Pension Payment : Member vs Employer?

[sojan]

I run a single person limited company. I have started pension with "youinvest" and the option to top-up SIPP is as a (a) Member (b) Employer

Via Member I have option to pay via my company Debit Card. If I choose Employer, it is a manual process of sending cheque etc..

Is there any difference to pay pension as a Member vs Employer? I'm anyway planning to mark it as "Pension Payment" in my Freeagent tool. But just wanted to check if the actual mode of payment makes any difference?

[jmo21]

Yes, there is quite a difference.

If your employer (your ltd) pays it, it is an expense of the company so reduces the companies corp tax (like any other expense does)

If you are planning to mark it as "Pension Payment" in your companies accounts, that means it MUST come from your companies bank account.

The other option is if you the employee pays out of your own money.

[sojan]

thank you mate. I'm still planning to pay from Ltd. company account (using company debit card). But the mode of payment in "youinvest" was the main doubt.

[Contreras]

thank you mate. I'm still planning to pay from Ltd. company account (using company debit card). But the mode of payment in "youinvest" was the main doubt.

It must be marked as Employer contribution (if that's what you intend). Otherwise the pensions co. will apply tax relief to it, and Hector would not be too pleased about that given you already had the CT deduction.

Unfortunately that limits the options for one-off payments. I suggest you give them a call if still in any doubt.

Edit: you might also want to check which is most tax efficient in your situation. In previous years I believe it has been marginally better to make personal contributions up to the level of salary (mitigated with an increased dividend) and supplement this with company contributions above that level. I'm not sure if that's still the case.

[jmo21]

thank you mate. I'm still planning to pay from Ltd. company account (using company debit card). But the mode of payment in "youinvest" was the main doubt.

yes, they have to be told "who" the payment is coming from.

And by the sounds of it, the "member" option to allow by Debit card should NOT be used with your companies debit card.