Budget 16th March 2016

[MarkT]

I think this board is going to become very busy, just like before the Autumn Statement.....

You can smell the fear.....

[Acme Thunderer]

Putting a limit on amount a company can contribute to a pension to be the same as the salary could be a line of attack. Only affects those operating low salary/high dividends, not Mr Average.

[WordIsBond]

Putting a limit on amount a company can contribute to a pension to be the same as the salary could be a line of attack. Only affects those operating low salary/high dividends, not Mr Average.

This would be coherent, easy to understand, and easy to implement and enforce. But this is government, so it couldn't happen.

Seriously, if he is just looking to target small business owners again (and again, and again), this would be a way to do it. But it would have no impact on the people who make high salaries in big business. Does he want the headlines to start reporting that he's targeting small businessmen and letting off the fat cats? He could accomplish the same thing and hit the big guys by limiting company contributions to £10K. Something like that could happen.

There are so many ways he could mess things up. I'm sure he'll stumble on a few of them.

[WordIsBond]

I think this board is going to become very busy, just like before the Autumn Statement.....

You can smell the fear.....

I'm not really expecting anything significant impacting contractors except something on pensions. Which probably won't have significantly greater impact on us than on other people.

[seanraaron]

Does he want the headlines to start reporting that he's targeting small businessmen and letting off the fat cats?

I think if it was indicated he's going after consultants making high five to six figures and not local shopkeepers or companies that employ more than one person and a family member it would be a pretty easy sell.

Most people find the idea of founding a limited company and paying yourself dividends to avoid tax a fairly unsympathetic position, surprisingly enough.

[Hobosapien]

Putting a limit on amount a company can contribute to a pension to be the same as the salary could be a line of attack. Only affects those operating low salary/high dividends, not Mr Average.

Didn't the pension contribution limits used to be like that, based on salary?

I seem to remember in my early years as a contractor that (so far the only time I've had an investigation by HMRC into expenses etc) they delved into my personal pension contributions saying I had contributed too much based on the minimal salary I was drawing. I think it was resolved by my accountant showing that I had under contributed in previous years and the rules allowed a roll up of up to 6 years or so, and the total contributions came under the limit for those years rolled up.

In the end, after about 6 months of back and forth with good old fashioned letters, HMRC said I'd done nothing wrong and owed them nothing extra. An accountant can not only save you money but also keep you out of trouble.

So yes, they may go back to some old rules. Nothing really changes, they just shuffle the deck chairs while the plebs are sinking into the pockets of the rich and foreign.

[billridley]

Pension Contribution

Didn't the pension contribution limits used to be like that, based on salary?

I seem to remember in my early years as a contractor that (so far the only time I've had an investigation by HMRC into expenses etc) they delved into my personal pension contributions saying I had contributed too much based on the minimal salary I was drawing. I think it was resolved by my accountant showing that I had under contributed in previous years and the rules allowed a roll up of up to 6 years or so, and the total contributions came under the limit for those years rolled up.

In the end, after about 6 months of back and forth with good old fashioned letters, HMRC said I'd done nothing wrong and owed them nothing extra. An accountant can not only save you money but also keep you out of trouble.

So yes, they may go back to some old rules. Nothing really changes, they just shuffle the deck chairs while the plebs are sinking into the pockets of the rich and foreign.

Is there still a limit on pensions compared to salary?? I am a bit confused because I asked my accountant if it was ok to pay a personal pension to my wife (direct from the company) who is a director and shareholder - but not an 'employee, i.e. no salary is paid. He said it was ok so I have stated to make contributions. Can anyone advise if my accountant (who provides a great service, no complaints) has got this correct, or is this something I need to clarify? Cheers and thanks.

[Hobosapien]

No idea what the current rules are, only that I'm conforming. My accountant makes sure of that. They'll change all the rules again on the 16th most likely anyway.

I don't put large amounts into a pension pot these days as they mess around with the rules so often that I cannot be arsed worrying about what state things will be in when I choose to retire, and I intend keeping it my choice.

I saw somewhere the idea of the govermin raising the pension age to above the average life expectancy so they wouldn't have to pay out anything.

Almost certainly bollox but it epitomises how the govermin can and do play the rules to their own ends and not to the benefit of those trying to secure a comfortable retirement.

[jamesbrown]

Is there still a limit on pensions compared to salary?? I am a bit confused because I asked my accountant if it was ok to pay a personal pension to my wife (direct from the company) who is a director and shareholder - but not an 'employee, i.e. no salary is paid. He said it was ok so I have stated to make contributions. Can anyone advise if my accountant (who provides a great service, no complaints) has got this correct, or is this something I need to clarify? Cheers and thanks.

The maximum total contribution is 40k (inc. employer contributions), but you cannot personally contribute more than the greater of 3.6k (IIRC), which attracts 20% relief (included in this figure), or the amount of your annual salary. Since your wife doesn't have a salary, the maximum contribution would be the former. I think the problem you may face is whether this is a valid business expense. If you cannot justify paying the wife a salary (i.e. they are doing nothing), how can you justify a pension payment?

[billridley]

The maximum total contribution is 40k (inc. employer contributions), but you cannot personally contribute more than the greater of 3.6k (IIRC), which attracts 20% relief (included in this figure), or the amount of your annual salary. Since your wife doesn't have a salary, the maximum contribution would be the former. I think the problem you may face is whether this is a valid business expense. If you cannot justify paying the wife a salary (i.e. they are doing nothing), how can you justify a pension payment?

Thanks. I need to query again with my Accountant. I was asked how much I intended to contribute to her pension this year and I said approx £12,000. He said that should be ok. Not so sure now.