Should I be using a pension?

greenglide

it is only recently that i have persuaded them to reduce the salaries from 30K (yes I know do not say anything!!!) to 12K.

If the other director is being so short sighted can you not have your salary reduced to the £8160 figure to avoid the NI and have them pay the difference into your pension?

It is only paying different dividends to different share holders that complications. Whether the company pays salary or pension makes no difference. The company actually gains because they avoid employers NI on the pension payments.

atush

I should also add that I am very happy with current investments in property and S&S ISAs.

Pensions and S&S isas are in effect the same, and can have the same investments even. they are both tax wrappers

This is my current understanding of pensions: Put money in and get tax relief (but this could stop or be changed at any time). No access whatsoever to the money until 55 (or any other age they may decide to change it to mid investment). 25% tax free lump sum upon taking the money (but this could stop or be changed at any time). Let the company make payments to save Corp tax and employers NI (but this could be stopped, changed or questioned at any time).

Do not worry about govt changes so much. The govt could also change the ISAs you like. In general, changes are not restrospective, and most major changes have a lag time. The most likely changes will be reductions in TR, so fill your boots while you can.

An easy comparison in S&S isas are, 100 into a pension costs you 80. 100 into an isa costs you 100. So you could lose 20% of the former before losing any of your own input?

Sure there are tax differences, but realisticaly you will be paying less tax in retirement to now so pensions have the edge.