New Contractor. Pension recommendations?

[fiisch]

Yes, correct.
No, wrong.

Thank you.

Fabulous news - as I'm just starting out, I'll hold off doing anything with pensions until I've got a buffer saved (I'm planning on only taking around 40% as salary/dividends initially).

Hopefully, by this time Vanguard will have their SIPP product launched, and I'll likely go with them for both mine and my wife's (second shareholder) SIPPs.

[northernladuk]

Hopefully, by this time Vanguard will have their SIPP product launched, and I'll likely go with them for both mine and my wife's (second shareholder) SIPPs.

Your company will be paying in to a pension of a shareholder?

[Lance]

Your company will be paying in to a pension of a shareholder?

To pay a pension to a shareholder they have to be 'employed' don't they? Or be a director with a salary.
Someone who's just a shareholder only has rights to dividends and voting I believe.

[fiisch]

My wife is a shareholder and employee of the limited company, as she provides invaluable administrative assistance...

She has a nominal second income from a part-time job.

[northernladuk]

My wife is a shareholder and employee of the limited company, as she provides invaluable administrative assistance...

She has a nominal second income from a part-time job.

Riiiiight. Of course she does. So does she have an contract of employment?

Regardless of the above the amount of pension should be reflective of the amount she earns and her role. You can't pay her 8k and then give her 10's of k pension payments. That's going to look like avoidance.

I have to say reading the last few replies, your knowledge and approach to this is quite frightening bearing in mind the amounts we are talking. It could be just a few innocent slip ups and you know your stuff but it doesn't look like it.

I'd suggest you go get some professional advice.

[fiisch]

Thanks Northernladuk - she has a part-time contract (6 hours a week) - she has reduced her hours from 21/week as a result of me going contracting due to runs to the station, childcare etc., as my working day will be considerably longer with an enforced London commute.

I believe the salary and dividends are to be split 50/50 (accountancy firm is currently reviewing this as our circumstances have changed since I last went contracting). I'm currently with a large accountancy firm that is often recommended to newbies by recruiters (having searched the forums, general consensus seems to be "they're expensive, competent enough but far from the best solution"), but I will probably be switching once I'm re-established.

I am still very much in the (re)learning phase, although must confess to the odd leg-pull in respect of IR35.

Edit: Sorry, misinterpreted your question - no, wife does not have an employment contract with my company, although marriage is a contract of sorts....?!?!

[northernladuk]

What does a contract of marriage have to do with a contract of employment?

[fiisch]

What does a contract of marriage have to do with a contract of employment?

I was being facetious again. There is no contract between my wife and my limited company.

The accountancy firm previously set her up as a shareholder with the intent to split dividends. Any work she does perform for my company is purely out of her eternal love, rather than any contractual obligation.

[northernladuk]

I was being facetious again. There is no contract between my wife and my limited company.

The accountancy firm previously set her up as a shareholder with the intent to split dividends. Any work she does perform for my company is purely out of her eternal love, rather than any contractual obligation.

<sigh>

Get some help from your accountant.

[Hobosapien]

...

Regardless of the above the amount of pension should be reflective of the amount she earns and her role. You can't pay her 8k and then give her 10's of k pension payments. That's going to look like avoidance.

...

Not sure that's correct. As long as she is an employee on PAYE then surely she can take advantage of salary sacrifice pension contributions up to the annual limit of £40k regardless of actual real earnings. So while she is actually only taking home £8k the overall earnings on paper for HMRC's perusal will include the salary sacrifice portion.

This is what many of use via brollies are doing.

If only a director and shareholder but not employed on PAYE then yes that would be dodgy.