Retirement Planning, Self Employed, Carry-Forward Advice

Ajayp007

Hi SME's. 
I am hoping someone can provide some guidance.
I am 45, have been Self-Employed for the last 12 Years. Director of an IT Company (no employees). I have 2 Pensions (5k / 20k) which have been sitting idle, last paid into when I was a permanent employee. I have an accountant who manages my day2day running.
Details about me: 
- Turn Over 115k - 120k Yearly
- Profits 80k - 90k
- Paid Minimum Wage + Dividend to take me to Approx 40k, wife is also a shareholder so also gets a dividend. 
Over the years, I have built up large sums within the Business approx 300k. Been paying 20k corporate tax on a yearly basis. 
I am now thinking of my future plans to start putting money aside into a Pension Pot.

From Reading various web sites and forums of the tax benefits of having a pension, am I right to say that before the financial year is up 05/04/2021,
I am allowed to pick up. 1 + 3 Years Carry forward rule. So:
1. Join a new Pension Scheme/Consolidate old Pensions
2. Pick up 40k for 2021-2022 before 05/04/2021
3. Pick up 120k for 2018-2021 before 05/04/2021
4. Schedule 40k to be move into the Pension on a yearly basis (1st collection before 05/04/2022)
My concerns are not to get into trouble with the HMRC. 
If you were in my shoes what would you do? There are so many different types of Pensions and Fees, I just don't know where to start. 
Any advice would be appreciated! 
Thanks In Advance.
Ajay 

Dazed_and_C0nfused

How much income does your self employment bring in?

You only seem to have given figures for your employment (directorship).

Or are you not really self employed?

I am 45, have been Self-Employed for the last 12 Years. Director of an IT Company (no employees).

Ajayp007

@Dazed_and_C0nfused
Thanks for responding. I am slightly confused on the question regarding "Income", but I will try to answer.
My Own (P60) Tax Year to 5 APRIL 2020 shows - Year Income 8.5k
I have a Limited Company, sole Director and Employee of the Company working as an IT Consultant.
Apologise if I have misunderstood the question.

dunstonh

I am 45, have been Self-Employed for the last 12 Years. Director of an IT Company (no employees).

Do you mean you have two jobs (self employed as job 1 and director of an IT company as job 2?  Or are you mixing up self employment with being a company direct (where you are effectively employed, not self employed).

My concerns are not to get into trouble with the HMRC. 

Shareholding directors are not really looked at by HMRC when it comes to pension contributions within the limits.  Its when you start paying staff (who may be family members) inappropriate levels for their role that they get interested in it.

I am allowed to pick up. 1 + 3 Years Carry forward rule. So:
1. Join a new Pension Scheme/Consolidate old Pensions
2. Pick up 40k for 2021-2022 before 05/04/2021
3. Pick up 120k for 2018-2021 before 05/04/2021
4. Schedule 40k to be move into the Pension on a yearly basis (1st collection before 05/04/2022)

Why just you and not your wife? she is a shareholder (and director?) too.

You shouldn't plan to have your retirement planning lopsided.  You potentially waste a personal allowance doing that.

Brenster

i am in a similar position to you in that i own a business which i am the director of (although i own a 25% share), and i pay myself minimal PAYE and top up with dividends for tax efficiency.
i have recently focused on my pension and these are the key points you should be aware of.
1) You are allowed to contribute a max of £40k to your pension pot per year.
2) You get tax relief on the personal contribution which is  restricted to the element of PAYE income you earn, so you are restricted to aprox £9k by the sound of it for this element.
3) Your business can then directly pay into your pension upto the £40k less your personal contribution and tax relief element, this can either be instead of paying yourself (therefore reducing the higher tax on any earnings over £50k) or in addition (if the business can afford it), the business will also save corperation tax on this element of pension payment so as the sole business owner it really is a no brainer.
4) if you are able to use this for the last 3 years then i would see someone urgently before the end of the tax year, so that you dont lose 1 years benefit once the new tax year starts.
Good Luck

Croeso69

dunstonh said:

I am 45, have been Self-Employed for the last 12 Years. Director of an IT Company (no employees).

Do you mean you have two jobs (self employed as job 1 and director of an IT company as job 2?  Or are you mixing up self employment with being a company direct (where you are effectively employed, not self employed).

My concerns are not to get into trouble with the HMRC. 

Shareholding directors are not really looked at by HMRC when it comes to pension contributions within the limits.  Its when you start paying staff (who may be family members) inappropriate levels for their role that they get interested in it.

I am allowed to pick up. 1 + 3 Years Carry forward rule. So:
1. Join a new Pension Scheme/Consolidate old Pensions
2. Pick up 40k for 2021-2022 before 05/04/2021
3. Pick up 120k for 2018-2021 before 05/04/2021
4. Schedule 40k to be move into the Pension on a yearly basis (1st collection before 05/04/2022)

Why just you and not your wife? she is a shareholder (and director?) too.

You shouldn't plan to have your retirement planning lopsided.  You potentially waste a personal allowance doing that.

I don't mean to pick on you today @dunstonh

Can a company pay a pension contribution for a shareholder who is not employed (presumably, as his shareholding wife only gets a dividend)?

Ajayp007

@Brenster
Thanks for the Advice: So even that I pick up an annual 9k Income, I can still pick up up to 40k from my company profits. 
1. For @dunstonh : My Wife is just a shareholder, not a directory of the company. 
2. For @dunstonh : I have just 1 job, just like @Brenster, I am the Director of a Limited Company. 
2. All, Does my plan below sound ok? 
3. I was looking for a reputable Pension Provider. My current providers cannot be bothered to answer their phones.
Any recommendations of Pension Types. Just want something simple, risk free. 

1. Join a new Pension Scheme/Consolidate old Pensions

2. Pick up 40k for 2021-2022 before 05/04/2021
3. Pick up 120k for 2018-2021 before 05/04/2021
4. Schedule 40k to be move into the Pension on a yearly basis (1st collection before 05/04/2022)

Dazed_and_C0nfused

You need to clarify if you are self employed or not?

Croeso69

Ajayp007 said:

@Brenster
Thanks for the Advice: So even that I pick up an annual 9k Income, I can still pick up up to 40k from my company profits. 
1. For @dunstonh : My Wife is just a shareholder, not a directory of the company. 
2. For @dunstonh : I have just 1 job, just like @Brenster, I am the Director of a Limited Company. 
2. All, Does my plan below sound ok? 
3. I was looking for a reputable Pension Provider. My current providers cannot be bothered to answer their phones.
Any recommendations of Pension Types. Just want something simple, risk free. 

1. Join a new Pension Scheme/Consolidate old Pensions

2. Pick up 40k for 2021-2022 before 05/04/2021
3. Pick up 120k for 2018-2021 before 05/04/2021
4. Schedule 40k to be move into the Pension on a yearly basis (1st collection before 05/04/2022)

Reputable, try ... http://www.hl.co.uk or http://www.youinvest.co.uk

Ajayp007

Dazed_and_C0nfused said:

You need to clarify if you are self employed or not?

@Dazed_and_C0nfused Apologies If I am not being clear. 
I am the Director and Sole employee of a Limited Company. 
I provide my IT Consultancy services and work on a contract basis and have done for the last 12 years. I do not have any other job or income. 
I hope this answers the question.

Albermarle

Any recommendations of Pension Types. Just want something simple, risk free. 

A pension is just a tax wrapper/administrator . Inside the pension normally your money is invested in funds linked to the stock market to varying degrees . These bring some risk but also the strong likelihood of growth over the long term .

Presumably this is how your current pension is invested 

Alternatively you can keep your pension funds in zero risk cash , where they will make zero return , so over the years you will lose out to inflation .

I suggest as you are short of time before the tax year ends , that you open a new pension , deposit the money and leave the money in cash in the pension. Then spend some time thinking about how you might want to invest it within the pension later ( but not too late  ) You need to either increase your knowledge of investing OR pay an IFA to do it for you .

 I was looking for a reputable Pension Provider. My current providers cannot be bothered to answer their phones. 

At this time of year they are always busy and probably Covid/working from home has an effect as well.

In any case it is easier and quicker to open one on line ( takes 10 minutes maximum ) 

You could try https://www.fidelity.co.uk/services/sipp/

0r  https://www.vanguardinvestor.co.uk/what-we-offer/personal-pension/personal-pension-account