is to put as much as you can afford directly from Your Co Ltd into your SIPP?

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    Quote Originally Posted by Maslins View Post
    This.

    Also bear in mind personal pension contributions are limited to your "net relevant earnings", which importantly excludes dividends. So for a typical Ltd Co owner this means they'd be limited to ~8k personal contribution, 40k company. Add in the simplicity and the fact that the end tax impact is virtually the same and company makes sense.

    Or 8K personal, 32K company, for a total of 40K.

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    I've been paying 100% of my (8K) salary as personal contributions for a while now, then "topping up" close to company year end with a company contribution. The personal contributions are (were?) slightly more tax efficient, as the whole of the basic rate band was left for dividends.

    As it happens, I'm close to the point of deciding I can't be arsed with this any more, and have cancelled the direct debit with effect from the end of this month, so next year I'll probably just make a lump sum contribution of whatever's in the company bank account near year end.

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    Quote Originally Posted by Ebenezer View Post
    I've been paying 100% of my (8K) salary as personal contributions for a while now, then "topping up" close to company year end with a company contribution. The personal contributions are (were?) slightly more tax efficient, as the whole of the basic rate band was left for dividends.

    As it happens, I'm close to the point of deciding I can't be arsed with this any more, and have cancelled the direct debit with effect from the end of this month, so next year I'll probably just make a lump sum contribution of whatever's in the company bank account near year end.
    With the advent of dividend tax, it is more efficient for company contributions, rather than personal from salary. Although this may of course change in the future.

    I would however consider drip feeding over the year rather than an annual lump sum, so you reduce the risk of buying into the market at the wrong time.

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