SIPP Pension Contribution from company to a director

raks001

hi - looking for a bit of advice.
Background
I'm a director of 2 actively trading companies and both are making a profit. Company 1 - 100% shareholder and sole director. I take drawings in the form of a salary and dividends. I have previously made a SIPP contribution from this company last year. Company 2 - trading for 3 years. 10% shareholder and I am 1 of 2 directors. No payroll has been setup for this company. I have never taken any drawings from this company. This year I would like to make a SIPP contribution from the 2nd company.

Questions
Is it possible to make a SIPP contribution from Company 2 as per above?
Is this SIPP contribution tax deductible for Company 2.

Many thanks

atilla

raks001 wrote: »

hi - looking for a bit of advice.

Questions
Is it possible to make a SIPP contribution from Company 2 as per above?
Is this SIPP contribution tax deductible for Company 2.

Many thanks

Yes, to both.
However, the trick to watch out for is 'reasonable'.
By that, is the level of payment reasonable. If the value is megabucks compared to the work done or compared to the payments made to others it is excessive, then HMRC may decide it isn't allowed (or tax deductible).

silvermum

Presume it will be an 'Employer's Contribution' from Company 2 which means that you won't be able to claim any tax relief on the contribution though?

dunstonh

Shareholding directors tend to not get a second glance from HMRC when making pension contributions via the company. Non-shareholding or minor shareholding directors have to use the fair and reasonable test.

Presume it will be an 'Employer's Contribution' from Company 2 which means that you won't be able to claim any tax relief on the contribution though?

As no tax would be payable on the pension contribution, there is no relief to get. That is what makes employer contributions so good as a means to getting money out of a company.