Ltd company - new pension rules

nrsql

Don't know if this would work but if you work through a limited company and can control your salary and are of a certain age could you pay into a pension scheme, take the 25% tax free lump sum and the rest taxed at your marginal rate rather than salary.

Means you get the 25% tax free and no NI?
Would presumably still need some salary but might be better than dividends?

westy22

Yes, and many business owners have been doing this for years using capped drawdown, often just taking the 25% PCLS and not drawing income - the changes announced yesterday haven't really affected this.

nrsql

The difference was that the money was locked in the pension apart from the 25%.

Can we now take out all the money immediately with only 75% taxable?

atush

yes, but you could easily go into the HRT band. Best to stay below it.

nrsql

It would mean adjusting the pension contribution so that you can take it all out and stay below. The 25% tax free would mean getting more income than with dividends but the same concept.

I'm sure there will be something to prevent this.

atush

25% TF, then take out only enough to keep your total income below 41K (or whatever the band is then).

It could take you a couple of years, but will save you tax.