Can company pay into private pension and claim CT relief?

Can company pay into private pension and claim...

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With the 7.5% tax hike on dividends, pension contributions for some will be a more attractive proposition. Certainly we would not want dividends being declared and then the individual paying privately into a pension when the company could pay directly and avoid the 7.5% charge.

With this in mind, can a company pay into an individuals private pension and obtain corporation tax relief or does a company pension need to be set up? If payments are allowed into a private pension, are there any procedures to follow? Presumably the pension company would need to be informed the contributions are now being made by the employer? Would the payments need to appear on wage slips? Any other things to consider?

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By mark1975
23rd Jul 2015 15:29

To answer my own question, for those interested:

An employer can pay contributions into an employees pension scheme, it does not need to be a company scheme. The company will get CT relief so long as the contributions pass the wholly and exclusively tests (see BIM46035). Employer contributions are not restricted by relevant earnings but the £40,000 annual allowance does apply with any unused from the previous 3 years available.

 

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By andy.partridge
23rd Jul 2015 15:53

Dividend tax

Isn't this a bit of a red herring?

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By mark1975
23rd Jul 2015 16:05

Red Herring?

How so Andy?

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By andy.partridge
23rd Jul 2015 16:10

Good idea

Weren't employer contributions a good planning idea before the Budget was announced?

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By mark1975
23rd Jul 2015 16:23

Yes, however I hadn't been sure whether a company scheme was required to get the CT relief and it had been easy to put a company scheme in place for the few. It will just be far more prevalent now.

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By King_Maker
23rd Jul 2015 16:56

Why would the payments appear on a payslip, if they are company payments.

Have you seen the recent thread on the timing of such company contributions and CT relief?

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By Marion Hayes
27th Jul 2015 17:06

Not just about CT relief

Not all personal plans will accept employer contributions.

Company plans often have better benefits and charging structures vary.

As always need proper advice on the implications

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