sipp

[pmeswani]

At the moment i pay £200 /month into my SIPP from my personal bank account. Then SIPP provider reclaim my tax back.

What is the benefit of making this payment from my company accounts as an employer pension payment?

Lower Corp. Tax for starters. Also, if you make employee contributions, you have to decide whether it comes out of your Dividend or PAYE allocation, which may incur Tax of some sort. So making Employer contribs will save on Corp Tax, N.I., Income Tax and any other tax.

As it stands, I pay about £200 a month into my Sipp from my personal bank acount, and I make an occassional employer payment on top. I could have put another £2.5k into my sipp recently, but decided to take it as a dividends and pay off some outstanding bills (and incurred some tax).

[diesel]

At the moment i pay £200 /month into my SIPP from my personal bank account. Then SIPP provider reclaim my tax back.

What is the benefit of making this payment from my company accounts as an employer pension payment?

[Fred Bloggs]

If it is employer contribs, there is no NICs to pay as far as I am aware. If I am wrong, then fair enough.

AFAIK, you are correct. I've been making employer SIPP contributions to HL for a fair while and have never seen the question of NIC's arise anywhere.

[pmeswani]

If you are not careful, you have to pay NICs on it.

If it is employer contribs, there is no NICs to pay as far as I am aware. If I am wrong, then fair enough.

[expat]

On the same form you can make a one-off employer contribution, which I have done myself.

If you are not careful, you have to pay NICs on it.

[pmeswani]

IIRC, with Hargeaves Lansdown (as an example) you fill in the SIPP form, tell them how much to debit (direct debit) every month from the Ltd Co account and tick a box that says "company contribution". And that's that. Ticking that box means they do not apply for tax credit like they do with a personal payments into their SIPP.

On the same form you can make a one-off employer contribution, which I have done myself.

[expat]

IIRC, with Hargeaves Lansdown (as an example) you fill in the SIPP form, tell them how much to debit (direct debit) every month from the Ltd Co account and tick a box that says "company contribution". And that's that. Ticking that box means they do not apply for tax credit like they do with a personal payments into their SIPP.

Indeed. But that is nothing to do with the question of the NICs.

Of course, in your payroll you simply don't include the sum paid to the SIPP as if it were salary, so it attracts no PAYE or NICs as far as your payroll is concerned.

The question is, do HMRC accept that? For the PAYE the answer is a simple Yes. For NICs it is not so simple: there are more conditions to satisfy. That is my point.

[Fred Bloggs]

IIRC, with Hargeaves Lansdown (as an example) you fill in the SIPP form, tell them how much to debit (direct debit) every month from the Ltd Co account and tick a box that says "company contribution". And that's that. Ticking that box means they do not apply for tax credit like they do with a personal payments into their SIPP.

[expat]

Yes you are able to do this as a company director. Guidance from the IR states:

“In cases where the contribution is part of a remuneration package paid wholly and exclusively for the purposes of the trade, then the contribution is an allowable expense.

... you should consider... the amount of the overall remuneration package.”

You need more advice than this: at the very least, you need to take Employer's NICs into account.

If the Ltd Co merely pays into a SIPP what you might have done yourself, and does it ad hoc according to your wishes, then the company is not investing its money in a SIPP, it is merely spending your money on your behalf. Your money has to have NICs as well as PAYE paid on it: in a SIPP you get the PAYE back, but not the NICs.

It is possible to have the Ltd Co pay the SIPP with its money, but there are conditions to satisfy. I am not an accountant (nor a lawyer), but it is such an obvious subject of concern to contractors owning the Ltd Co that employs them, that I am surprised that no accountant (or lawyer) has chosen to contribute a sticky entry about it.

[KackAttack]

Yes you are able to do this as a company director. Guidance from the IR states:

“In cases where the contribution is part of a remuneration package paid wholly and exclusively for the purposes of the trade, then the contribution is an allowable expense.

... you should consider... the amount of the overall remuneration package.”

[mrdonuts]

if i earn £60k can i pay 10 k salary and stick the other 50k in a sipp??? or can you only match the salary paid e.g. 10k