National Insurance on Pension Contributions

[Martin at NixonWilliams]

Beyond that level of contribution - on the income stated with divis making up the balance - it is likely that corporate contributions are appropriate. Personal contributions wouldn't attract relief above 100% of salary.

Agreed - The best approach is often to make personal contributions up to the amount of salary paid and any further contributions through the company.

With many jumping from paying a salary of £7,696 to £10,000 from April, this makes the above approach that bit more efficient.

[northernladuk]

Agreed - The best approach is often to make personal contributions up to the amount of salary paid and any further contributions through the company.

With many jumping from paying a salary of £7,696 to £10,000 from April, this makes the above approach that bit more efficient.

Come on Martin, tell him to speak to an accountant.. You know you want to!

[Martin at NixonWilliams]

Come on Martin, tell him to speak to an accountant.. You know you want to!

Why get an accountant when you can get free advice on here? Just kidding.. OP - I would suggest appointing an accountant (one who understands the contractor market), there is a lot of advice out there in addition to the above that can make the whole process easier and more tax efficient for you.

[ASB]

Why get an accountant when you can get free advice on here? Just kidding.. OP - I would suggest appointing an accountant (one who understands the contractor market), there is a lot of advice out there in addition to the above that can make the whole process easier and more tax efficient for you.

I just wonder if it might be difficult to get appropriate advice. The problem may be the breadth of the subject and being appropriately regulated.

Certainly you will give competent advice on the taxation treatment of contributions, the effect if they are made personally, by corporate, the limits of relief, the overall effect on what gets paid into the pension.

But, the interaction over the effects of the pension itself, e.g. liftetime cap, is the selected pension appropriate and all that sort of gumph.

I would be concerned over "crossover"; e.g. you might give me the boost possible accounting advice, but I have selected the worst possible product. I wonder a bit about duty of care etc.

Certainly on various things I've found it can be difficult to get advice on purely a subset of the overall picture.

[jmo21]

Simonmac sleeper sockie?

[mudskipper]

Simonmac sleeper sockie?

His professional alter-ego. As he only has 7 posts (vs 13,832), he clearly doesn't see the need to be professional very often!


I must admit I don't understand how personal contributions impact salary/divvies and tax, so I just do them all from myCo.

[Camnomis]

I must admit I don't understand how personal contributions impact salary/divvies and tax, so I just do them all from myCo.

I guess I am still thinking about my premie pension, and as if the contribution is coming from me rather than the company, I think I have the hang of it now.

If I pay myself the contribution as a dividend, and then pay that into my pension I will get the 20% back I paid as CT as Pension relief, however my threshold will rise by the total amount paid into my pension even though the dividend taken would only be ((11/10)*1.2)

His professional alter-ego. As he only has 7 posts (vs 13,832), he clearly doesn't see the need to be professional very often!

[Martin at NixonWilliams]

I would be concerned over "crossover"; e.g. you might give me the boost possible accounting advice, but I have selected the worst possible product. I wonder a bit about duty of care etc.

Certainly on various things I've found it can be difficult to get advice on purely a subset of the overall picture.

True, I could tell you the tax implications of making the contributions plus the effects of the annual & lifetime limits but I could not give advice on specific products. Likewise, an IFA is unlikely to be able to give any detailed advice in terms of tax planning / consequences of making the contributions.

We have often found that it helps to have an IFA and an accountant who will talk to one another. One instance I recall is where our client met with an IFA and came back from the meeting wanting to pay several thousands of pounds per year into his and his wife's pension. The wife was not really doing any work through the company and so we advised against this.

[Martin at NixonWilliams]

If I pay myself the contribution as a dividend, and then pay that into my pension I will get the 20% back I paid as CT as Pension relief, however my threshold will rise by the total amount paid into my pension even though the dividend taken would only be ((11/10)*1.2)

You are along the right lines but CT does not come into it where a personal contribution is made. The first 20% is an income tax relief.

You pay 80% of the contribution in order to receive 20% basic rate income tax relief, so if you pay £80 it is worth £100 as the pension provider collect the other 20% from HMRC.

You are correct in saying your basic rate band is extended by £100 to allow for higher rate tax relief.

[Camnomis]

You are along the right lines but CT does not come into it where a personal contribution is made. The first 20% is an income tax relief.

You pay 80% of the contribution in order to receive 20% basic rate income tax relief, so if you pay £80 it is worth £100 as the pension provider collect the other 20% from HMRC.

You are correct in saying your basic rate band is extended by £100 to allow for higher rate tax relief.

My comments on CT are there because I assume if I am taking a dividend I would have paid the CT on the profits that that comes from.