Quick one...

[Ragnarok]

If contracting through a limited co and funding a SIPP via the company, is your deemed payment reduced by the contributions if caught by IR35? If you contributed 90% of turnover to the pension would the deemed payment effectively be nil?

Before you say it - I will be talking to an accountant about it and getting my contract reviewed too, but want to make sure my understanding is correct.

Thanks for any advice

[Andy Hallett]

If contracting through a limited co and funding a SIPP via the company, is your deemed payment reduced by the contributions if caught by IR35? If you contributed 90% of turnover to the pension would the deemed payment effectively be nil?

Before you say it - I will be talking to an accountant about it and getting my contract reviewed too, but want to make sure my understanding is correct.

Thanks for any advice

Not my strongest area...... But when looking at pensions investigate a salary sacrifice scheme.

[Jessica@WhiteFieldTax]

In principle, yes, although I'm not sure how you get a 90% SIPP contribution to eliminate the deemed payment. Surely 90% SIPP + 5% general disregard leaves 5%?

You have the old issue of whether a pension contribution of that scale is deductible per se. I take the view it is likely to be; some will differ; its never really been tested.

Also have in mind the £50k annual cap etc.

[Contreras]

In principle, yes, although I'm not sure how you get a 90% SIPP contribution to eliminate the deemed payment. Surely 90% SIPP + 5% general disregard leaves 5%?

What about other legitimate expenses, e.g. minimum salary + mileage, are these also not deducted before the IR35 calculation (including the 5% general allowance) is then applied?

You have the old issue of whether a pension contribution of that scale is deductible per se. I take the view it is likely to be; some will differ; its never really been tested.

I understood that HMRC made a clarification* to [their interpretation of] the rules some years ago for a one-man-band Ltd Co. and that even 100% of profit as a pension contribution would be deductible (thus leaving a CT bill of £0) - if that's what you mean. Is this still in question?

Of course the financial wisdom of doing that should be questioned as any money up to the high rate threshold could have been invested to much the same tax effect outside of the SIPP instead.

* would have posted a link but the PCG website revamp seems to have broken my bookmarks. grrr.

[Jessica@WhiteFieldTax]

What about other legitimate expenses, e.g. minimum salary + mileage, are these also not deducted before the IR35 calculation (including the 5% general allowance) is then applied?

OP seemed to be disregarding expenses, etc and keeping it simple. Likewise my response. But of course these things figure. I was more digging into the significance of 90% stand alone.

I understood that HMRC made a clarification* to [their interpretation of] the rules some years ago for a one-man-band Ltd Co. and that even 100% of profit as a pension contribution would be deductible (thus leaving a CT bill of £0) - if that's what you mean. Is this still in question?

Of course the financial wisdom of doing that should be questioned as any money up to the high rate threshold could have been invested to much the same tax effect outside of the SIPP instead.

* would have posted a link but the PCG website revamp seems to have broken my bookmarks. grrr.

Yes, I think they did, but not in absolute terms just definitely-maybe-probably terms; Friday night, CBA to research further. Sorry.

[Ragnarok]

Thanks for quick replies. Yea was keeping it simple, just wanting to understand theory.