Pension need to knows Official MSE Guide Discussion

molerat

AnneMoss4 wrote: »

I'm wondering if it's worth getting a pension if you are self-employed and don't earn enough to pay tax?

What has being self employed and not paying tax got to do with how you are going to survive when you retire ? Put money into a pension and the tax man will top it up with an extra 20%.

OldBeanz

AnneMoss4 wrote: »

I'm wondering if it's worth getting a pension if you are self-employed and don't earn enough to pay tax?

Open a stakeholder, PP or SIPP and the Government adds 25% to the pension. Pay in £8 - they make it into £10. If you can match that without risk then let us know As long as you draw the money out gradually you do not need to pay tax on it either.

dekkard

At the risk of asking a silly/newbie question, is there any reason not to continue paying into company pension plans after leaving the company?

bigadaj

dekkard wrote: »

At the risk of asking a silly/newbie question, is there any reason not to continue paying into company pension plans after leaving the company?

The main reason would be because most companies and schemes don't allow it. Options are to leave the pension with the old company, transfer it into your new employers scheme if they allow it, or into your own personal pension or sipp.

jonon

Question about self-employed pension contributions , self assessment etc.

Are pension contributions seen as an expense? So on a £20,000 pre tax income, and £1000 contribution will mean you’re taxed on £19,000?

dunstonh

Are pension contributions seen as an expense?

Not for self employed.

? So on a £20,000 pre tax income, and £1000 contribution will mean you’re taxed on £19,000?

No. Contributions are net of basic rate tax relief for self employed.

jonon

dunstonh wrote: »

Not for self employed.


No. Contributions are net of basic rate tax relief for self employed.

Hi Sorry for my basic questions.

So if you make a contribution, say £1000 do the government add 20% into the pot?

Then when you come to file your tax return the full £20,000 pre tax earnings is taken forward?

dunstonh

jonon wrote: »

Hi Sorry for my basic questions.

So if you make a contribution, say £1000 do the government add 20% into the pot?

No.

If you make a contribution of £1,000, you write the cheque for £800 and the tax relief is added by the provider to make it up to £1,000. Pension contributions are referred to as gross. The 20% comes off the gross contribution.

jonon

So if you contribute £800 the government add 25%?

jonon

If you're employed do so save on no NI contribution on your pension payments?


I'm trying to work out how a Pension is better than a Lisa? If the final pot of a LISA is tax free, but the final pot of a Pension is taxable.