pension contributions from company

[Limited]

Hi

Can anyone explain how much I am able to contribute to a pension directly from my company? I am outside ir35 with low salary high dividends.

The information about this post A day seems unclear. Is the £300 pcm rule still valid as a minimum? Is it now considered ok to contribute more? I was thinking several times that amount. Just wondering what everyone else is doing.

My accountant says I need to speak to an IFA to get this info but don't really want to go through the whole being sold a pension thing. I'm quite happy with my Sipp, just want to put a bit more in.

thanks

[xoggoth]

http://www.accountingweb.co.uk/cgi-b...&h=1021&f=1026

Andrew Meeson replies

the criteria set out in BIM 46035 are now what matter. Any other considerations (eg whether the contribution exceeds the salary etc etc) are irrelevant.

[Crossroads]

My accountant says I need to speak to an IFA to get this info

Name and shame. Does he also say you need to speak to HMRC for tax related queries?

I have a sneaky feeling I know who your accountant is and they just want to put their in-house IFA onto you...

[Limited]

Before I name and shame, I would be interested to know what some of the accountants that post on these boards would advise a client in my position

Also, what does everyone else do? Presumably, with the changes in tax rates, it is worth putting pension payments through your company instead of paying personally.

thanks

[THEPUMA]

Before I name and shame, I would be interested to know what some of the accountants that post on these boards would advise a client in my position

Also, what does everyone else do? Presumably, with the changes in tax rates, it is worth putting pension payments through your company instead of paying personally.

thanks

I think the link posted by Xoggoth (http://www.accountingweb.co.uk/cgi-b...&h=1021&f=1026) briefly sums up my advice. I would want to discuss your specific circumstances in more detail before coming up with and absolute figure.

[glashIFA@Paramount]

Hi

Can anyone explain how much I am able to contribute to a pension directly from my company? I am outside ir35 with low salary high dividends.

The information about this post A day seems unclear. Is the £300 pcm rule still valid as a minimum? Is it now considered ok to contribute more? I was thinking several times that amount. Just wondering what everyone else is doing.

My accountant says I need to speak to an IFA to get this info but don't really want to go through the whole being sold a pension thing. I'm quite happy with my Sipp, just want to put a bit more in.

thanks

Just to back up whats already been said,

Payments from the employer are effectively unlimited, but they do not automatically qualify for tax relief. To be an allowable deduction against profits, the payments have to be “wholly and exclusively” for the purposes of the business in much the same way as any expense. In essence, this means that the payment should be at a reasonable level for the individual concerned.
A pension payment is part of the overall cost of employing staff, and so the local tax office should allow the payment as a deduction unless, exceptionally, there is an identifiable non-trade purpose for the employer’s decision to make the payment, or for the size of the payment.

Whether the payment is wholly and exclusively is the decision of the local tax office, though they will report any cases where they suspect a payment is not wholly and exclusive to HM Revenue & Customs’ technical team in Nottingham. Unfortunately, there is no base level of payment that is guaranteed to be allowable and the tax office can question any cases where the level seems excessive for the value of work undertaken by that employee.
The guidance that HM Revenue & Customs has recently published in the Business Income Manual indicates that employer payments would normally be wholly and exclusively for the purposes of its trade and it would be rather rare to have to consider whether there is a non-trade purpose for the employer’s decision to make a payment.
This updated guidance is generally positive where controlling directors are concerned, stating that “it is unlikely that there will be a non-business purpose for the level of remuneration package.” Remuneration package is the combined salary, wages, benefits and pension payments but does not include dividend income.

Hope this helps.

[rootsnall]

I've grappled with this a few times with thoughts of paying big amounts into a pension and in theory paying zilch tax. I'd say glash's summary is in line with my thoughts and understanding. My accountant advises limiting the amount to the same as your salary level ie. keep yourself under the radar. Pretty sure you'd get away with much bigger payments.

Does anybody know at what point your local tax inspector is deemed to have allowed the pension payment ?

[Limited]

Thanks for your answers

So it looks like what I was hoping to do - pay a sum similar to salary is no problem at all.

Now is there any particular reason why the IFA needs to be involved. I've not used one to set up my sipp and would rather not now

[moorfield]

Now is there any particular reason why the IFA needs to be involved. I've not used one to set up my sipp and would rather not now

No need whatsoever. Many SIPPS eg HL you can setup yourself and start the employer contributions from your ltdco account.

[rootsnall]

Now is there any particular reason why the IFA needs to be involved. I've not used one to set up my sipp and would rather not now

You just write a Co cheque and pay it into your SIPP account. What you then invest it in is another matter, I'm just buying shares to keep it simple.