Author Topic: Company director UK pension help  (Read 1176 times)

tinkertailor

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Company director UK pension help
« on: March 08, 2018, 08:13:00 AM »
I have a small Limited business, of which I am a company director.  Salary 8052 (to qualify for NI credit), plus 15000 dividends in 2016/17.  I haven't previously had a pension set up- yes, I know, feel free to facepunch me.  My total income this year from the business plus rentals is likely to be around 53k, so a pension is a sudden priority before the tax year ends in order to try and reduce the amount over the higher tax band rate if possible. 

However.  I'm confused.  So, so confused.  I've spend days reading pension articles and for some reason my brain is just refusing to play ball with this topic.  I also had two meetings with IFAs who told me entirely different things.  One told me that I can carry over unused annual allowances from the three previous tax years and one told me that I couldn't, because I had to be registered with a pension scheme during the previous tax years.  So, I have some questions.

- Which is correct? 
- How much in total can I pay into a scheme before the 5th April?
- Am I better off setting up a company pension or paying it in privately?  One IFA said I could do both, but was very vague on the pros and cons.
- Can anyone recommend any further reading for pension newbies, particularly guides for company directors?

PhilB

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Re: Company director UK pension help
« Reply #1 on: March 08, 2018, 09:41:17 AM »
The max you can pay in is 40k - the second IFA is correct that you only qualify for carry forward if you were a member of a qualifying pension scheme in the year you want to carry forward from.
You'll need to work out the numbers, but it's usually best for the company to pay the pension contribution as it's deductible for corporation tax purposes as well as not attracting any income tax / NI.

One further thing, unless there are different rules for directors, don't you only need to pay yourself a salary at the lower earnings limit level not the primary threshold to get your NI credit?

Richardp10

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Re: Company director UK pension help
« Reply #2 on: March 15, 2018, 05:06:26 PM »
You can only pay in up to your earnings each year so with only 8k salary that might be your max. Not sure if dividends count but I would guess not.

Paying in 8k would take you almost out of the 40% tax band.

If you haven't been a pension scheme member you cannot carry your allowance.

PhilB

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Re: Company director UK pension help
« Reply #3 on: March 16, 2018, 07:33:08 AM »
You can only pay in up to your earnings each year so with only 8k salary that might be your max. Not sure if dividends count but I would guess not.

Paying in 8k would take you almost out of the 40% tax band.

If you haven't been a pension scheme member you cannot carry your allowance.
That only applies to employee's contributions.  Employer's contribution are only limited by the annual allowance.

Richardp10

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Re: Company director UK pension help
« Reply #4 on: March 18, 2018, 12:35:18 AM »
Ah hadnt thought of him opening an employee scheme but I see it was mentioned by OP.

It's quite last minute, not sure how easy an employer scheme can be set up but a Sipp can be done in minutes.