Pension contributions can be one of the most tax-efficient ways for company directors to plan for retirement. Our advisers can help you understand your options and build the right strategy.
Contact an adviser for company director pension Advice
If you are a director of a limited company or a company owner, you can contribute pre-taxed income from your company to your pension and as this counts as an allowable business expense the company will also receive tax relief
against corporation tax.
A company pension contribution is not limited to ‘earnings’ in the same way that a personal pension contribution is – instead the rule is that it meets HMRC’s ‘wholly and exclusively’ test which will need to be verified by your accountant.
If you have a large amount of cash in your business that you would like to put into your pension fund, which attracts no personal income tax and also reduces the company profits by the level of contribution you may also be able to take
advantage of the pension ‘carry forward’ rules which allow you to also make up any of the three previous tax year pension annual allowances that you didn’t use in addition to this year’s allowance (provided you had a pension plan available to make the contributions in those years).
Therefore if you have made no pension contribution in this tax year nor any contribution in the three previous years you could move up to £160,000 out of the company and into your personal pension without paying any tax and
reducing the company’s profits provided it meets HMRC’s ‘wholly and exclusively’ test.
– Are you self-employed without access to a company pension plan?
– Are you a Limited Company director or owner who wants a more flexible pension plan than that offered to the firm’s staff?
– Are you a Limited Company director or owner who wants to take profits, tax efficiently, from the company by using a pension fund rather than paying tax on salary or dividends
– Are you a Limited Company director or owner who wants to buy their offices with the help of their pension fund?
The benefits of making company pension payments for company directors and company owners.
Personal Income Tax Rates
Personal Allowance; Up to £12,570 = 0% Tax
Basic rate; £12,571 to £50,270 = 20% Tax
Higher rate; £50,271 to £150,000 = 40% Tax
Additional Rate; £150,000+ = 45%
Personal Dividend Tax Rates
Basic rate; £12,571 to £50,270 = 8.75%
Higher rate; £50,271 to £150,000 = – 33.75%
Additional rate; £150,000+ = – 39.35%
Corporation Tax
Profits of £50,000 or below = 19%
Profits between £50,000 and £250,000 = 26.50%
Profits over £250,000 = 25%
National Insurance Rates
Employers start to pay NI at 13.80% on employees annual earnings in excess of £9,096 and continue to pay this on all earnings
Employees start to pay NI at 12.00% on annual earnings in excess of £12,576 , this rate reduces to 2.00% on earnings in excess of £50,271
Personal Nics stop at State Pension Age but Employer Nics Continue.
Director loans can be withdrawn with no Personal tax or NIC paid however this does not reduce the corporation tax.
Get in touch with us directly on 01159 670888
Choosing the right adviser is important. See what our clients have said about their experience with Veracity Financial Planning.
Looking for trusted financial planning, investment advice, pension guidance or mortgage advice? Our team is here to help you make informed financial decisions with clarity and confidence. Arrange an initial consultation with one of our advisers today.
Whatever you’re looking for, Veracity Financial Planning has got you covered.
2b Thackeray’s Lane,
Woodthorpe,
Nottingham,
NG5 4HP
For Pension & Investment advice email:
financialadvice@veracityfp.co.uk
For Mortgage advice email:
mortgageadvice@veracityfp.co.uk
0115 967 0888
