Pension contribution from limited company

snm2205

I run a small consulting company as a part-time venture. It is a limited company. Revenues are in the £20-£25k range annually and almost all profit, and no money has been taken from the business.

I would like to get the cash from the limited company into my personal pension in the most tax-efficient manner.

Does anyone have any experience of carrying this sort of transaction out?

Many thanks
Stephen

dunstonh

Does anyone have any experience of carrying this sort of transaction out?

IFAs do. Its a common transaction. Although its not difficult for consumers either as its treated as an employee contribution.

MikeJones_2

snm2205 wrote: »

I would like to get the cash from the limited company into my personal pension in the most tax-efficient manner.

Difficult to say definitively which is the most tax efficient option (or indeed best pension arrangement) without knowing your entire financial position, which is why an IFA is a good idea.

One method for example, would be for the limited company to pay the contribution into a registered pension arrangement for you (there are many different types of these though, which is where the advice element comes in), potentially reducing corporation tax where any is payable.

Mike Jones

I work in the field of Pension Education and Pension Guidance in the UK. I am a current member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

ozzage

MikeJones wrote: »

Difficult to say definitively which is the most tax efficient option (or indeed best pension arrangement) without knowing your entire financial position, which is why an IFA is a good idea.

One method for example, would be for the limited company to pay the contribution into a registered pension arrangement for you (there are many different types of these though, which is where the advice element comes in), potentially reducing corporation tax where any is payable.

Mike Jones

That's why I do. I have a one-man-band limited company and it pays £500 per month into my personal pension (not quite your situation I know). It's an expense for business purposes reducing my company profit (so less corporation tax), plus no NIC is paid.

In theory the limit on such payments is much higher than the amount you're talking about BUT... if HMRC thinks that you're paying yourself a massive pension contribution simply to avoid paying income tax, then they'll try to hit you for it. And to be fair, it sounds like that's what you are doing.

Here's a link worth reading:

http://www.fleetstreetinvest.co.uk/economy/taxation/company-pension-contributions-00005.html

As everybody else has said, you should speak to an IFA or maybe your company accountant if you have one.