IR35 and pension contrib.

[Jose]

Hi,

I'm just checking something

I am inside IR35 working through my own limited company - expensive setup but legal and straightforward - or so I thought

As I dont have a pension - my plan always was to put everything I made into one - to reduce tax/NI .

As long as I did this before the end of the tax year i thought this would be OK.

Now - my accoutants have told me I cant do this - as 'payroll' has already been calculated for the last few months - I can only use invoices I sent in over the last few weeks (since last payroll was worked out) - Is this true ?

Also - they have told me , just today, that the 5% no questions asked tax break you get for company expenses - must be used - you cant just deduct it - you have to have real expenses to show for it in order to claim it -

otherwise you have to pay Corporation Tax on what you did not spend


Is that correct ?????????

Mnay Thanks for reading and any replies!!

[minstrel]

Now - my accoutants have told me I cant do this - as 'payroll' has already been calculated for the last few months - I can only use invoices I sent in over the last few weeks (since last payroll was worked out) - Is this true ?

If you've already been paid some salary and that has been notified to HMRC, I'm not sure you can unpay yourself and make a company pension contribution.

However, if you've not recieved any salary, then it's possible your accountant just doesn't want the hassle of redoing all the figures they've calculated and is screwing you around.

Ask your accountant what the legal reason is they can't do what you are asking, and ask them to give links to HMRC rules.

If you've not received any salary yet, then I think you are being given the run around. If you have recieved salary, then I think it's possible your accountant is right and you can't unpay yourself.

Not really sure though...

[KackAttack]

You can pay into your pension the amount of your salary at any point during the tax year - in one lump sum if you wish.

HMRC aren't informed as such, you just pay it direct from your company to the pension company and record this on your annual accounts. You are leaving very late for this tax year if you don't already have a pension setup though.

Also - they have told me , just today, that the 5% no questions asked tax break you get for company expenses - must be used - you cant just deduct it - you have to have real expenses to show for it in order to claim it -

otherwise you have to pay Corporation Tax on what you did not spend

This is correct.

[expat]

...
Also - they have told me , just today, that the 5% no questions asked tax break you get for company expenses - must be used - you cant just deduct it - you have to have real expenses to show for it in order to claim it -

otherwise you have to pay Corporation Tax on what you did not spend


Is that correct ?????????

Pretty well. The confusion comes from the fact that you do indeed perform an intermediate step of working out what the tax would be on:
your total income
- allowable expenses that any employee could claim, that you can justify
- a full 5% for other expenses (that an employee couldn't claim).

That doesn't mean that you get to claim a flat 5%. What you then do with that result is compare it to the calculation of tax on:
your total income
- allowable expenses that any employee could claim, that you can justify
- other expenses (that an employee couldn't claim), that you can justify.

You have to pay whichever of these 2 calculated tax amounts is greater.