Pension Contributions

[newtonia]

Just wondering if anyone know what the taxes payable are on employer contributions to (HMRC approved) employee pensions.

The employees are not required to contribute themselves, so I would have thought this was a pure benefit and thus subject to PAYE/NI, but I cannot seem to find this written, or disputed, anywhere official. Or maybe I'm wrong about it being subject to tax?

Any answers or advice would be great, thanks =)

[David Griffiths]

There is no taxable benefit on payments to approved pension schemes

[newtonia]

Thanks David,

I seem to understand it now: Up to 100% of salary (to a maximum of 255k) can be contributed tax-free. Correct?

It makes sense, and I'll take it as truth, but I'd have loved to see it written somwhere. The information I got fgrom Businesslink regarding that figure above only seems to refer to employee contributions - its not clear. Nothing I've found says employer contributions are tax-free, but I guess its implied somehow.

Thanks :)

[David Griffiths]

I seem to understand it now: Up to 100% of salary (to a maximum of 255k) can be contributed tax-free. Correct?

Not correct. Employer contributions are not linked to or restricted by the level of salary paid.
[/quote]

[newtonia]

Ok, but surely employers cannot contribute and unlimited amount without the employee being taxed?

[newtonia]

"There is also an 'annual allowance', which for 2010-11 is set at £255,000. This is the limit on the annual tax relief which an individual may receive on pension contributions and other increases in a person's pension rights. More can be contributed but the tax exemption on the excess will be recovered. The annual allowance will be held at this level until 2015-16."
- From Businesslink.

[David Griffiths]

"There is also an 'annual allowance', which for 2010-11 is set at £255,000. This is the limit on the annual tax relief which an individual may receive on pension contributions and other increases in a person's pension rights. More can be contributed but the tax exemption on the excess will be recovered. The annual allowance will be held at this level until 2015-16."
- From Businesslink.

An individual, not an employer

I also said that there was no link or restriction on an employer's contributions based on the employee salary. I did not say that there wasn't an overall limit

[newtonia]

Sorry, I think I wasn't clear.

That is is what I was referring to. I am asking whether or not an individual (an employee) pays taxes on employer's contributions to their pension.

The contributions we would make to employees' pensions are quite minimal, less than 5k max per employee per annum.

[David Griffiths]

Sorry, I think I wasn't clear.

That is is what I was referring to. I am asking whether or not an individual (an employee) pays taxes on employer's contributions to their pension.

The contributions we would make to employees' pensions are quite minimal, less than 5k max per employee per annum.

Answered in my first post.

No

[newtonia]

I know, I got a little confused over the thresholds, but I'm happy to assume that we'll never reach any of them anyway.

I do appreciate your responses, but writing just a few words can be vague to someone who is clearly struggling to grasp a subject.

Thanks though, I've got enough of it now to proceed.

N :)