View Full Version : pension and tax ltd company
federusa
29th October 2009, 10:36
If I have a Ltd company (Director with 100%). The company made 60000 income/year. Expenses are 25000/year, salary for Director is 6475/year. Can the company pay the Director the 100 % of the remainning in a private pension?
What are the implications from the point of view of taxes?
As it goes is it true corporation taxes will be cero?
I am due to pay taxes on the money pay in the pension?
RAL
29th October 2009, 11:10
As long as you the pension payment is for "wholly and exclusively for the business purpose", the pension payment by the company are tax deductible expense.
No futher tax to pay by you for the pension contribution by the company.
federusa
29th October 2009, 11:17
ok. this is an agreement that suits me as I dont need salary and I want to build a pension pot in a few years. The fact that salary is so low and I am not taking any dividends against such amount of pension can be saw as a way to avoid paying tax??
elainec100@cheapaccounting
29th October 2009, 12:46
If you reduce your salary to £5720 there will be no tax or NI. On a salary of £6475 you will have some NI to pay over.
If you have other income then your approach may be good.
However not enough detail to say or not - but have you used up to the higher rate tax threshold?
federusa
29th October 2009, 13:30
Oother income came from wife salary ans isas (wife and mine) so my only taxable income will be the company salary wich I will reduce to my personal allowance. Is that ok then?
elainec100@cheapaccounting
29th October 2009, 14:28
Oother income came from wife salary ans isas (wife and mine) so my only taxable income will be the company salary wich I will reduce to my personal allowance. Is that ok then?
Well again this is only based upon what you say here ...
But I would suggest that you take a dividend up to the higher rate threshold (allowing for the personal allowance less the salary taken).
There is no income tax to pay ion this dividend and the div is paid out of post corporation tax profits.
Then put any more into a pension and look at the wife's situation.
Only a suggestion. Your accountant will advise more based on your personal circs and if you don't have an accountant you might want to get one :D:D
good luck