Quick question about pensions

**Louisa@InTouch** · 27 April 2015, 11:36

The company can make employer contributions into a pension scheme. These should be paid directly from the business bank account to the pension provider. They will be gross payments into the scheme, treated as a company expense and provide the company with 20% corporation tax relief.

The other option would be to make pension contributions personally, to extend your basic rate band.

I would suggest that you speak to an IFA for guidance on the maximum you personally can contribute into your pension pot, if you don't want any personal tax implications. Plus would be an opportunity to discuss your obligations with Auto-Enrolment, if you have any.

**northernladuk** · 27 April 2015, 11:57

Contractors' Questions: What are my pensions options? :: Contractor UK

Pensions and Investments for Contractors

Contractor pensions - a lucrative tax break

Contractor Pensions, Pensions advice and support for Contractors

And plenty of threads on all aspects of pensions below...

https://www.google.co.uk/search?q=pe...ntractoruk.com

**Eirikur** · 27 April 2015, 12:56

Originally posted by David Barrett View Post

Morning all,
I know standard life will allow me to set up direct debit payments into this pension again, but can these be sent from the business account and put down as an expense, do they have to go on my pay slip? if they go on my payslip does it have to be a % of my gross rather than a fixed amount?

I could really do with some direction on this, even if its just a link to a decent guide!

Thanks

I've done exactly that with SL. Direct debit payment every month directly form my business account and the odd lump sum now and then. I also had some pension built up from another permie role, which I had transferred into the SL account as well.
There's nothing on my payslip about this.
Just call SL directly, don't use any middle man

**Snarf** · 27 April 2015, 15:40

Originally posted by Eirikur View Post

I've done exactly that with SL. Direct debit payment every month directly form my business account and the odd lump sum now and then. I also had some pension built up from another permie role, which I had transferred into the SL account as well.
There's nothing on my payslip about this.
Just call SL directly, don't use any middle man

Hi, Thanks.
How does that work from a tax point of view, My accountant has said that this would be fine, however suggested that this would not be a company expense (Because the pension plan is an old company one where they made a contribution too (or this is my understanding of what he said)) :

Your contributions are classed as private contributions therefore the company does not get any pension relief. Instead, your contributions extend your personal allowance rate before you start paying tax at 40%.

For example, if you paid £5000 into a pension, you would be able to earn an additional £5000 before you pay tax at 40% than someone who pays nothing in to a pension.

He also said though that he cant really give advice on pensions, so I have just made an appointment with an IFA next week.. just want to get as much info before I go in as possible now, rather than them telling me what they can do, Id rather have an idea of what can be done first!

**northernladuk** · 27 April 2015, 15:41

Originally posted by David Barrett View Post

Hi, Thanks.
How does that work from a tax point of view, My accountant has said that this would be fine, however suggested that this would not be a company expense (Because the pension plan is an old company one where they made a contribution too (or this is my understanding of what he said)) :

Your contributions are classed as private contributions therefore the company does not get any pension relief. Instead, your contributions extend your personal allowance rate before you start paying tax at 40%.

For example, if you paid £5000 into a pension, you would be able to earn an additional £5000 before you pay tax at 40% than someone who pays nothing in to a pension.

He also said though that he cant really give advice on pensions, so I have just made an appointment with an IFA next week.. just want to get as much info before I go in as possible now, rather than them telling me what they can do, Id rather have an idea of what can be done first!

Read any of those links I posted and maybe looked for a couple more?

**Snarf** · 27 April 2015, 15:57

Originally posted by northernladuk View Post

Read any of those links I posted and maybe looked for a couple more?

Hi,

Yeah have started reading through, but had limited time on my lunch break, Will be having a proper look tonight.

The person who posted after you seems to have been in exactly the same situation that I am in now, if I can get some insight from their first hand experience it can only help bolster any information that I glean from the links that you provided!

All of your help is appreciated, like I said, the more info that I can go in with to the IFA the better.

Thanks again

**Contreras** · 27 April 2015, 17:54

Originally posted by David Barrett View Post

Morning all,

Before I jump in to my question a bit of background:

I have started contracting back in October 2014 and left permanent employment in December 2014 (I was lucky enough to find a client that didn't mind me working entirely out of hours along side a perm role!)

Anyway, when I was in full time employment I had a pension with standard life, its got about 5-6k in it as I only paid into it for a year or so, obviously when I left full time employment this stopped.

Now its been 4 months with no pension contributions so I though it was about time that my company started paying into my pension again.

What are my options? I know standard life will allow me to set up direct debit payments into this pension again, but can these be sent from the business account and put down as an expense, do they have to go on my pay slip? if they go on my payslip does it have to be a % of my gross rather than a fixed amount?

I could really do with some direction on this, even if its just a link to a decent guide!

Thanks

It's unfortunate that your accountant cannot advise on the tax position.

If the pension scheme will accept company contributions then there isn't a problem. Your company can treat it as a business expense offset against profits.

In most cases it is marginally more tax efficient to make the contributions personally, up to the level of annual salary, and then use company contributions beyond that level if desired. It won't be a company expense, but the company then has more retained profit to pay an increased dividend effectively compensating for the salary which you dumped into the pension.

All this happens and is calculated within the bounds of the tax year. Contributions don't necessarily need to coincide with the payroll cycle. Company contribs should be covered by profit, personal contribs should be covered by salary.

Re. the payslip, a convenience for your records - what do you want it to show? A company contribution is made outside of PAYE, although it is remuneration. A personal contribution is made out of pocket and none of the company’s business.

Re. IFAs, firstly they should be able to answer similarly to the points above and moreover explain why it is so (which I omitted to do). They should understand the contractor model of salary/dividends and explain how pension contrib's work in this scenario and the effect on corp tax. Secondly, based on the experiences of others here recently they may try to sell you the idea of creating a loss in order to carry forward allowances from previous years - several recent threads on that here, here and here.

And do a search, but be mindful that the pension rules have been meddled with a number of times in recent years. This post particularly may address your original question.

**Eirikur** · 28 April 2015, 08:17

It is really simple as explained by many in this and other threads
- you call SL and tell them what you want, you may even want to change the plan you're using, be prepared because if you sound insecure SL might refer you to an IFA
- set up direct debit from your business account
- pay in the agreed amount per month or whatever period
- deduct the amount from your company income at your year end statement and don't pay any taxes over it

As you seem to be very insecure better speak to an IFA who will happily advise you whatever product brings him the most profit.

**Snarf** · 28 April 2015, 13:16

Originally posted by Eirikur View Post

It is really simple as explained by many in this and other threads
- you call SL and tell them what you want, you may even want to change the plan you're using, be prepared because if you sound insecure SL might refer you to an IFA
- set up direct debit from your business account
- pay in the agreed amount per month or whatever period
- deduct the amount from your company income at your year end statement and don't pay any taxes over it

As you seem to be very insecure better speak to an IFA who will happily advise you whatever product brings him the most profit.

Hi, Thanks.

This was exactly how I assumed it would work, its only because my accountant didn't seem to agree - maybe I didn't explain myself to him well enough...

I have an appointment with an IFA next week anyway so Ill hang fire now - I also want to sort the wife's pension out as she is also an employee so might as well make use of the IFA while I have him!

Thanks for the help everyone.

Quick question about pensions