Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • looknohands
    • By looknohands 10th Jun 17, 12:20 PM
    • 379Posts
    • 163Thanks
    looknohands
    SIPP contributions around year end
    • #1
    • 10th Jun 17, 12:20 PM
    SIPP contributions around year end 10th Jun 17 at 12:20 PM
    Hi I have a SIPP that I have been contributing to through my company, my company just had it's first year end and I'm a bit unsure on a few things.

    By way of background my company year end was May 31st and there is £30k in capital and reserves, (£10k is accounts receivable, the remaining £20k is cash in the bank)

    I was advised to make contributions before my year end to lower corp tax liability by a friend, however most of the cash was paid at the start of June so I didn't have the capital to invest in a pension before year end, and some is still in invoices due, so now I will owe 20% corp tax on that £30k capital, reducing this to £24k.

    Is making a pension contribution now a bit daft as I've missed the tax relief. And is there anyway to avoid this in the future, without the cash there I can't make the contributions, so seem impossible to avoid.

    My accountant doesn't advise on matters like this (understandably) and I don't have an FA. Maybe this is something I will look into but my fund size is currently small as only started this year.
Page 1
    • bigadaj
    • By bigadaj 10th Jun 17, 1:11 PM
    • 9,573 Posts
    • 6,095 Thanks
    bigadaj
    • #2
    • 10th Jun 17, 1:11 PM
    • #2
    • 10th Jun 17, 1:11 PM
    Get a new accountant.
    • looknohands
    • By looknohands 10th Jun 17, 1:28 PM
    • 379 Posts
    • 163 Thanks
    looknohands
    • #3
    • 10th Jun 17, 1:28 PM
    • #3
    • 10th Jun 17, 1:28 PM
    Thanks bigadaj,
    Could you let me know how would a different accountant may have helped? I didn't have the cash available, is it possible to back-date pension payments perhaps?
    • AnotherJoe
    • By AnotherJoe 10th Jun 17, 2:19 PM
    • 7,049 Posts
    • 7,516 Thanks
    AnotherJoe
    • #4
    • 10th Jun 17, 2:19 PM
    • #4
    • 10th Jun 17, 2:19 PM
    Couldn't you have got a short term loan into the company, even if it was your own personal money? Use that to get over the cash flow problem?
    • dunstonh
    • By dunstonh 10th Jun 17, 3:05 PM
    • 88,754 Posts
    • 54,086 Thanks
    dunstonh
    • #5
    • 10th Jun 17, 3:05 PM
    • #5
    • 10th Jun 17, 3:05 PM
    Is making a pension contribution now a bit daft as I've missed the tax relief. A
    it will be in this business year and offset current year profit. You havent missed it. It is just coming a year later.

    And is there anyway to avoid this in the future, without the cash there I can't make the contributions, so seem impossible to avoid.
    You need money to pay money. So, if its not there then short of borrowing money, you cannot do it. If you have the money personally, you could consider a directors loan to the company.

    This is discussion between your IFA and Accountant if you are not sure what is best.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • missile
    • By missile 10th Jun 17, 3:33 PM
    • 8,768 Posts
    • 4,232 Thanks
    missile
    • #6
    • 10th Jun 17, 3:33 PM
    • #6
    • 10th Jun 17, 3:33 PM
    It is often said a good accountant can save you more than his fee. I am still looking for that accountant.
    "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
    Ride hard or stay home
    • Fermion
    • By Fermion 10th Jun 17, 3:57 PM
    • 52 Posts
    • 17 Thanks
    Fermion
    • #7
    • 10th Jun 17, 3:57 PM
    • #7
    • 10th Jun 17, 3:57 PM
    I had a similar situation some years ago, but my accountant arranged to move my tax years forward 1 month, so I had a 13 month year in that particular year.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,008Posts Today

8,096Users online

Martin's Twitter