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Can pension be paid to a retiring staff member

Part-timer retiring (related person) can a pension be paid?

Client has a part-time member of staff aged 82 retiring and would like his company to pay her a small pension each month, there is no contractual obligation to do so.

 

She has bene employed by the company for 13 years earning £400 per month, the client would like to continue paying her this amount as a pension.  She is a related person being the client’s mother.

Can the pension be paid, if so, is it tax deductible?

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28th Mar 2019 13:18

bobhurn wrote:

Can the pension be paid, if so, is it tax deductible?

Yes, it can be paid but I'm struggling to see why a tax deduction might be due. And that's before you consider the connection.

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28th Mar 2019 13:23

I was considering the pension as a cost to the company?

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to bobhurn
28th Mar 2019 13:34

It's certainly that.

But how do you justify it as being for the trade ?

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to bobhurn
28th Mar 2019 14:18

All revenue (trading) expenses must have been incurred “wholly and exclusively” for the purposes of the business to be allowable for tax purposes.

I am struggling to see this too.

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28th Mar 2019 13:50

Why does the lady have to 'retire'? Surely she can continue in employment with reduced duties.

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to paul.benny
28th Mar 2019 13:57

She only works 2 half-days a week and i sfinding it too much combined with health problems.

Client has decided to pay her a monthly allowance from his personla funds, so problem over

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to bobhurn
28th Mar 2019 14:32

bobhurn wrote:

Client has decided to pay her a monthly allowance from his personla funds, so problem over

And the good news is that she won't therefore be taxed on it, as she would have been with a pension (assuming her total income in excess of PA, etc.).

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By TPAims
02nd Apr 2019 09:06

I would allow it.

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