Transfering LISA to a Pension while 20% penalty in place.

Brynsam

Splitpin84 said:

MallyGirl said:

really self employed or company director

yes self employed but may need to change over to LTD company if paying into a pension doesnt reduce my earnings as i dont want to break the VAT threshold.

If your earnings break the VAT threshold, so will your company's turnover, surely? Although company pension contributions are eligible for corporation tax relief, they don't reduce turnover.

You sound pretty confused. Why not see and IFA and get some fully-informed advice based on an understanding of all your circumstances rather than hoping somebody here might hit on the right answer?

Marcon

Brynsam said:

Splitpin84 said:

MallyGirl said:

really self employed or company director

yes self employed but may need to change over to LTD company if paying into a pension doesnt reduce my earnings as i dont want to break the VAT threshold.

If your earnings break the VAT threshold, so will your company's turnover, surely? Although company pension contributions are eligible for corporation tax relief, they don't reduce turnover.

You sound pretty confused. Why not see and IFA and get some fully-informed advice based on an understanding of all your circumstances rather than hoping somebody here might hit on the right answer?

Probably an accountant, too, to ensure you grasp the basics of running a limited company.

Splitpin84

Dazed_and_C0nfused said:

Completely off the mark.

Don't understand your maths to be honest.  £80k from you plus tax relief at source = £100k.  So on your thinking why would you be taxed on £20k if your income was £100k??

Anyhow, if you contribute £100k (gross) to a relief at source pension such as a SIPP or personal pension then you will still have taxable income of 100k.

But your basic rate tax band will be increased from £37,500 to £137,500 so you will only pay 20% tax, no higher rate tax.

Thanks for clearing it up, for some reason i thought contributing to a pension was like an allowable buisness expense for some strange reason.

Splitpin84

Brynsam said:

Splitpin84 said:

MallyGirl said:

really self employed or company director

yes self employed but may need to change over to LTD company if paying into a pension doesnt reduce my earnings as i dont want to break the VAT threshold.

If your earnings break the VAT threshold, so will your company's turnover, surely? Although company pension contributions are eligible for corporation tax relief, they don't reduce turnover.

You sound pretty confused. Why not see and IFA and get some fully-informed advice based on an understanding of all your circumstances rather than hoping somebody here might hit on the right answer?

Yes your right i am confused lol
Will need to find an accontant i think and discuss things with them to make sure i fully understand things before proceeding with anything.

MallyGirl

Splitpin84 said:

Thanks for clearing it up, for some reason i thought contributing to a pension was like an allowable buisness expense for some strange reason.

A company contributing into a director's pension will reduce the company's corporation tax bill.

dunstonh

Thanks for clearing it up, for some reason i thought contributing to a pension was like an allowable buisness expense for some strange reason.

It is for a limited company but not for the self-employed

Dox

Splitpin84 said:

Brynsam said:

Splitpin84 said:

Personal Pension.

Then it won't reduce your overall earnings.

I thought anything contributed to a personal pension plan or SIPP would reduce earnings as im self employed?

Are you confusing this with an 'adjusted' personal allowance for those earning £100K+?

kinger101

Do you need to transfer from the LISA to Pension.  There is a slight tax advantage, but not nearly as much as leaving the LISA intact and still contributing until you're back into basic rate.
I'd second getting an accountant involved moving forward, as they'll be able to help you decide on whether Ltd Co is the better option going foward.