My heart sank when a I got a call from a client, who pays himself £8,000 salary, telling me his IFA has suggested he makes an employer pension contribution of £40k before 5 April
I don't pretend to be a specialist in this area, so I wanted to refer both myself and him to a table that would show caps and limits of what was and wasn't possible on a personal and/or employer basis. I have searched but can't find anything suitable even on the Pension Advisory Service website. Can anyone offer a link or assistance?
Edit - I am aware of the £50k annual allowance, that tax relief is limited to 100% earnings, but not sure about was 'earnings' means or the practical implications of exceeding earnings while staying under the annual allowance cap.
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Should be ok
As long as it is an employer contribution and not a personal contribution (in which case it would be limited to salary so tmax contriution would be £8,000).
As it is an employer contribution, max would be £50k (plus any unused relief for the last 3 years - up to £50k pa).
HMRC, if they look at anything at all, will look at salary plus ension contribution as a whol;e package to determine if this is reasonable as a slary for him - but if it is his own company, I can't really see how anything could be too much),
My thoughts go to the advice that
a pension contribution of that level is appropriate at all.....now how much commission does that pay..............hmmmm
Taxhound is correct. Best source for official confirmation is HMRC Business Income Manual at BIM 46035.