Personal vs company pension contributions

[ittony]

I've just released in some horror, possibly four years too late, that although I've always thought that paying into a SIPP personally (with it therefore being grossed up), versus paying in from the company with pre corporation tax money, worked out as much of a muchness, ever since the 7.5% dividend tax came in that's no longer the case and you're basically 7.5% better off paying it via the company (or rather 6.3% better off now the corporation tax is 19%).

Is that right or am I missing something? This is for a basic rate tax payer, taking 8k or whatever it is this year in salary and the rest in dividends.

[northernladuk]

Your posting history makes for some very grim reading. You've been struggling with the basics of your finances for over 13 years.

Why don't get yourself an accountant and do it right? The amount of time and money you've wasted trying to get us to do it for you instead of get a professional and doing it properly.

Get a bloody accountant.

[ittony]

Charming.

I just like to understand thing from first principles, and to do so with a group of like minded peers.

There's not much point in having this subforum if the answer to every question is consult an accountant / lawyer, is there.

[Lance]

Charming.

I just like to understand thing from first principles, and to do so with a group of like minded peers.

There's not much point in having this subforum if the answer to every question is consult an accountant / lawyer, is there.

the point is that often the best advice is to seek professional help. As you've ballsed it up for four years on the bounce it's very valid advice.

And to answer your questions
- yes you'd have been better off paying from the company rather than personally
- yes you have missed something. Quite a lot of things.
- you forgot to add on how much the giovernment adds to personal payments
- the amount you can put in personally is capped at your salary level (so £8k in your example. You've not exceeded that have you???????)
- you've done this without an IFA as well haven't you? Where have you invested it? Not a stakeholder surely? It is actually a pension isn't it?

[northernladuk]

Charming.

I just like to understand thing from first principles, and to do so with a group of like minded peers.

There's not much point in having this subforum if the answer to every question is consult an accountant / lawyer, is there.

Kind of but the point isn't to do someone's accounts for them because they don't get a professional. Remember, even though it's an accounting area of the forum it's still contractors reading it. If you've accounting questions you should really be asking accountants on something like accountingweb.

It's not the best platform if that makes sense.

[ittony]

- yes you have missed something. Quite a lot of things.
- you forgot to add on how much the giovernment adds to personal payments
- the amount you can put in personally is capped at your salary level (so £8k in your example. You've not exceeded that have you???????)
- you've done this without an IFA as well haven't you? Where have you invested it? Not a stakeholder surely? It is actually a pension isn't it?

I obviously haven't missed adding on what the government adds otherwise it would be a great deal more than 6.3% difference! I'm not a complete idiot. I just took my eye of the ball a bit when I was busy. Ironically now I've had time to work out how to do it more efficiently, I won't be able to as the company will be making a loss. Oh well. It's not a lot difference anyway, certainly nowhere near what an accountant would have charged over the period.

And yes, it is actually a pension! Not a stakeholder, whatever that is, but a SIPP. All under control! And no, I'm certainly not paying for an IFA either.

[Lance]

I obviously haven't missed adding on what the government adds otherwise it would be a great deal more than 6.3% difference! I'm not a complete idiot. I just took my eye of the ball a bit when I was busy. Ironically now I've had time to work out how to do it more efficiently, I won't be able to as the company will be making a loss. Oh well. It's not a lot difference anyway, certainly nowhere near what an accountant would have charged over the period.

And yes, it is actually a pension! Not a stakeholder, whatever that is, but a SIPP. All under control! And no, I'm certainly not paying for an IFA either.

why does the company making a loss mean you can't contribute?
Is it solvent? Pension is an expense even when making a loss.

[ittony]

It's not the best platform if that makes sense.

Point taken, but I'm not trying to get people to do everything for me for free, I just want to check my workings against what others have done, and get some general pointers.

[northernladuk]

Point taken, but I'm not trying to get people to do everything for me for free, I just want to check my workings against what others have done, and get some general pointers.

In an exam they call that cheating.

[ittony]

why does the company making a loss mean you can't contribute?
Is it solvent? Pension is an expense even when making a loss.

The company is solvent and has enough retained profit to keep paying me for a while, but most of the articles I've read on the subject of personal vs company pension contributions say that the amount paid into the pension must not exceede the company's annual profit.

Although I must admit that doesn't entirely ring true to me, not least because profit is something measured after pension payments, not before.