Company vs personal pension when under IR35

[jamesbrown]

Hi all,
Yes the supply chain is fully overseas, no UK entity whatsoever except for me and my ltd. Thanks for clarifying about the situation when an umbrella makes more sense.

Okay so it's chapter 8 which provides the detail, thanks.

So going back to my original question, does it make sense for my ltd to pay employer contributions into a workplace pension vs my paying into a personal pension? If I understand right, my ltd would save employer's NI which is 13.8% but if I pay into my personal pension I'll be able to get tax relief of 40%, so it doesn't seem to make sense to have a workplace pension.

Can anyone point to a simulator/calculator which can confirm to me how it works, which amounts get taxed and what rate pre and post salary pre and post pension payment?

Cheers

So a small company and overseas with no UK Permanent Establishment and no other entity with a PE in the supply chain? If the supply chain is fully overseas, how on earth can YourCo deem your contract to be inside IR35? I highly doubt the working practices are inside but, hey ho, it's possible (in principle, having a fully overseas supply chain makes no difference but, in reality, the working practices with all my overseas clients are way outside).

Regarding company or personal pension contributions, I think the main issue with personal contributions, traditionally, is that you're limited to a contribution no larger than your PAYE salary, which is typically small, but not with a company contribution, where you can happily contribute £40k per year and get the CT relief (assuming it meets the wholly and exclusively test, like any other business expense, but it typically will). Probably best to speak to your accountant about pension contributions - I think you've probably understood what your options are, now it's about details.

[Craig@Clarity]

As far as I understand your Limited company can pay into pension as an employer contribution which will be deducted as an allowable deduction before Employer NI & salary is calculated and this is in addition to the 5% allowance if there is one in your situation.

Best speaking to an accountant as they would know better.

^This is correct

[Whitelime]

So by using an Umbrella Company for inside IR35 roles, all you're actually doing is robbing yourself of 5% expenses?

[ladymuck]

So by using an Umbrella Company for inside IR35 roles, all you're actually doing is robbing yourself of 5% expenses?

Er... no.

You're not allowed to claim any expenses for an inside role, unless they are ones the client is actually going to reimburse you for.

You can't rob yourself of something you can't claim.

[northernladuk]

So by using an Umbrella Company for inside IR35 roles, all you're actually doing is robbing yourself of 5% expenses?

Only if you meet the criteria. The exemption has been removed in most cases.

[jamesbrown]

Er... no.

You're not allowed to claim any expenses for an inside role, unless they are ones the client is actually going to reimburse you for.

You can't rob yourself of something you can't claim.

I think they're talking about the situation with the OP. The 5% allowance still exists for a small client or a fully overseas supply chain ("old IR35") because the responsibility to determine status and apply deemed payments remains with YourCo, which is what that allowance is meant to cover.

[ladymuck]

I think they're talking about the situation with the OP. The 5% allowance still exists for a small client or a fully overseas supply chain ("old IR35") because the responsibility to determine status and apply deemed payments remains with YourCo, which is what that allowance is meant to cover.

Ah... comprende.

[Madb1lly]

Hi all,

Yes it's inside IR35 even though the client is overseas. I decided this after reviewing the HMRC criteria, the main reason is because of the substitution criteria, they would not accept a substitute (although the contract doesn't prohibit it) mainly because they've hired me to lead and manage a team. They're a small company and the role is relatively senior in their organisation, I had an interview with the CEO, so despite how the contract is worded if HMRC rang them ask about working arrangements it would become apparent pretty quickly that my client wouldn't accept a substitute. I decided I don't want to say I'm outside IR35 and risk being investigated and having to defend something I already knew wouldn't hold up.

About the pension payments, the order of preference seems to be to max out my contributions to my personal pension in respect of higher rate tax relief, then my ltd can pay into the workplace pension and get relief CT and employer's NI.

Thanks for the help everyone. You're right jamesbrown, the next step is to work out the details with an accountant.

Cheers

[eek]

Hi all,

Yes it's inside IR35 even though the client is overseas. I decided this after reviewing the HMRC criteria, the main reason is because of the substitution criteria, they would not accept a substitute (although the contract doesn't prohibit it) mainly because they've hired me to lead and manage a team. They're a small company and the role is relatively senior in their organisation, I had an interview with the CEO, so despite how the contract is worded if HMRC rang them ask about working arrangements it would become apparent pretty quickly that my client wouldn't accept a substitute. I decided I don't want to say I'm outside IR35 and risk being investigated and having to defend something I already knew wouldn't hold up.

About the pension payments, the order of preference seems to be to max out my contributions to my personal pension in respect of higher rate tax relief, then my ltd can pay into the workplace pension and get relief CT and employer's NI.

Thanks for the help everyone. You're right jamesbrown, the next step is to work out the details with an accountant.

Cheers

Nope - as you are using a limited company - the best approach is a £40,000 paid direct from your company into your pension fund.

And yes you clearly do need an accountant based on the above.

[Whitelime]

Hi all,

Yes it's inside IR35 even though the client is overseas. I decided this after reviewing the HMRC criteria, the main reason is because of the substitution criteria, they would not accept a substitute (although the contract doesn't prohibit it) mainly because they've hired me to lead and manage a team. They're a small company and the role is relatively senior in their organisation, I had an interview with the CEO, so despite how the contract is worded if HMRC rang them ask about working arrangements it would become apparent pretty quickly that my client wouldn't accept a substitute. I decided I don't want to say I'm outside IR35 and risk being investigated and having to defend something I already knew wouldn't hold up.

About the pension payments, the order of preference seems to be to max out my contributions to my personal pension in respect of higher rate tax relief, then my ltd can pay into the workplace pension and get relief CT and employer's NI.

Thanks for the help everyone. You're right jamesbrown, the next step is to work out the details with an accountant.

Cheers

IR35 insurance?