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  • FIRST POST
    • ukznmcl
    • By ukznmcl 14th Jul 17, 9:31 AM
    • 7Posts
    • 1Thanks
    ukznmcl
    Over paying pension payments
    • #1
    • 14th Jul 17, 9:31 AM
    Over paying pension payments 14th Jul 17 at 9:31 AM
    Good morning folks

    I am self employed and currently pay £680 per month into a SIPP Pension that I have set up through my limited company. I pay this amount as I pay myself a base salary of £8600 per year and the rest per dividends.

    I would like to increase my pension payments to around £1000 per month but from what I have read you cannot pay more into your pension than you pay yourself as a salary.

    Is there anyway I can put more into my pension? I have also set up a ISA using Indexed funds to compensate but I would prefer to put as much in the penison as its fire and forget and also get more tax benefits.

    I am 38 years old and my pension put is currently at £47k and have around 30 years left of working (that depresses me!) if that helps.
Page 1
    • Linton
    • By Linton 14th Jul 17, 10:09 AM
    • 8,491 Posts
    • 8,429 Thanks
    Linton
    • #2
    • 14th Jul 17, 10:09 AM
    • #2
    • 14th Jul 17, 10:09 AM
    If your employer (ie your company) pays money into your pension the earned income limit doesnt apply. It is only relevent for personal contributions. The total contribution (yours and your employer's) is limited to £40K/year for tax relief, but in your case you arent getting any tax relief as you personally dont pay into any pension. Whether there are any constraints on a company contribution of more than £40K I dont know.
    • EdSwippet
    • By EdSwippet 14th Jul 17, 12:58 PM
    • 595 Posts
    • 565 Thanks
    EdSwippet
    • #3
    • 14th Jul 17, 12:58 PM
    • #3
    • 14th Jul 17, 12:58 PM
    Whether there are any constraints on a company contribution of more than £40K I dont know.
    Originally posted by Linton
    Still limited to £40k before a 'tax charge' applies. From HMRC:
    What counts towards the annual allowance
    Defined contribution pension schemes --- Total amount of contributions paid in by you or anyone else (including your employer and the government)
    When making employer contributions it is important to make sure that the receiving scheme knows not to claim basic rate tax relief on these. SIPP providers that permit employer contributions will usually ask about contribution sources.
    • Dazed and confused
    • By Dazed and confused 14th Jul 17, 1:23 PM
    • 1,861 Posts
    • 829 Thanks
    Dazed and confused
    • #4
    • 14th Jul 17, 1:23 PM
    • #4
    • 14th Jul 17, 1:23 PM
    You appear somewhat confused.

    If YOU are paying £680/month then that will be £850 gross with basic rate tax relief added which is way more than £8600/year.

    Is the limited company actually paying the pension?

    Also, you clearly state in your op that you are self employed. In that case you can include your self employed business profits when working out how much you can contribute into your pension.

    I know you are going to come back and say you aren't actually self employed but that is just a perfect example of why you need professional advice not help on a public forum where those trying to help don't know all the facts.

    You'll be telling us next that you can take £5000 of dividends without having to pay any extra tax
  • jamesd
    • #5
    • 14th Jul 17, 1:58 PM
    • #5
    • 14th Jul 17, 1:58 PM
    You can make personal contributions of up to 8600 and your limited company can make employer contributions so that the combined total is not more than 40k gross. In addition you can carry forward unused annual allowance from the previous three years provided you were in any pension scheme, including any old one no longer being paid in to. No problem for your company to pay in one thousand or three thousand a month, both within 40k.

    Ensure that the SIPP payments are being reported by the pension scheme as employer payments and no extra tax relief is being added. Alternatively they can be employee contributions with tax relief added provided you are paying the NI on the extra pay. Employer contributions are most efficient.

    As hinted at by Dazed and confused, for practical purposes you're not regarded as self employed but as an employee of your limited company.
    • Alexland
    • By Alexland 14th Jul 17, 10:53 PM
    • 670 Posts
    • 420 Thanks
    Alexland
    • #6
    • 14th Jul 17, 10:53 PM
    • #6
    • 14th Jul 17, 10:53 PM
    Also when you have maxed your annual pension contributions at 38 you may wish to consider a Lifetime ISA?
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