DIY Pensions for a Limited Company?

[northernladuk]

Finally stopped lurking in this forum and took some action!

Opening SIPP (HL) for Ltd contributions to my (first) pension.

First, thanks to those who have provided much needed info in this forum.

I guess this is more a question for my accountant, which I'm in process of changing due to poor performance etc, but I like to get a feel for stuff before I ask the 'grownup'.

Does anyone have any thoughts on the maximum percentage of the amount that would otherwise go to corporation tax at year end one should make to a SIPP, to avoid (any) raised eyebrows at HMRC? In other words, is it ok to seek to pay no corporation tax at all?

Thanks in advance for any guidance.

I think you are thinking like a permie. There is no 'percentage', after all you are only paying yourself around 11k so bit hopeless to basis it on that.

You can also only put in 40k a year to be tax efficient so no chance you'll not be paying any corp tax.

Just be wary though. You need to grow a warchest first. This should be thick end of 6 months of income if not more that is there for rainy days. Will sting just seeing it sit there but that's what it's for.
You then pay/divi what you need and then any thing extra (not spending the tax you've put aside of course) can go in the pension. I'm guessing it won't be anywhere near 40k a year.

But I suspect you've got a slightly different situation going on where you don't need to divi everything or something in which case we can't really help because we are just guessing.

[Fred Bloggs]

Woodford Equity Income Fund being liquidated.

For any unfortunates holding this ^^^^ in their SIPP, you need to read the press this morning. No real need for a link, it's everywhere.

[jarjarbinks]

SIPP + passive investing IMO. Check out Monevator — Make more money, invest profitably, retire early for passive investing talk + a good table comparing SIPP providers.

You can contribute up to £40k/year* from your Ltd directly into a SIPP tax free.




* more if you have unused pension contributions from the previous 3 years.

Sorry to jump thread but if I have opened a sipp in March 2018 , can I pay pension contributions for year ending 2017 and 2016 ? Please advise as my accountant did not mention it when discussing pensions


Sent from my iPhone using Contractor UK Forum

[Fred Bloggs]

Sorry to jump thread but if I have opened a sipp in March 2018 , can I pay pension contributions for year ending 2017 and 2016 ? Please advise as my accountant did not mention it when discussing pensions


Sent from my iPhone using Contractor UK Forum

If you had any other UK pension plan in place before March 2018 even one you don't pay into any more, the answer is yes. Otherwise it's no, I'm afraid.

[Fred Bloggs]

For any unfortunates holding this ^^^^ in their SIPP, you need to read the press this morning. No real need for a link, it's everywhere.

If this is you, I'm afraid you're going to be rather disappointed, annoyed in fact at what's happening to your investment.

[ravenscroft]

Reduce CT paying into Pension example

Chaps,
just wanted to OK these scenarios
No I haven't spoke to my accountant - and haven't got to detail of which pension fund/type.
I am 59.
I have a potential CT bill of £10k to pay. Financial year has passed
Large warchest and pay myself a large salary - not the usual 8/9k. Company has never paid into a pension before.
Have lots of 'old' private pensions from previous employments. Assume that I am happy to use one/more of these pension vehicles to receive monies.

So assuming I have a few good years left - I should be paying no CT every year and using company funds to pay into my pension funds the 10K?
Once its in the pension fund - 40% is added (Claimed via Self Assessment) - becomes 14k?
When I fill in my SA form - 10K is added to my gross salary?
When the time comes I can take out of the pension 25% of the 14k = 3.5K (Tax free money that was going to be lost to CT)
I can go back a year or 2 for more 10K pension payments (high enough salary to allow this) ? How do these back payments look in terms of Company Accounts?
Can I declare pensions payments greater than potential CT to declare a loss? Assuming in the near future can become profitable?

Does this all seem workable?
Thanks

[Amanensia]

If you are paying money directly from your company to your pension then there's no tax to reclaim.

(Even if you were to pay £10k from your personal funds, you wouldn't get a tax rebate of 40% of £10k. You'd get a tax rebate of the amount necessary to gross up the £10k to the pre-tax figure - which would be £6,666.67.)

Why are you focussing on paying £10k in to the pension? It sounds like you think that will mean that the £10k CT you owe won't need to be paid. That's not the case. Suppose you made £50k profit in a year, so your CT bill would be £10k (ish). If you pay £10k into your pension then you've now made a profit of £40k, so you still owe £8k CT.

[ravenscroft]

If you are paying money directly from your company to your pension then there's no tax to reclaim.

(Even if you were to pay £10k from your personal funds, you wouldn't get a tax rebate of 40% of £10k. You'd get a tax rebate of the amount necessary to gross up the £10k to the pre-tax figure - which would be £6,666.67.)

Why are you focussing on paying £10k in to the pension? It sounds like you think that will mean that the £10k CT you owe won't need to be paid. That's not the case. Suppose you made £50k profit in a year, so your CT bill would be £10k (ish). If you pay £10k into your pension then you've now made a profit of £40k, so you still owe £8k CT.

Yes Thankyou - both your statements are how I should have looked at it.
I was getting too excited there for a bit

[Freud]

If you are paying money directly from your company to your pension then there's no tax to reclaim.

(Even if you were to pay £10k from your personal funds, you wouldn't get a tax rebate of 40% of £10k. You'd get a tax rebate of the amount necessary to gross up the £10k to the pre-tax figure - which would be £6,666.67.)

Why are you focussing on paying £10k in to the pension? It sounds like you think that will mean that the £10k CT you owe won't need to be paid. That's not the case. Suppose you made £50k profit in a year, so your CT bill would be £10k (ish). If you pay £10k into your pension then you've now made a profit of £40k, so you still owe £8k CT.

In this scenario, if you paid £50k into your pension (given you haven't contributed in previous years), your profit would then be £0 so no CT to pay ?

[xenomorph]

Looks like HL online systems are messed up.
They dont list my apartment when I put in my postcode!
So have to do it via post.

I went Vanguard last month but only just told me they dont support monthly direct debit from company account. Only from personal banks.
I know a lot of people here just like to pay in lump sums but If I do that then I would need to ensure I ignore that amount of money from my company balance to ensure I got enough for lump sum and my safety pot.