Making pension contributions from the business account

[Tax Lord]

In theory your accountant should not advise on the type of pension you should contribute to. However he/she should know the tax implications!!! A great way to save corpoartion tax is by paying into a pension and you can actually pay the full profits of the company into a pension if the Director so wishes.

ie £100k turnover less £100k pension = no profit or corp tax.

[FarmerPalmer]

Scottish Equitable and Virgin both accept direct payments from employers into their stakeholder offerings.

[MrRobin]

I just called them up again and spoke to someone different. Apparently the first guy was wrong and it's perfectly fine so long as the pension provider allows it.

Oh well, perhaps he was new.

Thanks everyone!

[contractor79]

Well I used to be with Giant who set up the Scottish widows personal pension thing for me. Then I started my own Ltd co and paid into the plan as an employer. I really can't see why this would be wrong, and it annoys the hell out of me when accountants come to such different conclusions about things.

[MrRobin]

Nice when the rules are completely intuitive and black and white.

Tell me about it! It's more complex than chuffing IR30 flippin 5

P.S. Thanks for the help

[ASB]

There's plenty of money in the business account... I'm doing this to a) reduce CT bill and b) just get a pension going as I've been meaning to do it for years (yes yes I know many of you are against pensions and prefer to just invest wisely)

A bit more reading has revealed:



Wholly and Exclusively for the need of the company I presume... hmm maybe this is what they meant..

Search on that. There is a view that for a one man band this test will always be passed. There is also a view that 100% of salary is OK. And there is also a view that you could just add it to your salary and then make a salary sacrifice of that amount.

Nice when the rules are completely intuitive and black and white.

[MrRobin]

It's a Scottish Widows Personal Pension. It definitely accepts Employer contributions because there's a whole section on the application form.

There's plenty of money in the business account... I'm doing this to a) reduce CT bill and b) just get a pension going as I've been meaning to do it for years (yes yes I know many of you are against pensions and prefer to just invest wisely)

A bit more reading has revealed:

In order for the company to obtain tax relief, the contribution needs to satisfy the ‘wholly and exclusively’ test.

Wholly and Exclusively for the need of the company I presume... hmm maybe this is what they meant..

[ASB]

It is down to a scheme provider whether they will accept corporate contributions into a personal pension. It is down to HMRC whether type type of pension is an allowable deduction for CT, so your accountants could be either right or wrong dependant upon what schemes you have.

I believe that all stakeholder pensions can accept company contributions, whether they will or not is a different thing I believe. Scottish widows certainly used to and did L+G (and may or may be true now).

I have an old section 226 retirement policy as well. I am pretty sure that any contributions made by the company into this are not allowable for CT purposes since I don't think it was an approved scheme.

[pmeswani]

I think your accountant is wrong, I've been paying directors pension straight from my company account to scottish widows, and this is treated as a business expense when it comes to my company account

WHS. You can make company contributions as a lump sum. The benefit of doing this is that it reduces the overall CT tax bill. However, it does mean that it would be less money for you to draw on. So only do it if you have enough money in the company account to do it.

[contractor79]

I think your accountant is wrong, I've been paying directors pension straight from my company account to scottish widows, and this is treated as a business expense when it comes to my company account

[MrRobin]

Hello everyone, long time no type. How are you all?

I'm setting up a Personal Pension and want to make a lump sum contribution from my ltd company account to start it off. Everything I've read so far makes me think this is possible and is a business expense and therefore comes out of company profit meaning less CT to pay.

However, I spoke to my accountant (one of the popular ones on here) and was told that I couldn't make company contributions into a Personal Pension, I would have to either set up a corporate pension or take the money out the company as salary and make the lump sum payment myself and apply for the tax relief.

I am very confused and this goes against what I've read so far, but feel like i shouldn't be questioning my accountant as they are usually correct...

Anyone able to confirm / deny?

Cheers me dears.