How to put company NICs into pension?

RedMonty

I'm self-employed, low income because of family responsibilities. I'm the director of a non-profit ltd by guarantee, which gets income from grants / support in kind. I pay myself for my time from that income.

I've just started a SIPP pension. I understand so far that if I pay in £2,880, the govt will add 20% tax relief, making it £3600. Now I've read that if I pay in via my company, I can get another 13.8% tax relief on NI contributions via pension contributions, making it 33.8% tax relief on my pension contribution.

How do I make this happen? I've been trying to read up on it but can't find anything clear.

As a micro-entity, I do my own accounts / CT100 form as it's been all rather simple up to now (!) and usually results in very low levels of corporate tax ( For the sake of clarity, let's say I pay myself £10,000 pa from the company.) but dealing with pension contributions is new to me.

Any help?

Dazed_and_confused

Are you paying anything pension wise based on your self employed profits?

Or are you confusing being self employed with a limited company?

RedMonty

Dazed_and_confused wrote: »

Are you paying anything pension wise based on your self employed profits?

Or are you confusing being self employed with a limited company?

That £2,880 I mentioned above, I could choose to pay it either out of my own personal money, or have my company pay it, instead of paying it to me. Apart from that, I have no other pension payments, and my company makes no pension payments either. (and yes, I probably will have to put more into my pension to get it off to a good start).

Here's more info about small company directors and that 13.8% NIC tax relief on pension contributions:

https://www.pensionbee.com/pensions-explained/pension-contributions/contributing-to-your-pension-from-your-limited-company

chrismac1

The assumption inherent in the 13.8% figure is that your limited company salary is higher than 8,424 which is the starting point for NI for 2018-19 tax year.

It sounds like this assumption is not relevant to you.

RedMonty

chrismac1 wrote: »

The assumption inherent in the 13.8% figure is that your limited company salary is higher than 8,424 which is the starting point for NI for 2018-19 tax year.

It sounds like this assumption is not relevant to you.

Depending on future grant income, it will be, yes. It's a non-profit limited by guarantee so there are no shares and no dividends and I am only paid for work done, not for any kind of shareholding. (Our funders receive detailed accounts on where their money goes)

Pennywise

You're not actually paying the employers NIC of 13.8%,so you're not going to get any relief for something you're not paying.

[Deleted User]

From the first post it is difficult to ascertain whether there is a self-employed business in addition to a limited company - latter posts suggest not.

If the only income is from the limited company the op needs first to understand that he/she is not self-employed. The phrase ' I pay myself £10,000 pa from the company' tends to suggest that this understanding is not present.

RedMonty

Thanks for your replies. Yes I am self employed and registered as such with HMRC etc. (I also work occasionally for other orgs and have other income eg from giving talks).

I invoice the limited company (which I founded and of which I am the main director) for my time and my invoices are checked and approved for payment by the other directors (who do not work for the company). The company applies for project funding, and I use that funding for our community projects, hiring workers on a project basis, sometimes with volunteers. The sort of funding we apply for, individuals cannot apply, only organisations with charitable aims, proper safeguarding policies, etc.

I apologise for not being clear in my previous questions, this is also a learning process for me. The pension rules are unclear around micro-entities like us, and I haven't received any letters from HMRC about setting up a company pension. I am the only person it might apply to, and I am in the process of setting up a SIPP, which should mean the company has no need to set up a workplace pension.

If our funding increases, and I hope it will, then yes I will have to look at this issue again and consider becoming an employee, not self-employed.

I've done some more research now, and I'm still not clear - if I'm self-employed and invoicing the company for my work - can the company make any kind of contribution to my SIPP pension, and how would it work?

The Pensions Regulator is strongly requesting that companies should be making pension contributions for contract, short term, and irregular workers, which suggests there should be a mechanism for my case.