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Tax Insider Tip: Pay Pension Contributions

3rd Jan 2014
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Paying contributions into a registered pension scheme can be an effective way of extracting profits from a family company.
 
Employer contributions can be made without limit, although they count towards the annual allowance (£50,000 for 2013/14). Contributions made in excess of the annual allowance attract a tax charge, although to the extent it is unused, the annual allowance can be carried forward up to four years.
It should be noted that HMRC may challenge a corporation tax deduction if they feel the payments are excessive.
 
Example:
Bill and Louise are directors of their family company. They each have a registered pension scheme.
 
In 2013/14 the company makes pension contributions of £20,000 each to their registered pension scheme. The £40,000 paid by the company is deductible for corporation tax purposes.
 

This is a sample tip taken from our 136 page guide:
101 Ultimate Tax Strategies Revealed.

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