Company Pension Contributions

MickKnipfler

Thanks Shaun,

I'm fast coming to that conclusion. It seems odd that it's all subjuctive and down to the interpretation of the local tax office. I hope I don't have to call a few different ones until I get an answer I like then move to that area!

MickKnipfler

I spoke to the business helpline and they promptly directed me towards the pension helpline who directed me back to the business helpline.

Anyway, I was eventually directed to BIM46000-46198. It would appear that company contributions are indeed subject to relief from CGT up to £225kpa as long as they are “wholly and exclusively” for business use”. It is this phrase that confused me as to it’s true meaning.

From what I can gleam from the BIM pages and conversations with HMRC, it would appear that it means that the total remuneration must be appropriate for the role fulfilled. I assume that means that if you employed your wife for 1 hour a week and paid her £10, that’s OK. But, if you also paid £50pa into a pension scheme then that would be disallowed. As I’m the only employee and generate the entire turnover then I can’t see any issues there. I’m also wondering if I could use this to my advantage in terms of justifying a small salary as the “Total Remuneration” is still representative and any profit can then be justifiably be taken in dividends.

Isn’t this supposed to be “Simplified”?

shaunrc

A good point!

However in defence of the ""A Day" changes overall there were quite a few good changes and in general there was simplification.There were around 17 pension regimes and now there is around 1! So a benefit there.

Some areas like employer contributions were left vague. I think that in classic New Labour terms they love making things difficult to employ plenty of bureaucrats and lawyers! Frankly I know that politicians do not understand the value of their own pension pots and nor do civil servants. If it really came to it I would ask to value their pension!

If its any consolation the mess around ASPs is much worse. Rules were introduced on A Day to allow a type of drawdown to continue after 75. The rules have been changed twice since. I have someone who wants to use ASP but I am recommending against as they keep changing the rules in more punitive fashion and so who can say what it will be like in 5/10 years time?