Reply to: Pension and dividends

[northernladuk]

Or the OP can continue with this one, why not ? It's not like anyone needs your permission to post here.

Boo

Cause he will get a better response starting his own thread rather than jumping on the back of other ones. Back in your box you.

[Boo]

Cool, in the unlikely situation they don't answer your questions then please feel free to start a thread and we can have a look.

Or the OP can continue with this one, why not ? It's not like anyone needs your permission to post here.

Boo

[bstar1]

Yes.

No. You could take an extra £11,925 net dividend, ((10600 / 80%) * 90%), assuming profits allow.

No. The company could make contributions of up to £26,750 gross, (40000 - (10600 / 80%)), assuming profits allow.


Don't take my word for it, I could be wrong too. Get advice from a tax professional.

still waiting to hear back, but after 4 years contracting and paying extortionate coorptax each year I didn't realize how private pension reform has changed to such a great advantage to the jobbing ltd co contractor. Smell a rat with this government as once the funds are replenished they might change the tax laws "retrospectively" for pensions.

[Contreras]

1. Can I make personal and my ltd company contribution's to the same pension pot.

Yes.

2. If I put the same as the gross salary amount of £10,600 into personal pension would I be able to take another £10,600 extra as dividend as not exceed the threshold.

No. You could take an extra £11,925 net dividend, ((10600 / 80%) * 90%), assuming profits allow.

3. I could then make another £29,400 contribution from the ltd company to bring the max pension allowance to £40,000.

No. The company could make contributions of up to £26,750 gross, (40000 - (10600 / 80%)), assuming profits allow.

Is this correct

Don't take my word for it, I could be wrong too. Get advice from a tax professional.

[northernladuk]

Cool, in the unlikely situation they don't answer your questions then please feel free to start a thread and we can have a look.

[bstar1]

What did your accountant or IFA say?

still waiting to hear back

[northernladuk]

What did your accountant or IFA say?

[bstar1]

1. Can I make personal and my ltd company contribution's to the same pension pot.


2. If I put the same as the gross salary amount of £10,600 into personal pension would I be able to take another £10,600 extra as dividend as not exceed the threshold.


3. I could then make another £29,400 contribution from the ltd company to bring the max pension allowance to £40,000.


Is this correct


Thanks

[Craig at Nixon Williams]

I'm looking at maximising my personal pension contributions.

I have/own a rental property. It's mortgaged.

Is my total salary my Ltd Co salary + one year's rental yield? Or must I reduce this by the amount of my mortgage repayments?

That is not the case. Rental income would not count as relevant income for pensions and therefore you would not get tax relief on pension contributions made in excess of salary in this case.

The only exception to this is if the property qualifies as a furnished holiday let (there is a strict criteria for this), in which case the rental profits do count as relevant earnings.

If you want to contribute to your pension in excess of your salary, the excess could be made from the company and you would get corporation tax relief on the amount.

I hope this helps.
Craig

[I just need to test it]

I'm looking at maximising my personal pension contributions.

I have/own a rental property. It's mortgaged.

Is my total salary my Ltd Co salary + one year's rental yield? Or must I reduce this by the amount of my mortgage repayments?

[IR35 Avoider]

2. A tracker is not necessarily the best investment. If a share rises, the tracker has to buy more of that share and if a share falls, the tracker has to sell part of its holding.

I know I'm several months late in pointing this out, but this is wrong. Vanilla equity index trackers are capitalisation weighted, so no shares need to be bought or sold in those scenarios.

The value of holdings in the fluctuating equity needs to go up and down in proportion to the price changes, but that is taken care of automatically by the change in share price.

One of the attractions of tracking a cap-weighted index is that such trackers need to do very little trading to stay on track.

Edit: If I'd bothered to read the rest of the thread I would have noticed this had already been addressed.

[unixman]

What is the effective tax rate paid in dividends above the HR threhold ? I calculate it as 20% corporation tax on profit before dividends, followed by 25% higher rate dividend tax.

Multiplier = 0.8 * 0.75 = 0.6, that is to say an effective tax rate of 40%. Is that right ?

[Craig at Nixon Williams]

'Afternoon! Sorry to resurrect this thread so late. I have just re-read the whole thing and it is all good stuff. I just wanted to check re the limits above. I understand they apply to pension contributions made personally, from personal salary. But what limits apply to contributions made by your Ltd company into your personal pension ?

The only limit to consider here is the £40k per annum - though there are ways to make larger contributions if you have unused allowances from prior years.

When it is a company contribution, the pension provider will not reclaim tax from HMRC (that is only applicable to personal contributions) but you will get relief from Corporation Tax.

[mudskipper]

Your SIPP will receive the cash invective from the Guvvy and it will reflect in the cash balance. Takes about six weeks for H&L to receive the first amount.

Only applicable to personal contributions.

Company contributions aren't subject to corp tax, so are already tax free.

[Scruff]

Your SIPP will receive the cash invective from the Guvvy and it will reflect in the cash balance. Takes about six weeks for H&L to receive the first amount.