Context: i)ESM00035 says deemed payment received by the LtdCo could be withdrawn by the Director as non-taxable dividend. Advantage: No RTI from LtdCo required. ii) For sole shareholder, sole director LtdCo, no pension enrolment required. Just checking whether it is possible to take advantage of (i) & (ii) to avoid the 'redundant RTI' by the LtdCo and at the same time avail SIPP pension tax relief. Firstly, is deemed payment classed as "qualified earnings” for pension contributions?or does it require RTI from the LtdCo to make it so? If deemed payments are allowed as "qualified earnings”: case 1: the director can contribute to their SIPP and receive the pension tax relief, with deemed payment withdrawn as non-taxable dividend, no RTI - simple to implement, would that be right? case 2: if the LtdCo pays employer contributions into the director’s SIPP, in what way can the Director claim pension tax relief?
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How does the non-taxable dividend work?
If you allocate salary payments to the director as non-taxable dividends in the accounts then won't the company profit increase and a resultant corporation tax liability?
Would it be better to do the RTI as non-taxable salary and claim this as an expense to reduce profit and reduce corporation tax?
Also, would it be better to make the pension contributions personally and save 40% income tax? Rather than making an employer contribution and saving 19% corporation tax?
I would assume that a deemed payment is qualifying earnings as the fee-payer would have processed payroll and given the contractor pay slips and P45/P60, i.e. it is employment income.