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Any Answers Answered: Pension contributions and associated company rules

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TaxTV's Giles Mooney and Tim Good have plucked a couple of tricky tax questions from the pages of Any Answers to tackle, this month focusing on personal pension contributions and substantial commercial interdependence rules.

8th Dec 2023
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To view the full questions and AccountingWEB readers’ answers click on the links below. To watch the video, click the play icon in the box above.

Tax on state pension lump sum: SIPP contributions

The first question comes from AccountingWEB reader duncanphilipstate, who claims to have “an obscure question about an obscure issue”.

Duncanphilipstate asks: “Can pension contributions be used to reduce taxable income to zero in a way which leaves the State Pension Lump Sum untaxed?”

In answering the question, Tim Good points out that this question is relevant to a dwindling band of individuals, but there could be opportunities available for people in their 70s.

Associated companies: Spouse with investment company

The second question concerns AccountingWEB member WhiffoWills, who tells fellow accounting professionals they’re struggling a little bit with the substantial commercial interdependence rules.

In their scenario, Mr X owns 100% of Company A, a trading company of which he is the sole director. Mr and Mrs X own 50% each of Company B, an investment company with commercial property. Both Mr and Mrs X have a role in managing the company. WhiffoWills asks the pertinent question – are they associated?

In his answer, Good states that there are two important questions to tackle: a) who is the chairman of the property investment company  (if there is one); and b) what loan finance (if any) has been provided to the property investment company.

For the latest episode of TAXtv visit PTP Interactive.​ TAXtv is a monthly tax update programme available as an annual subscription (11 issues plus budget editions) to view online, download from the internet or watch on DVD.

 

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