Redundancy, LTD company, re-employed..

mbee123

Hi,

Looking for a bit of advice regarding the most tax efficient way to manage income for this tax year.

Payments received below:-

April 2019 - Redundancy payment £46k (£30k tax free) so taxable = £16k
April - June - 3 month contractor LTD company = £12k
July - March - PAYE employee = £25k

I don't really need to take the £12k that will be in my LTD company account, any time soon, if I took it all it would push me into the higher tax band. I'm keen on putting any extra into my pension.

Would it be best/possible to leave it in there and draw it next year as I am now on a lower income so would not expect to be into the 40% tax bracket next tax year or load up my pension now and claim tax relief

My new job has a very good pension so I will be upping my contributions, I am 52 shortly and looking at retirement in 3-6 years

Appreciate any help with this..thanks

Pennywise

Yes, it's possible not to draw it and take it as a dividend the year after, but the company will have to pay 19% corporation tax as it's profit, and then you'll have 7.5% personal dividend tax on the dividend less the £2k annual dividend allowance.

May be better for you to put all the profit as employer pension contributions into a SIPP for you, so no corporation tax at all, meaning the full amount goes into your pension, tax free.