Unlimited Pension Contributions?

[richardwilshire]

Hi All,

A couple of questions about the new pension rules

I am currently paying myself a salary of £8,000 a year and have taken dividends for the year up to the 40% tax band. As I understand it, the current pension rules allow me to make a personal contribution equivalent to 100% of my salary and for the company to put in money up to a total of about £215,000. The company contributions can be offset against corporation tax.

By the end of the year I will have about £25,000 in the company and was considering putting this in as the company contribution. I have read that the Revenue can dispute disproportial large amounts but I'm not exactly sure of the rules. Is anyone else considering a putting in large sum this year?

Thanks - Richard

[Nixon Williams]

The Revenue have not made themselves clear.

I think a contribution of £25000 on a salary of £8000 might be pushing it!!

You will need to speak to your pension advisor but the rules are not yet clear.

Alan

[Billy Pilgrim]

I'm looking at MyCo putting in 750 - 1K per month - with salary slightly above that.

Don't know if I'll be running the gauntlet here since there are no test cases out there yet - but it does not seem like an excessive amount !!

[Bradley]

Clearer?

The Revenue have not made themselves clear.

I think a contribution of £25000 on a salary of £8000 might be pushing it!!

You will need to speak to your pension advisor but the rules are not yet clear.

Alan

I doubt if HMRC will even notice and even if they do guidance issued so far makes it clear that catch up payments will be allowable. It's not that unclear. Sail on!

[Nixon Williams]

I doubt if HMRC will even notice and even if they do guidance issued so far makes it clear that catch up payments will be allowable. It's not that unclear. Sail on!

Risky strategy (to carry on and hope the Revenue do not catch you) that may suit some, I like to sleep at night!

Alan

[richardwilshire]

I'm only considering doing something like this if I can be fairly sure that it wont be a problem. Because this is a new issue, I can't seem to find any conclusive information on the subject.

Does anyone have any ideas on who may be the best to talk to about this? I'm a little cautious about ringing the Revenue and asking them!

[Bradley]

Resentment

Risky strategy (to carry on and hope the Revenue do not catch you) that may suit some, I like to sleep at night!

Alan

Just to clarify

What I am saying is not risky as it quotes HMRC published guidance.

What you said was misleading if not incorrect

I hope you can sleep at night once you realise you were wrong!

[rootsnall]

Just to clarify

What I am saying is not risky as it quotes HMRC published guidance.

What you said was misleading if not incorrect

I hope you can sleep at night once you realise you were wrong!

Can you point me in the right direction for this guidance. I have investigated this quite a bit and the latest wisdom from various sources is that you can only make large employer pension contributions relative to the employee salary at the discretion of your local tax inspector. In other words you don't really know the score !? If you approach the tax office with your plans then I'm sure that will be deemed as tax planning and they won't say anything. if you approach them after you file your accounts then that would be asking for it.

[Nixon Williams]

Just to clarify

What I am saying is not risky as it quotes HMRC published guidance.

What you said was misleading if not incorrect

I hope you can sleep at night once you realise you were wrong!

Bradley, I sleep very well thanks for asking!

We do not advise clients to take a course of action just because the Revenue are unlikley to notice! We give them the facts and then they can decide.

[Bradley]

Shameful

Bradley, I sleep very well thanks for asking!

We do not advise clients to take a course of action just because the Revenue are unlikley to notice! We give them the facts and then they can decide.

Quote from HMRC guidance:

Where the remuneration package is paid in respect of a director, who is also a controlling shareholder ... you should accept that the [pension]contributions are paid wholly & exclusively for the purposes of the trade.

So, in other words, if you own your own company then you can contribute pretty much what you like including amounts over £215,000.

I get the impression from the above that you're more concerned with saving face than getting to the right answer.