Hi all, hope someone can help.
I have a small Ltd Company client which has two directors - no company pension scheme in place at all.
They have just taken on their first member of staff who will not be a director or share holder, simply an employee. As part of his remunerations the Ltd Company will pay contributions towards his already set-up and been running for a couple of years, personal pension plan.
My questions are:
- Should the contributions from the Ltd Company be made through the PAYE payroll - if not then how should they be made?
- Are 100% of the contributions deductible for the company's Corp Tax?
- Is there a more efficient way of running this?
Thank you for all your help - really appreciate your comments.
Best,
Archie
Replies (2)
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No expert but
I have just come across this and been coached in it so;
Contributions by the company to a personal pension scheme are deductable (within certain limits I guess), in fact they are (?soon to be) compulsary.
Any contribution by the employee is deducted AFTER paye has been calculated (if collected and paid over by the company. The pension provider in our case insisted on one payment only.) The employee gets his tax relief via SA.
Experts will no doubt fill in the gaps!
Pensions paid by the employer
Contributions to an allowable scheme can be made by the employer. They can be paid gross [monthly quarterly, annually] . C.T. relief at 20% is due at the appropriate rate.This is much cheaper than remunerating, through the employee, as 13% NIC is saved. In other words, do not give said employee a £1,000 pay rise - give him £1100 of pension instead.
You will save 13% NIC contributions and he will thank you, as he is not taxed on said pension, and he pays no employee NIC either. Contact the pension company and set up an employer pension contribution DD or STO, with the company's bankers.