Retirement Planning, Self Employed, Carry-Forward Advice

AlanP_2

Whichever you open make sure you select the correct application form / process for company contributions and not personal.

 

Brenster

Simplistically is would work like this;
PAYE £9K (You can personally invest £7200, government tax relief adds £1800)
This leaves you with £31k to max out your yearly contributions, if your ltd company pay this directly into your pension (not through you personally !), it is not classed as your earnings and therefore not subject to income tax, and your business profits will be less £31k therefore they will not pay corporation tax on this element.  NOTE this element is not subject to government tax relief as the PAYE element is.
Hope this makes sense.

Albermarle

2. For @dunstonh : I have just 1 job, just like @Brenster, I am the Director of a Limited Company. 

So to  avoid any future confusion , best not to refer to yourself as self employed , as you are not .

dunstonh

Croeso69 said:

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)?

The wife would need to either be an employee or more typically spouses hold an officer position.    You don't need company secretaries any more but often you see the spouse is shown as one or as a director.      Putting the spouse on the company as a director can save tax as well as help the administration in the case of death and allow pension contributions to be made.      If the spouse has her own job then the benefits are less.  
As a shareholder only with no officer position held (or employee) then no pension contributions can be made.

Ajayp007

Albermarle said:

2. For @dunstonh : I have just 1 job, just like @Brenster, I am the Director of a Limited Company. 

So to  avoid any future confusion , best not to refer to yourself as self employed , as you are not .

Ok Thanks, I never do really, just thought its the terminology to use on this forum. 

Dazed_and_C0nfused

Ajayp007 said:

Albermarle said:

2. For @dunstonh : I have just 1 job, just like @Brenster, I am the Director of a Limited Company. 

So to  avoid any future confusion , best not to refer to yourself as self employed , as you are not .

Ok Thanks, I never do really, just thought its the terminology to use on this forum. 

It is.  If you are actually self employed.  If not it just causes confusion and can result in you getting poor suggestions for your circumstances.

Ajayp007

Brenster said:

Simplistically is would work like this;
PAYE £9K (You can personally invest £7200, government tax relief adds £1800)
This leaves you with £31k to max out your yearly contributions, if your ltd company pay this directly into your pension (not through you personally !), it is not classed as your earnings and therefore not subject to income tax, and your business profits will be less £31k therefore they will not pay corporation tax on this element.  NOTE this element is not subject to government tax relief as the PAYE element is.
Hope this makes sense.

Thanks to everyone who has provided their advice. 
So based on what I have been told, I believe this will be acceptable:
1. Join a new Pension Scheme/Consolidate old Pensions
2. Company contribution 31k (approx - To be calculated based on TAX Returns) for 2021-2022 before 05/04/2021
3. Company contribution 93k (approx - To be calculated based on TAX Returns) for 2018-2021 before 05/04/2021
4. Schedule Company contribution of 31k to be move into the Pension on a yearly basis
(1st collection before 05/04/2022)
*And If I have understood correctly, I will not be getting any tax relief and cannot pick up the full 40k. 

Albermarle

You can leave consolidating pensions until later when you have had more time to study the pros and cons of each one .
The new pension provider will probably query why you adding so much . You just have to tell them you have worked it all out and you are using carry forward allowances .

Ajayp007

Thanks for everything @Albermarle @Dazed_and_C0nfused, @Brenster, @dunstonh and others... 
Things are moving on, Just have one question to clear up:

If your yearly profits are £99k can you pick up:
31k Company Pension Contribution + 3 Years Carry Forward of 93k so Total = £124k because it exceeds
the yearly £99k figure Or does the 3 years consider the profits for those separate yearly accounts.
Just want to make sure this is acceptable. 

zagfles

Ajayp007 said:

Thanks for everything @Albermarle @Dazed_and_C0nfused, @Brenster, @dunstonh and others... 
Things are moving on, Just have one question to clear up:

If your yearly profits are £99k can you pick up:
31k Company Pension Contribution + 3 Years Carry Forward of 93k so Total = £124k because it exceeds
the yearly £99k figure Or does the 3 years consider the profits for those separate yearly accounts.
Just want to make sure this is acceptable. 

This isn't a pensions question, it's a more a corporation tax question. As far as the annual allowance rules go, as long as you were a member of a pension scheme for the last 3 tax years you can carry forwards any unused annual allowance, your profits or earnings don't matter for company contributions.

But that's pension rules. You're probably best speaking to your accountant about deductions/allowability for corp tax, see https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax/carry-forward which has some useful info. And interestingly they seem to use your definition of "self employed" ie including ltd company directors!