Company Pension Contributions From Retained Funds Rather Then This Years Profits

[IR35 Avoider]

I don't think there's any requirement for pension contributions to be made in the same financial year as the earnings that support them.

I have in the past made a loss paying pension contributions and carried some of the loss back, reclaiming corporation tax from the previous year. (Though it was a long time before HMRC actually coughed up the cash.)

[Cirrus]

Are you saying that company pension payments can be made from retained funds (rather than profits in the current year) ?

I decided to take three years' pension contributions (approx £140k) but was too late to squeeze it into a good year. I therefore put it into the subsequent year (when I'd stopped working). My accountant said you'll be OK unless the Revenue think you're dormant or ceased trading so I got a little number in the City to bring some revenue. However it was much less than £140k. We put in the big pension figure thus making a substantial loss. The Revenue dumped the full whack of CT refund into my company a month later; no questions asked. You can only go back one year so when I shoved in another load of pension in the next year I couldn't get any respective CT refund.

So whatever the rules might be, all I can tell you is I got my CT refund without any issues.

[craigy1874]

I agree it is fine and I would advise my clients to do it.

However, CT is under self-assessment which is process now, check later.

So just because you get a repayment, it doesn't mean it has gone through on the nod, there could still come an enquiry anytime up to 1 year from the date you submitted the Ct600.

[stovefan]

Hi

I think some of the replies are focussed on reclaiming CT but this was outisde the scope of my question.

In summary, the main thing here is that you cant stick £40K in a company pension if you havent made 40K profit in that company year (regardless of how much is in the company account). This is different to backdating for previous years, based on a healthy current year turnover.

Of course there is nothing to stop me from making the contributions by taking dividends and then paying the amount from that, but since I believe I will get another contract, I will wait and backdate the contributions for 2017-2018 when ready.

Tx - Stovefan.

[Cirrus]

In summary, the main thing here is that you cant stick £40K in a company pension if you havent made 40K profit in that company year

You are a bit slow on the uptake, aren't you? Several people have categorically said yes you can and they've done it.

The CT just proves the Revenue are used to this.

[craigy1874]

Hi

I think some of the replies are focussed on reclaiming CT but this was outisde the scope of my question.

In summary, the main thing here is that you cant stick £40K in a company pension if you havent made 40K profit in that company year (regardless of how much is in the company account). This is different to backdating for previous years, based on a healthy current year turnover.

Of course there is nothing to stop me from making the contributions by taking dividends and then paying the amount from that, but since I believe I will get another contract, I will wait and backdate the contributions for 2017-2018 when ready.

Tx - Stovefan.

Jesus, if that is what you are gathering from the responses, I fear for you...

[stovefan]

Him Ciirrus/Craigy

As I said, I spoke to the tax helpline at IPSE and they were clear that they are against this (as is my accountant).

Im also see that another poster was recommended against doing this.

So I may be slow on the uptake but just happy to err on the side of caution

Thx - stovefan.

[WordIsBond]

Him Ciirrus/Craigy

As I said, I spoke to the tax helpline at IPSE and they were clear that they are against this (as is my accountant).

Im also see that another poster was recommended against doing this.

So I may be slow on the uptake but just happy to err on the side of caution

Thx - stovefan.

Mate, there's a wide blue sea of difference between "you can't" and "I am happy to err on the side of caution." Especially when the legislation makes no such restriction and many people have done it.

[Cirrus]

It is easier for a camel to pass through the eye of a needle etc

Stovie, can I just say - on behalf of everyone on this channel: thank you very, very much for making a big voluntary donation to HMRC's funds. Not only will you be making a huge contribution to the disenfranchised of this Mad Max dystopian wasteland of a country after Brexit, but more importantly you'll be saving the rest of us from paying quite as much tax as we otherwise might have to.

Good on yer!