Pension Contribution from Limited Company

[WC66]

I have sent up a SIPP for an online provider

As a shareholder and director of the company I wish to make a direct contribution of £40k (up to the permitted limit). My understanding is this will be treated as an expense and can be offset off corporation tax

In terms of the paperwork, does this need to be declared on own self investment at all if within the limit? Any advice appreciated

 

[Red Wood]

I'm pretty certain you can only make a £40K pension deduction if it is equal to your gross PAYE pay. So you must of paid yourself £40k to be able to make a tax deductible pension payment of £40k.

 

[mattk]

No. Simply make it as an Employer's Contribution, straight from your business bank account to your SIPP.

As you say, it is tax deducible for CT purposes and there is no need to declare anything on your self assessment.

An Employer's Contribution is not limited by the salary you pay yourself.

Don't forget, you can also utilise any unused annual allowance (know as Carry Forwards) going back three previous tax years.

 

[Red Wood]

Well I never.... That is very generous!

 

[WC66]

Yes seems pretty generous. I do wonder if it get culled before long.

Also you are allowed to go back 3 years

 

[Rawlinson Pryde]

You need to be careful to make sure it is not excessive otherwise Corporation Tax relief may be withdrawn.

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim46035

 

[Red Wood]

So

No. Simply make it as an Employer's Contribution, straight from your business bank account to your SIPP.

As you say, it is tax deducible for CT purposes and there is no need to declare anything on your self assessment.

An Employer's Contribution is not limited by the salary you pay yourself.

Don't forget, you can also utilise any unused annual allowance (know as Carry Forwards) going back three previous tax years.

Does that mean if £10K was contributed to a pension pot each of the previous 3 financial years, legally you could then make a tax deductable pension contribution of £90K in the 3rd year?