SIPP info needed

[pmeswani]

Let me confirm... as a director of myCo, myCo can pay £2,880 into a SIPP for my children each and every year. Is this payment tax deductible in myCo? And then HMRC add a tax credit? Can I do this for all of my children? And all my wives? What about the cat?

This doesn't sound right. Looks like the tax benefit comes round twice - most unlike HMRC who normally want it twice. If its out of personal funds not the same.

It won't be yourco that will be paying it, it will be you as an individual. And no, the money from yourco won't attract any tax add-ons.

[Fred Bloggs]

You pay for the kid's/wife's SIPP out of persoanl income and get tax relief added. I do this for my kids.

[diesel]

i currently pay my HL SIPP monthly from my private account is it better to make the payments from my business account? if so what are the main difference to me and my company? And is there any benefit in doing this?

thanks

[Gonzo]

i currently pay my HL SIPP monthly from my private account is it better to make the payments from my business account? if so what are the main difference to me and my company? And is there any benefit in doing this?

thanks

There's not a lot in it.

The debate about whether it is best to make company contributions or personal contributions to a pensions has been round and round on here before, and I think that the conclusion is that there is not a lot in it, but it depends on how you are paid and whether or not you are paying up under IR35.

My opinion on it always was that the Personal Tax reclaimed from HMRC (22% of the gross figure) was more than the Corporation Tax (19% of the gross figure) that my Ltd company would pay. so I always contributed personally.

But beware, those tax rates are changed by the government frequently and I think the pendulum has swung in favour of company contributions at the moment.

I am not an accountant and it is also possible that I was just wrong in the first place of course.

[ASB]

My opinion on it always was that the Personal Tax reclaimed from HMRC (22% of the gross figure) was more than the Corporation Tax (19% of the gross figure) that my Ltd company would pay. so I always contributed personally.

Depends on level of contribution etc; in order to get that personal income it has also suffered EE and ER NI.

[expat]

i currently pay my HL SIPP monthly from my private account is it better to make the payments from my business account? if so what are the main difference to me and my company? And is there any benefit in doing this?

thanks

If you are working within IR35, or to be precise if your company is paying you salary rather than dividends, so that PAYE and NICs are paid on your income, then it is better for the company to make the payments than for you to do it. It is better by the amount of NICs paid.


Examples, on £1000 salary.

(A) Personal contributions.
Company money needed to pay salary: £1128
Gross salary: £1000
Net salary: £590 (assuming this tranche subject to 40% tax and 1% EE NIC)
Into SIPP: £590
Grossed up by HL to: £737.50 (i.e. as if it had 20% tax).
Result for SIPP: £737.50.
In SA, claim for rest of Higher Rate Tax relief:
Tax refund £250 (to you personally).

So you get £250 and the SIPP gets £737.50. HMRC get £140.50 (NICs, plus £2.50 arithmetical quirk).

(B) Company contributions.
Same Company money: £1128
Into SIPP: £1128.
No grossing-up or relief.
Result for SIPP: £1128.

So you get £0 and the SIPP gets £1128. HMRC get £0.

[moorfield]

There's not a lot in it.

+1

Personally I find it a lot less hassle just to make contributions direct from the ltdco.