Higher rate tax payer, self employed... Pension advice please

Alphamare

I think (I have tried really hard to do my research) that if hubby starts saving into a pension it will help him save tax. Possibly even bring him under the threshold? I think he pays the higher rate at around 6-7k per annum.

Am I right?

How do I go about choosing a pension plan for him?
Do you have any suggestions?

Although he is self employed in the ten years we have been together I have taken over running his business, saving etc. he had debt before I met him and now we are buying a house! That's why I'm here doing all those research now as it's just not his forte.

Thanks.

PeacefulWaters

You might be better posting on the Pensions section of the forum.
http://forums.moneysavingexpert.com/forumdisplay.php?s=&daysprune=&f=19

The answer is that you're right, pension contributions can reduce / remove tax liability at higher rates.

The best way? Could be ways for self employed to maximise tax efficiency for company and individual.

Post in the pensions section and clarify if this is sole trader or limited company. If this income is steady he might be better off as a limited company.

lovinituk

If he's not already formed a limited company get him to see a decent accountant sharpish as it can be much more tax efficient than being a sole trader.

Alphamare

No he is not a limited company. Can you explain that please?
He has a good accountant who has mentioned tha before so we could explore it further with him. Wouldn't that have an effect on our ability to buy a house though?

How do I find the pensions board please?

Onawingandaprayer

http://forums.moneysavingexpert.com/forumdisplay.php?f=19

Sobryma

Alphamare wrote: »

No he is not a limited company. Can you explain that please?
He has a good accountant who has mentioned tha before so we could explore it further with him. Wouldn't that have an effect on our ability to buy a house though?

How do I find the pensions board please?

You need to take professional advice as it is not a black and choice, the attached gives some general info but you need specific to your circumstances. I pulled this of google and have no connection to them.

http://www.sjdaccountancy.com/information-centre/self-employed-limited-company

Re pension payments the amount in a particular band is a guide I have used, but if you get child allowance or have earnings over £100,000 then you hit various tax traps that mean you get 60% plus in effective tax relief. The annual cap is £40,000 with prior 3 years unused allowance brought forward. Again it may be worth taking professional advice at least to start you off - although you can set up simple pensions via discount brokers (cavendish online) or fund supermarkets (fidelity, bestinvest, hargreaves landsdown etc.).

Alphamare

Thank you. I will post in the pensions section and read some threads there. I'll also explore the ltd company options with the accountant.

SW17

Sobryma wrote: »

The annual cap is £40,000 with prior 3 years unused allowance brought forward.

Just one small point - my understanding is that you can only carry forward unused allowance from prior years if you were a member of a UK pension scheme (which is registered with HMRC) in those years. You don't have to have contributed, but you have to have been a member.

lovinituk

Alphamare wrote: »

No he is not a limited company. Can you explain that please?
He has a good accountant who has mentioned tha before so we could explore it further with him. Wouldn't that have an effect on our ability to buy a house though?

How do I find the pensions board please?

As a limited company you can draw a nominal wage plus dividends. It can save a lot of money in tax however as above its not black and white. He needs to sit down with his accountant and ask him to show him some projections.