Hi There,
As a director I wish to pay into my personal pension scheme via the company? I understand that I can set up an employers persion scheme making employee + employer pension contributions and save corporation tax in the process.
Am I able to make a payment directly from the limited company account to my personal pension scheme? Would this be as expense / director loan?
Appreciate any responses in advance.
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Replies (18)
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Just send me the money you want to pay into your pension and I’ll get that all sorted for you. Did you want your pension pot invested in high risk or ultra high risk investments? I find that the returns on both types are excellent.
What industry does your company serve?
It doesn't necessarily affect the answer to your question - nor my disinterest in providing an answer. I just need to know what free stuff I can ask you for.
Many personal pension schemes accept an employer's contribution without changes to the policy. Check the policy documents for this and if in doubt call your pension advisor or the pension company.
An employer's contribution is as the name suggests an expense of the employer, consequently it doesn't touch the director's loan account. Given that you didn't realise this, if you're doing the bookkeeping your company, it raises concerns about the accuracy of the records. It might be time to ask a professional bookkeeper and, or an accountant for help.
Thanks for this, tony. I've been scratching my head wondering what it has to do with a director's loan, does the OP know what a director's loan is, would the OP benefit from some help?
Your comment makes all of that clear to me.
Now I understand the question, isn't the answer "yes, but that may not be the end of the tax consequences"?
You're right. I forgot how daft OPs can be… they ask Aweb before they check with the service provider in question. Happens again and again and still catches me out.
Thank you very much for the response.
I do know that if I was to run an employers pension scheme that it would be an expense.
Question is as a sole director can the company just pay into the personal pension scheme directly and still be classed as an expense?
That's not exactly what you asked. But, without wanting to seem snitty, your latest post exacerbates the question over whether you ought to get professional assistance - in essence, why would you be the sole director make any difference compared to say a company with four directors?
Hi There,
As a director I wish to pay into my personal pension scheme via the company? I understand that I can set up an employers persion scheme making employee + employer pension contributions and save corporation tax in the process.
Am I able to make a payment directly from the limited company account to my personal pension scheme? Would this be as expense / director loan?
Appreciate any responses in advance.
Put it all on black, red, or maybe even green. Any "drawdown" from this route will be completely tax free too!
You should be able to pay into your personal pension directly form your company. The contribution will be an expense of the company and therefore reduce your tax liability e.g. if the company makes a contribution of a £1,000, this will save the company £190 in corporation tax. Your personal pension will receive £1,000.
If the Director can prove the total remuneration is commensurate with his duties and there is sufficient unused relief.
The OP would be best to obtain bespoke advice. The accountants on this thread have given good advice (despite the OP not being an accountant, posting anonymously and expecting valuable advice for free) but the OP now needs advice for his or her specific circumstances.
Notwithstanding some of the comments in BIM46035, in practice in the case of a close company where the ability of a director- shareholder to take remuneration is closely linked to the profits it makes, HMRC won't challenge or object to a director drawing virtually, if not all of the profit as remuneration.
Unused relief, except to the extent that a lack of sufficiency can result in an annual allowance charge, isn't relevant to the amount of contribution the employer can pay.
I agree though, that the OP may benefit from some specific advice.
Assuming the remuneration is linked to their duties. I don’t see why profits are relevant and why the remuneration couldn’t create a loss.
The annual allowance includes unused relief so is relevant to employer contributions. The difference between employer and employee contributions is that employer contributions are not restricted to relevant earnings.