LTD Company - Personal Pension

Discussion in 'Accounts & Finance' started by NEF, Oct 6, 2020.

  1. NEF

    NEF UKBF Regular Free Member

    162 8
    Hello

    I'm just after a bit of advice...

    I run my own LTD company and I've been building the company up the last few years, I currently also work for an employer and pay tax at the higher rate through my own employment.

    I have not took a wage from my LTD company as like said I've been building the company up and it just isn't worth it currently for the effort put in to give half away in taxes when I can further grow the company....

    My question being I want to invest in a personal pension, I understand your allowed to pay upto £40k into a pension per year from a LTD company and this can be backdated 3 year and reduces corporation tax paid by the company.... Do I have to be paying myself a wage for this to be allowed OR as the MD can I just pay into a private pension regardless if I take a wage from the company...

    Has anyone got guidance or dummies guides for pensions with a LTD company...

    Thanks
     
    Posted: Oct 6, 2020 By: NEF Member since: Jan 14, 2008
    #1
  2. dotcomdude

    dotcomdude UKBF Enthusiast Free Member

    514 105
    In your position, I would buy this book.

    Probably work out the maximum salary the company could pay someone to do the work you do for the company, then take that under a salary sacrifice arrangement as pension contributions. Make some additional employer contributions too.
     
    Posted: Oct 6, 2020 By: dotcomdude Member since: Jul 27, 2018
    #2
  3. NEF

    NEF UKBF Regular Free Member

    162 8
    Seriously I already have that book:oops: , I will take a look ...
     
    Posted: Oct 6, 2020 By: NEF Member since: Jan 14, 2008
    #3
  4. mattk

    mattk UKBF Newcomer Free Member

    2,332 854
    Yes, you can make an Employer's Contribution up for £40k per year, regardless of your salary. It is definitely the most tax efficient way to get money out of your company, but of course, pension limitations apply.
     
    Posted: Oct 6, 2020 By: mattk Member since: Dec 5, 2005
    #4
  5. NEF

    NEF UKBF Regular Free Member

    162 8
    So even though I don’t take a wage from the company I can still pay myself a pension via employers contribution ?
     
    Posted: Oct 6, 2020 By: NEF Member since: Jan 14, 2008
    #5
  6. Spur Support Services

    Spur Support Services UKBF Contributor Free Member

    68 13
    You don't need to take a salary. Just ensure that your overall contributions are within the pension limits.
     
    Posted: Oct 6, 2020 By: Spur Support Services Member since: Aug 21, 2020
    #6
  7. Rawlinson Pryde

    Rawlinson Pryde UKBF Contributor Free Member

    88 24
    Posted: Oct 6, 2020 By: Rawlinson Pryde Member since: May 9, 2020
    #7
  8. NEF

    NEF UKBF Regular Free Member

    162 8
    So what does this actually mean, and what is a non-trade purpose...
    Basically..... is this possible or not, half of the HMRC information pages are just waffle..
     
    Posted: Oct 7, 2020 By: NEF Member since: Jan 14, 2008
    #8
  9. Rawlinson Pryde

    Rawlinson Pryde UKBF Contributor Free Member

    88 24
    If you are unsure what it means we would recommend that you obtain proper advice.
     
    Posted: Oct 8, 2020 By: Rawlinson Pryde Member since: May 9, 2020
    #9
  10. NEF

    NEF UKBF Regular Free Member

    162 8
    It’s a forum about accounting for people with businesses, to get some advice and guidance ...

    So just don’t use the forum and pay someone your saying ?
     
    Posted: Oct 8, 2020 By: NEF Member since: Jan 14, 2008
    #10
  11. Darren_Ssc

    Darren_Ssc UKBF Ace Free Member

    1,363 443
    There are a few accountants looking for new clients on here. A few do it professionally by demonstrating their competence in answering random questions, some others use the simple of approach of offending people and suggesting they pay for professional advice.

    I couldn't say which approach works best but I have a fair idea.
     
    Posted: Oct 8, 2020 By: Darren_Ssc Member since: Mar 1, 2019
    #11
  12. Rawlinson Pryde

    Rawlinson Pryde UKBF Contributor Free Member

    88 24
    Guidance and advice was provided and you didn’t understand it! Anyone looking to pay £120k to £160k into a pension scheme should obtain proper tailored tax and pension advice. That is the best advice you can get on here!

    If you get forum advice then what happens if it goes wrong...
     
    Posted: Oct 8, 2020 By: Rawlinson Pryde Member since: May 9, 2020
    #12
  13. Argentum Tax

    Argentum Tax UKBF Contributor Free Member

    96 19
    I agree totally. There has to be some limit as to what guidance can be given in a forum and what happens if complex guidance is not properly understood. We only have to look at HMRC online guidance to see that it can quickly become unintelligible given the complexity of many tax matters.

    In addition there can be many variables which are inevitably not made clear in the context of a forum. There is a point, quickly reached, beyond which proper advice is essential. Unfortunately that advice is not free.
     
    Posted: Oct 8, 2020 By: Argentum Tax Member since: Aug 24, 2015
    #13
  14. NEF

    NEF UKBF Regular Free Member

    162 8
    I stated the £40k limit , I did not refer to amounts of £120-160k per year ????
     
    Posted: Oct 10, 2020 By: NEF Member since: Jan 14, 2008
    #14
  15. Surinder Singh

    Surinder Singh UKBF Newcomer Free Member

    6 1
    I am not expert in this part but as far as I know it would be beneficial for you to pay it from your salary. Dividend get paid after corporation tax has been deducted so you will lose 19% CT and if you pay from salary you can show as a expense and save 19% and anyway there is no tax on pension investment which seems win win both sides.
     
    Posted: Oct 13, 2020 By: Surinder Singh Member since: Oct 13, 2020
    #15
  16. UKSBD

    UKSBD Not a real duck Staff Member

    10,230 2,009
    You said backdated 3 years.
    3 years (plus this year) could be £120-160k
     
    Posted: Oct 13, 2020 By: UKSBD Member since: Dec 30, 2005
    #16