Pension providers which allow card payments from Employer?

[hg5guy]

I run a small Ltd company which is effectively a side hustle gone well (still work full time).

I don't pay myself a salary as I get one of those from the day job, but pay myself a decent dividend now and again.

I have a SIPP with AJ Bell which is mostly the culmination of a load of chicken feed old pensions that have been consolidated + adhoc payments from money I've generated 'on the side'.

What I want to do is to pay myself, as a director, some modest ad-hoc payments into my pension from my ltd company. AJ Bell does facilitate this however it only seems to allow this by cheque when selecting 'employer'!

I'm using one of those modern all-digital banks (Mettle to be precise) and don't have a company cheque book, therefore I'd ideally be able to pay in using the card (just as I do for individual payments).

So I suppose my question is:

"Is anybody here currently paying money from their Ltd company into their personal person via the companies card, and if so what pension provider?"

Appreciate you reading / any attempts to answer!

 

[WaveJumper]

From their website:

Yes, they can. Employer contributions are paid gross, i.e. without tax being deducted first.

Your employer can pay into your SIPP by cheque, Direct Debit or BACS.

Each time your employer makes a single contribution to your SIPP, you'll need to send us a completed SIPP additional contribution form. If you want your employer to make a payment by BACS, please send us a secure message asking for our bank details.

If you want your employer to make regular payments to your SIPP by Direct Debit, please ask them to complete a SIPP employer Direct Debit form and send it to us.

Contributing to Your Pension: What are the Rules? | AJ Bell

One of the biggest perks of pensions is earning tax relief on what you pay in - this is based on your earnings and how much tax you pay. So how much can you contribute to your pension?

www.ajbell.co.uk

 

[Will S]

Hi, I use Vanguard Asset Management for our pensions and make payments using our business debit card.

 

[DontAsk]

Your employer can pay into your SIPP by cheque, Direct Debit or BACS.

So not by debit card then.

 

[hg5guy]

From their website:

Yes, they can. Employer contributions are paid gross, i.e. without tax being deducted first.

Your employer can pay into your SIPP by cheque, Direct Debit or BACS.

Each time your employer makes a single contribution to your SIPP, you'll need to send us a completed form If you want your employer to make a payment by BACS, please send us a secure message asking for our bank details.

If you want your employer to make regular payments to your SIPP by Direct Debit, please ask them to complete a form and send it to us.

Thanks for your reply, unfortunately that's far too much of a headache, it would be OK if I wanted to do a fixed monthly payment (e.g. say £200 a month every month) as I'd do a direct debit, but I want to do adhoc, so say might decide the companies got a bit of spare cash and pop a grand in the pension a few times a year.

Filling out and sending a form each time would be a royal pain the backside.

 

[hg5guy]

Hi, I use Vanguard Asset Management for our pensions and make payments using our business debit card.

Thanks, that's a good option then! Cheers.

 

[Maxwell83]

Thanks, that's a good option then! Cheers.

I also use Vanguard for my SIPP and can confirm debit card payments are very easy, once you've verified the company (one time process).

 

[Paul Kelly ICHYB]

Why not use bank transfer?

 

[hg5guy]

Why not use bank transfer?

Each time you do it you have to fill in and sign and send them a form which feels like a process which belongs in the 1990s. Print, fill it in, scan it back in, send it.

As we're only talking modest sums here (the odd few hundred quid perhaps 4 or 5 times a year) I was hoping to just make a card payment like I do my normal contributions, so enquiring whether there are other SIPP providers who make this much easier.

Sounds like Vanguard may be the way forward, as I can always transfer that out to AJ Bell in the future to consolidate (or vice versa).

 

[delane167]

HL permit debit card payments into a SIPP

 

[hg5guy]

HL permit debit card payments into a SIPP

Is that definitely from 'employer' or is that for individual contributions?

The precise issue I'm having here is that when I want to top up I have to select whether it is an individual contribution (so from money that is already mine) or from employer (so in this case, the company that I'm a director of).

AJ Bell allow top ups from debit card when I select individual, but what I need is to do that when selecting 'employer'.

 

[delane167]

Is that definitely from 'employer' or is that for individual contributions?

The precise issue I'm having here is that when I want to top up I have to select whether it is an individual contribution (so from money that is already mine) or from employer (so in this case, the company that I'm a director of).

AJ Bell allow top ups from debit card when I select individual, but what I need is to do that when selecting 'employer'.

Yes from an employer, its how we (I) top it up.

 

[hg5guy]

Yes from an employer, its how we (I) top it up.

Brilliant, thanks.

AJ Bell potentially missing out on quite a large market here then if they are the only one which sticks unnecessary hurdles up for ltd company directors!

I otherwise really enjoy using AJ Bell so not going to transfer out from there but no change I'm going to fill out a form every time I want to top up a few hundred quid.

 

[WaveJumper]

Thanks for your reply, unfortunately that's far too much of a headache, it would be OK if I wanted to do a fixed monthly payment (e.g. say £200 a month every month) as I'd do a direct debit, but I want to do adhoc, so say might decide the companies got a bit of spare cash and pop a grand in the pension a few times a year.

Filling out and sending a form each time would be a royal pain the backside.

Have to say not sure what the headache is they except a bank transfer you just need to ask them for their bank details ..... am i missing something

"payment by BACS, please send us a secure message asking for our bank details".

 

[Newchodge]

Thanks for your reply, unfortunately that's far too much of a headache, it would be OK if I wanted to do a fixed monthly payment (e.g. say £200 a month every month) as I'd do a direct debit, but I want to do adhoc, so say might decide the companies got a bit of spare cash and pop a grand in the pension a few times a year.

Filling out and sending a form each time would be a royal pain the backside.

And you run a business?

 

[fisicx]

Each time you do it you have to fill in and sign and send them a form which feels like a process which belongs in the 1990s. Print, fill it in, scan it back in, send it.

As we're only talking modest sums here (the odd few hundred quid perhaps 4 or 5 times a year) I was hoping to just make a card payment like I do my normal contributions, so enquiring whether there are other SIPP providers who make this much easier.

Sounds like Vanguard may be the way forward, as I can always transfer that out to AJ Bell in the future to consolidate (or vice versa).

Set up the payment on your phone or pc and payments take seconds. No forms to fill in.

 

[hg5guy]

And you run a business?

Yes, I do, do you hang around on forums all day waiting for an opportunity to be outright condescending and rude?

Really genuinely grateful for the helpful answers, I now have two strong suggestions in Vanguard and HL, unfortunately the prevalence of posts like the above on this forum is why I've been a lurker for years rather than a signed up member.

 

[hg5guy]

Have to say not sure what the headache is they except a bank transfer you just need to ask them for their bank details ..... am i missing something

"payment by BACS, please send us a secure message asking for our bank details".

"Each time your employer makes a single contribution to your SIPP, you'll need to send us a completed SIPP contribution form"

 

[hg5guy]

And you run a business?

I've just realised that you are a moderator, no wonder this place is so toxic.

 

[WaveJumper]

"Each time your employer makes a single contribution to your SIPP, you'll need to send us a completed SIPP contribution form"

I would assume for tax reason as employer contributions are gross, also covering themselves for money laundering regs

 

[pentel]

Interactive investor has the same process as AJ Bell. This doesn't directly help the OP but does steer them away from looking at II.

I don't find this a particularly onerous requirement.

 

[hg5guy]

Interactive investor has the same process as AJ Bell. This doesn't directly help the OP but does steer them away from looking at II.

I don't find this a particularly onerous requirement.

I suspect the reason you don't find it particularly onerous is that on Interactive investor you can at least just send it to them via the secured messages section of your account.

With AJ Bell you have to post it to them! Each time I want to pop a couple of hundred quid in via the ltd company.

 

[Maxwell83]

I would assume for tax reason as employer contributions are gross, also covering themselves for money laundering regs

Fair enough, but there's no such requirement with Vanguard or HL, making the AJ Bell's insistence on this process a complete PITA.

 

[hg5guy]

I would assume for tax reason as employer contributions are gross, also covering themselves for money laundering regs

I don't doubt that they do it for some good reason, but I don't think in 2022 there is any excuse to have to print out and post the form each time you want to bang in a few hundred quid, not in the days of digital signatures and encrypted messaging systems.

 

[WaveJumper]

I don't doubt that they do it for some good reason, but I don't think in 2022 there is any excuse to have to print out and post the form each time you want to bang in a few hundred quid, not in the days of digital signatures and encrypted messaging systems.

All seems rather odd then, have you actually spoken to them and asked why

 

[macScot]

Just curious, there doesn't appear to be any tax advantage (assuming that the current corporation tax reduction will cancel out future income tax payments made beyond the initial 25% tax-free allowed). Unless I am mistaken, if you put the money into the SIPP vs opening an investment account for the company, so have you considered this option?

With a SIPP you would be locking it in until retirement age whilst If you invested it as a company into shares/funds/property etc., then you could technically cash it out as dividends if the need arises in the future.

By the way, I am not offering advice, I am simply trying to understand the thought process as I am in a very similar position where our company, fortunately, has a cash surplus that is earning only 0.55% at the bank right now and we have been looking at options of either long term savings or investing in shares, and want the money to be available if things change rather than it being tied down in a pension fund.

 

[Maxwell83]

Just curious, there doesn't appear to be any tax advantage (assuming that the current corporation tax reduction will cancel out future income tax payments made beyond the initial 25% tax-free allowed). Unless I am mistaken, if you put the money into the SIPP vs opening an investment account for the company, so have you considered this option?

With a SIPP you would be locking it in until retirement age whilst If you invested it as a company into shares/funds/property etc., then you could technically cash it out as dividends if the need arises in the future.

By the way, I am not offering advice, I am simply trying to understand the thought process as I am in a very similar position where our company, fortunately, has a cash surplus that is earning only 0.55% at the bank right now and we have been looking at options of either long term savings or investing in shares, and want the money to be available if things change rather than it being tied down in a pension fund.

If you pay into a SIPP, you get money out of the company with corporation tax relief applied. The money can then grow with no tax on any investment gains, and tax is only paid when you withdraw it from your pension (with a 25% tax free lump sum).

Compare that to investing via the company - you invest profits only after corporation tax has been paid, so you're already 19% down on the initial investment. Then the investment gains are taxed at corportion tax rate, so growth is 19% less. Then when you want to access the money, its still inside the company, so you pay your personal tax rate on all withdrawals just like any other extraction from the company. When corporation tax increases next year, it makes the SIPP even more beneficial.

The SIPP is much more tax efficient than leaving the money in the company, but of course as you say the downside is it being untouchble until pension age - but that just means you need to properly plan for how much you will want from that point in time and afterwards, and use the SIPP accordingly. You use other options for money that you know you will need before pension age.

And of course its limited to £40k per year, or less if your earnings mean you have tapered pension allowance.

 

[nelioneil]

If you pay into a SIPP, you get money out of the company with corporation tax relief applied. The money can then grow with no tax on any investment gains, and tax is only paid when you withdraw it from your pension (with a 25% tax free lump sum).

Compare that to investing via the company - you invest profits only after corporation tax has been paid, so you're already 19% down on the initial investment. Then the investment gains are taxed at corportion tax rate, so growth is 19% less. Then when you want to access the money, its still inside the company, so you pay your personal tax rate on all withdrawals just like any other extraction from the company. When corporation tax increases next year, it makes the SIPP even more beneficial.

The SIPP is much more tax efficient than leaving the money in the company, but of course as you say the downside is it being untouchble until pension age - but that just means you need to properly plan for how much you will want from that point in time and afterwards, and use the SIPP accordingly. You use other options for money that you know you will need before pension age.

And of course its limited to £40k per year, or less if your earnings mean you have tapered pension allowance.

I understand these payments are classed as employer contributions. Does the 40k a year include both employee and employer contributions (say they have another job with a pension paying both sets of contributions).

 

[Maxwell83]

I understand these payments are classed as employer contributions. Does the 40k a year include both employee and employer contributions (say they have another job with a pension paying both sets of contributions).

Yes, £40k total. If you exceed that, there is a tax charge on the amount of contributions that exceed your allowance.

However you might be able to carry forward unused allowance from previous years in some circumstances.

 

[macScot]

I think its the employees total contributions, the 40k is the tax-free threshold or 100% of your earnings, you can still contribute more than that but you do not get to claim tax relief, and you would be responsible for filing a self-assessment to make sure you are paying the right taxes.
There is no tax relief benefit for an employee for an employer's contribution, and I am not aware of a limit as such, but best to check with 'the pension regulator gov uk' website for full details.

 

[macScot]

Correction: the 40k annual figure is the total allowance paid into your private pension scheme no matter who pays in (you, your employer, or a third party).

 

[Gettingthereslowly]

I was with AJ Bell Sipp - can confirm that was the process - you have to send in a form every time employer makes a contribution. You get used to it after a while......I'd often send the money via BACS first, then a few days later print off/scan/email the form. But agree with OP....bit of a pain for small amounts.

Yep: £40k max employee plus employer contributions per year - so OP you would need to check how much your 'day job' was paying into your work pension. As already stated, you can put more in than £40k....but not claim the tax relief.........why would anyone want to do that?..........inheritance tax......

 

[NEF]

I would put more than the annual allowance via employer contribution if it was allowed. It seems as if this method is not allowed, or any tax benefit is lost when paying lump sums via employer contributions over this limit.

 

[hg5guy]

I was with AJ Bell Sipp - can confirm that was the process - you have to send in a form every time employer makes a contribution. You get used to it after a while......I'd often send the money via BACS first, then a few days later print off/scan/email the form. But agree with OP....bit of a pain for small amounts.

Yep: £40k max employee plus employer contributions per year - so OP you would need to check how much your 'day job' was paying into your work pension. As already stated, you can put more in than £40k....but not claim the tax relief.........why would anyone want to do that?..........inheritance tax......

I'm only expecting to pay in £200 to £300 at a time as this is a small side hustle, so yes filling out a form each time is a big pain in the backside. If I were doing larger amounts then less so.

It is easier for me to set up a HL account, use that for employer contributions, then fill in one form at some stage in the future to transfer the entire value of the fund to AJ Bell (or vice versa, in the opposite direction).