Retrospective Pension Contributions

[Sky Rocket]

Hello All,

I have a question which I’m hoping some of the accountancy folk on here may be able to answer.

I currently am not making any pension payments via my Limited co. My YE accounts for 17/18 is due to be filed within the next couple of months (company YE was Sept 18) .

I spoke with my accountant about making pension payments now to offset the corporation tax from 17/18. She has told me that pension contributions can only reduce the corporation tax in the year that the contribution was made, ie. they can only reduce my CT in the 18/19 year. The CT that is due for 17/18 cannot be minimised

Another accountant has told me that as long as the payment is accrued, then it doesn’t matter when the payment is actually made – and if my accounts have not been filed, then I should be able to make a contribution to minimise the 17/18 bill.

Any pointers to which is correct please?

Thanks in advance

[ContrataxLtd]

Hello All,

I have a question which I’m hoping some of the accountancy folk on here may be able to answer.

I currently am not making any pension payments via my Limited co. My YE accounts for 17/18 is due to be filed within the next couple of months (company YE was Sept 18) .

I spoke with my accountant about making pension payments now to offset the corporation tax from 17/18. She has told me that pension contributions can only reduce the corporation tax in the year that the contribution was made, ie. they can only reduce my CT in the 18/19 year. The CT that is due for 17/18 cannot be minimised

Another accountant has told me that as long as the payment is accrued, then it doesn’t matter when the payment is actually made – and if my accounts have not been filed, then I should be able to make a contribution to minimise the 17/18 bill.

Any pointers to which is correct please?

Thanks in advance

Hi SkyRocket

Your accountant is correct, you can only get tax relief on Pension contributions in the period they are made.

The second accountant is wrong, although you can accrue pension contributions from an accounting perspective they should be disallowed for a taxation perspective and only allowed for tax in the period they are actually paid.

Overall it probably doesn't make much of a difference but you could possibly make a large contribution this month and then extend your year end to 31st March so that you have an 18 month accounting period with the pension in it, this brings forward the tax relief on the pension a little bit but also brings forward the tax payment on the 6 month period too. I should add, if this is your first year you may not be able to extend your year end to 31st March.

Martin
Contratax Ltd

[Maslins]

Another accountant has told me that as long as the payment is accrued, then it doesn’t matter when the payment is actually made – and if my accounts have not been filed, then I should be able to make a contribution to minimise the 17/18 bill.

I'm fairly confident this is wrong. For many things other than pensions it would be correct...but pensions need to be physically paid in the period.

[Sky Rocket]

Thanks guys, appreciate the quick response.