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Employers Pension Contribution from Ltd Company

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MartynC27
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Employers Pension Contribution from Ltd Company

#280683

Postby MartynC27 » January 28th, 2020, 6:37 pm

I want to make a pension contribution direct from my limited company to my SIPP

I am the sole Director.

For an Employee contribution from my personal account I know I can only pay in my annual salary up to a maximum of £40,000 pa and still get tax relief on the contribution.

I would like to know if there is any limit on employer's contributions direct from my company account.

I understand that employer's contributions to registered pensions schemes are a company expense and will offset corporation tax which is charged at 19%

Thanks,

Alaric
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Re: Employers Pension Contribution from Ltd Company

#280700

Postby Alaric » January 28th, 2020, 7:11 pm

MartynC27 wrote:
I would like to know if there is any limit on employer's contributions direct from my company account.


The £ 40,000 is the limit on all contributions. An employer can put more in, but it gets added to the employee's income and taxed.

https://www.gov.uk/tax-on-your-private- ... -allowance
from which
Annual allowance

Your annual allowance is the most you can save in your pension pots in a tax year (6 April to 5 April) before you have to pay tax.
You’ll only pay tax if you go above the annual allowance. This is £40,000 this tax year.

What counts towards the annual allowance

Your annual allowance applies to all of your private pensions, if you have more than one. This includes:
the total amount paid in to a defined contribution scheme in a tax year by you or anyone else (for example, your employer)
any increase in a defined benefit scheme in a tax year

If you use all of your annual allowance for the current tax year

You might be able to carry over any annual allowance you did not use from the previous 3 tax years.


and continues

fca2019
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Re: Employers Pension Contribution from Ltd Company

#280705

Postby fca2019 » January 28th, 2020, 8:15 pm

As a director i would get prof advice on this.

I think you pay 40k as an employer contribution only.

This should save CT at 19% and save employer's national insurance of 13.8%, so the saving is 32.8% in total.

The 40k limit = employee cont + tax relief + employee contr.

MartynC27
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Re: Employers Pension Contribution from Ltd Company

#280712

Postby MartynC27 » January 28th, 2020, 9:05 pm

Alaric wrote:
MartynC27 wrote:
I would like to know if there is any limit on employer's contributions direct from my company account.


The £ 40,000 is the limit on all contributions. An employer can put more in, but it gets added to the employee's income and taxed.

https://www.gov.uk/tax-on-your-private- ... -allowance
from which
Annual allowance

Your annual allowance is the most you can save in your pension pots in a tax year (6 April to 5 April) before you have to pay tax.
You’ll only pay tax if you go above the annual allowance. This is £40,000 this tax year.

What counts towards the annual allowance

Your annual allowance applies to all of your private pensions, if you have more than one. This includes:
the total amount paid in to a defined contribution scheme in a tax year by you or anyone else (for example, your employer)
any increase in a defined benefit scheme in a tax year

If you use all of your annual allowance for the current tax year

You might be able to carry over any annual allowance you did not use from the previous 3 tax years.


and continues


Thanks for the reply,

As I did not use all of my annual allowance from the previous 3 tax years - do you know how I would go about carrying the previous years annual allowance over ?

fca2019
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Re: Employers Pension Contribution from Ltd Company

#281126

Postby fca2019 » January 30th, 2020, 12:44 pm

There is calculators online to do this as its complicated. I think in most cases ppl don't use carry fwd unused pension allowances as I think you need to earn high salary like a bonus in that year to utilise the unused allowance.

Wizard
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Re: Employers Pension Contribution from Ltd Company

#291084

Postby Wizard » March 15th, 2020, 9:27 pm

MartynC27 wrote:
Alaric wrote:
MartynC27 wrote:
I would like to know if there is any limit on employer's contributions direct from my company account.


The £ 40,000 is the limit on all contributions. An employer can put more in, but it gets added to the employee's income and taxed.

https://www.gov.uk/tax-on-your-private- ... -allowance
from which
Annual allowance

Your annual allowance is the most you can save in your pension pots in a tax year (6 April to 5 April) before you have to pay tax.
You’ll only pay tax if you go above the annual allowance. This is £40,000 this tax year.

What counts towards the annual allowance

Your annual allowance applies to all of your private pensions, if you have more than one. This includes:
the total amount paid in to a defined contribution scheme in a tax year by you or anyone else (for example, your employer)
any increase in a defined benefit scheme in a tax year

If you use all of your annual allowance for the current tax year

You might be able to carry over any annual allowance you did not use from the previous 3 tax years.


and continues


Thanks for the reply,

As I did not use all of my annual allowance from the previous 3 tax years - do you know how I would go about carrying the previous years annual allowance over ?

Did you get this sorted in the end? I used prior year contributions for my company contributions to my SIPP a couple of years back, my accountant saw no complicated issues as it was clear I had not used any of the allowance in those years.


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