Inside Ir35 and pensions

[WTFH]

I have a question about the maximum contribution that can be made into the pension (inside IR35, brolly etc).

If I was billing say £300K as an inside IR35 contractor could the brolly pay the full £60K into my pension, reducing my salary to £240K - which is below the £260K "adjusted income" level set by HMRC.

Or would I be restricted to a max contribution of £40K due to the tapering of the allowance?

I suppose I'm asking if the "brolly/employer" contribution to the pension forms part of the "adjusted income"?

Thanks,
--Jatinder

A bit of an old thread to bump, but your first port of call is to ask your brolly if they are prepared to do that.
The second one would be to speak to your accountant to discuss the actual figures, because they will know what's going on from that point of view.

[northernladuk]

I have a question about the maximum contribution that can be made into the pension (inside IR35, brolly etc).

If I was billing say £300K as an inside IR35 contractor could the brolly pay the full £60K into my pension, reducing my salary to £240K - which is below the £260K "adjusted income" level set by HMRC.

Or would I be restricted to a max contribution of £40K due to the tapering of the allowance?

I suppose I'm asking if the "brolly/employer" contribution to the pension forms part of the "adjusted income"?

Thanks,
--Jatinder

300k a year inside? Jesus. That's very high so have to ask is that a realistic figure or an overly high one for a theoretical example? Two inside gigs?

Have you considered the possibility of contributing to a scheme from previous years as well? You can contribute for three previous tax years which comes to a big number.
Your umbrella is your first point of contact as they are your employer and will also be able to tell you if this is even possible. Not all will allow that.

You probably don't have one but for sums that big I'd also be getting hold of an accountant to look at your options. I wouldn't be trusting some drone at a brolly to be well versed enough in tax law to get it right, particularly with those amounts.

[jatinder]

I'm currently outside but there is a tempting inside contract so I may switch. Figures are realistic.

I don't have a brolly at the moment, but I wouldn't take the contract if it meant I couldn't load up the pension to the max.

--Jatinder

[northernladuk]

I'm currently outside but there is a tempting inside contract so I may switch. Figures are realistic.

I don't have a brolly at the moment, but I wouldn't take the contract if it meant I couldn't load up the pension to the max.

--Jatinder

Even with max pension and years before carry forward that's can be a huge amount of tax needs paying. You do right to do some detailed tax planning. It's an interesting situation but it strikes me it would have to be a huuuuge amount more than an outside gig to make it worth it. I think there is a figure of around 35% less when comparing an 450 inside/outside rate. If you are talking about 1200 a day that percentage difference must be huge.

Remember also to consider your paye already paid this year via the LTD. You've already used some of your allowance when doing your sums.

Paying an accountant for a detailed review could be very good value in your situation. The online PAYE calculators are notoriously unreliable and at those figures the percentage error could be massive.