Company pension contribution to the Director' SIPP

Closing my LTD and using my post corporate tax profits to my Director SIPP - is this allowable

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I am a sigle Director of an LTD and only employee; i have being the sole driving force of the revenue. I have a 100k retained profits LTD business bank account; no pending liabilities. Corporate tax has already been paid. I intend to close down the company, over the next 6 months. I want take those 100k without any tax implications, so i plan to pay/contribute/transfer those 100k directly to my SIPP (AJ Bell) account is solely on my name) which and then strike off the company in company house. Zero tax implications, no need for MVL. 

Does this work? Has anybody had same strategy? Will this practice be challenged by HRMC? I asked two accountants; they suggested that this will work. I want to do more due diligence therefore, i ask the forum here. Very appreciative of your responses. 

Replies (10)

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By David Ex
21st Sep 2023 19:08

£100,000 decisions require tailored tax advice not the musings of a random anonymous internet forum.

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Replying to David Ex:
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By dedalos
21st Sep 2023 19:28

Many thanks David. Indeed i asked an IFA, who pointed me back to the accountants. Keen to get a view here, as well.

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Replying to dedalos:
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By Tax Dragon
21st Sep 2023 20:13

My view is that nothing has zero tax implications.

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By Not Anonymous
21st Sep 2023 21:10

And when you bite the bullet and decide who to get paid advice from you might want to go armed with details of your unused annual allowance from previous years.

Which is noticeable by its absence from your query here.

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By IWantToLearn
21st Sep 2023 21:12

Has the company has stopped trading? If so, the company likely won't receive corporation tax deductions on the contributions.

You as an individual can only have £60k contributed to your pension in one tax year unless you have prior year unused allowances.

There's much to consider as others have mentioned and with the numbers involved it would be prudent to get some thought out, paid for advice.

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By FrankTax
21st Sep 2023 21:38

Surely your accountant advised you to make directors pension contributions in the year's you were trading, claiming the relevant CT relief and reducing the CT you paid?

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By richard thomas
21st Sep 2023 22:03

What you are doing in economic terms is distributing the retained profits, as the payment will never benefit the company. Whether that has tax consequences for you is a question you need professional advice on.

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By petercooperuk
22nd Sep 2023 11:03

I sympathise because it can be hard to nail down definitive answers from tax advisers when they encounter situations they're not familiar with. So many tax decisions in this country are taken under the "well, I can't find anything against it, so let's try it and see if HMRC queries it" basis which, of course, they statistically mostly don't.

You say that you intend to close the firm within the next six months. I assume, therefore, you have enough unused allowance to enable the full £100k contribution (if not, you might want to extend your plans out to April). Will the company be considered as "trading" till closure? If so, then in what way do you think HMRC could contest it? There's not even an argument about it being excess remuneration because you wouldn't be deducting it against profits. (If you are still trading and this is all as above board as it sounds, you really should look into the CT angle because you could be leaving serious money on the table.)

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By Dp2020
22nd Sep 2023 11:23

Post trading expenses don't necessarily get CT relief, so this needs careful consideration by an accountant

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Lisa Thomas
By Lisa Thomas - Insolvency Practitioner
25th Sep 2023 14:54

If you change your mind about whether an MVL is appropriate, I'd be happy to give you a quote for an MVL.

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