Pension contribution

[sassan]

Hi,

I run my company from home. I am a sole director and employee. My company has made £5.000 profit since April this year. I have a SIP (self invested pension) with HL (Hargreaves Lansdown) . I am over 65 years of age. Is it possible to pay this profit directly to my SIP pension scheme with HL without paying any Employer NI and corporation tax?

Thank you
Sass

 

[sassan]

Hi,

I run my company from home. I am a sole director and employee. My company has made £5.000 profit since April this year. I have a SIP (self invested pension) with HL (Hargreaves Lansdown) . I am over 65 years of age. Is it possible to pay this profit directly to my SIP pension scheme with HL without paying any Employer NI and corporation tax?

Thank you
Sass

 

[arnydnxluk]

Yes, assuming you're not 75 or over (max age for SIPP contributions).

You need to contact Hargreaves Lansdown before making the payment to ensure it's made as an employer contribution. You just provide them with some details (e.g. the name of your company) and they'll set everything up, then you can either set up a direct debit or log in online to make a payment via debit card.

https://www.hl.co.uk/pensions/contributions/employer/forms

 

[sassan]

Mike, thank you for your reply. I pay myself salary from the profits the company makes. My annual salary that I take from my business is just below 8000 a year. I pay 20% tax on it because I have already receiving state pension of around 11,000 a year. This year my profit is going up and if I want to pay myself anything above 8000 a year the company has to pay employer NI which is 13% (My company is not eligible for employer allowance as I am a sole paid director). So in addition to 20% tax I also have to pay employer NI ( I do not pay employee NI because I am 70 years old). I was just wondering to pay any profit above 8000 a year to my SIPP pension to avoid 20% tax and 13% employer NI. Am I correct on this?

Thank you
Sass

 

[arnydnxluk]

You still pay Income Tax on pension drawings above the personal allowance. However you can take a 25% tax free lump sum, you won't have to pay NI and the company's contributions are Corporation Tax deductible. You should therefore find that pension contributions are the most tax efficient way to extract earnings from your company.

 

[Alan]

Although you have to be careful about pension recycling ( I'm not sure that is the real term ), it would only apply if you had drawn down tax free lump sums, its a complicated rule that I don't fully understand but it basically stops you some how double dipping the tax free stuff.

https://www.pensionsadvisoryservice...n/pensions-and-tax/pension-lump-sum-recycling

I suspect as long as you can prove it is from profits of the company rather than a prior lump sum ....