Company director, alsocompany employee, pensionable earnings even though company dissolvedinsolvent?

justcheckin

Sorry to keep asking all these daft questions but have picked up some very messy finances from my parents and am trying to do my best to increase their (now small) income and capital.

I am sure the answer will be 'no' but I feel I need to check to know I've done my best.

My Dad was one Director of 3 of a now dissolved company. At closure it's sole creditor was him, and owed him £91k

He had also been an employee of the company. Whilst this was the case, is there any chance at all that these earnings are pensionable?

I appreciate this could sound like a wind-up, but is honestly not, and they really are on their uppers.

bowlhead99

If by 'pensionable' you mean were his earnings that he received in his capacity as an employee, "relevant earnings" for the purposes of him being able to make pension contributions up to the amount of his earned income... then generally yes employment earnings are earnings that you can put into a pension.

If by 'pensionable' you mean that the company had an employment contract with him under which they would pay (for example) x% of his employment earnings up to a certain amount, into a pension for him - then that's possible, but how could we possibly know whether they did have such an agreement with him or not? If the company is closed and dissolved, it's not going to make any further pension contributions if it has not already done so. Presumably as a director of the company he knows whether or not he had a pension to which they were contributing, and might have written that fact down somewhere if he was supposed to be directing the company.

Not sure if there is some other backstory you've provided in another thread to which we should be referring for context, as you mention 'all these' questions but I haven't been keeping track.

Thrugelmir

justcheckin said:

Sorry to keep asking all these daft questions but have picked up some very messy finances from my parents and am trying to do my best to increase their (now small) income and capital.

I am sure the answer will be 'no' but I feel I need to check to know I've done my best.

My Dad was one Director of 3 of a now dissolved company. At closure it's sole creditor was him, and owed him £91k

He had also been an employee of the company. Whilst this was the case, is there any chance at all that these earnings are pensionable?

I appreciate this could sound like a wind-up, but is honestly not, and they really are on their uppers.

Did your father lend the Company money?  Seems unlikely that he would have paid himself a salary if the company wasn't in the position to actually pay it.  

justcheckin

bowlhead99 said:

If by 'pensionable' you mean were his earnings that he received in his capacity as an employee, "relevant earnings" for the purposes of him being able to make pension contributions up to the amount of his earned income... then generally yes employment earnings are earnings that you can put into a pension.

If by 'pensionable' you mean that the company had an employment contract with him under which they would pay (for example) x% of his employment earnings up to a certain amount, into a pension for him - then that's possible, but how could we possibly know whether they did have such an agreement with him or not? If the company is closed and dissolved, it's not going to make any further pension contributions if it has not already done so. Presumably as a director of the company he knows whether or not he had a pension to which they were contributing, and might have written that fact down somewhere if he was supposed to be directing the company.

Not sure if there is some other backstory you've provided in another thread to which we should be referring for context, as you mention 'all these' questions but I haven't been keeping track.

Sorry I wasn't clear, and thank you for the clarity of your post. You are correct that the company did not make any employer contributions for him. It was simply whether I could get him to put the spare headroom of the difference between the non-taxpayer £3600 and the MPAA into a Sipp (in addition to the £3600 gross I have already advised he pay into a SIPP before his 75th birthday (02/04/20).

justcheckin

Thrugelmir said:

Did your father lend the Company money?  Seems unlikely that he would have paid himself a salary if the company wasn't in the position to actually pay it.  

I can completely see how this sounds implausible. My Father has bipolar disorder, and I believe firmly believed that the company had high hopes of achieving a good income. Whether or not this was ever objectively the case, I can't analyse. However, if you are asking because of an aspect of this I have not considered, then please say what info is lacking and I'll happily provide it.

Thrugelmir

justcheckin said:

Thrugelmir said:

Did your father lend the Company money?  Seems unlikely that he would have paid himself a salary if the company wasn't in the position to actually pay it.  

I can completely see how this sounds implausible. My Father has bipolar disorder, and I believe firmly believed that the company had high hopes of achieving a good income. Whether or not this was ever objectively the case, I can't analyse. However, if you are asking because of an aspect of this I have not considered, then please say what info is lacking and I'll happily provide it.

I was wondering if you believed that the amount owing to your father when the company was dissolved was in some way related to remuneration. Injecting personal capital to get a company off the ground and indeed keeping it afloat is far from unusual. That's the risk when in business. 

Dox

justcheckin said:

Sorry to keep asking all these daft questions but have picked up some very messy finances from my parents and am trying to do my best to increase their (now small) income and capital.

I am sure the answer will be 'no' but I feel I need to check to know I've done my best.

My Dad was one Director of 3 of a now dissolved company. At closure it's sole creditor was him, and owed him £91k

He had also been an employee of the company. Whilst this was the case, is there any chance at all that these earnings are pensionable?

I appreciate this could sound like a wind-up, but is honestly not, and they really are on their uppers.

You are referring to the £91K as 'earnings'. Did they go through the payroll before the company went bust? If not, and the £91K is either a build up of dividends retained within the company, or a director's loan, then no, it can't be classed as pensionable.