I have a tax question that is vexing me:
taxable income for year from very good permie stint = £115000
salary from myCo = 0 (living off savings for rest of the tax year)
MyCo dividends for tax year 0
What is going to be best:
(1) make a contribution to SIPP from personal savings (to get down to 100k; could be up to £20k net contribution), or
(2) declare a "bonus" out of MyCo's warchest of £5k and use that from for (so I can get pension tax relief at the full 60% tax on the 20k between 100k and 120k)?
The way I understand it is:
(1) contribute 16k from savings, topped up to 20k in SIPP, claim back 7k via Self Assessment form, cost of 20k in pension = 9k
(2) (i) declare 5k dividend, deduct from taxable income, save 1k corp tax.
(ii) contribute 16k (11 savings and 5k bonus), topped up to 20k in SIPP, claim back 8k via Self Assessment form, cost of 20k in pension = 8k
So (2) gives me + MyCo an extra £2k for the tax year. What am I missing?
Would it be even better if I declare a dividend of £5k instead of pay a bonus of 5k?
taxable income for year from very good permie stint = £115000
salary from myCo = 0 (living off savings for rest of the tax year)
MyCo dividends for tax year 0
What is going to be best:
(1) make a contribution to SIPP from personal savings (to get down to 100k; could be up to £20k net contribution), or
(2) declare a "bonus" out of MyCo's warchest of £5k and use that from for (so I can get pension tax relief at the full 60% tax on the 20k between 100k and 120k)?
The way I understand it is:
(1) contribute 16k from savings, topped up to 20k in SIPP, claim back 7k via Self Assessment form, cost of 20k in pension = 9k
(2) (i) declare 5k dividend, deduct from taxable income, save 1k corp tax.
(ii) contribute 16k (11 savings and 5k bonus), topped up to 20k in SIPP, claim back 8k via Self Assessment form, cost of 20k in pension = 8k
So (2) gives me + MyCo an extra £2k for the tax year. What am I missing?
Would it be even better if I declare a dividend of £5k instead of pay a bonus of 5k?
Comment