Workplace pension fees

jillybroon

Hi everybody - 1st post !!

I have my own small sole trader business, and I am putting my husband on the payroll ( my only employee )
Thinking about a workplace pension for him, and the cheapest way for both of us to avoid any extra fees. 
Is there a best overall workplace pension provider that has low fees for both employee + employer ? I see some there is a fee upfront for the employer , and with others, an additional % fee for the employee, so a bit of a minefield.
I see Hargreaves Lansdown and Fidelity do workplace pensions, but can't see if there is any extra fees involved.

Any help would be grateful 

Thanks

Jeremy535897

You could consider the Government scheme:
https://www.nestpensions.org.uk/schemeweb/nest/employers.html

Savvy_Sue

The other places we were recommended to look (small employer) were Now Pensions and The People's Pension. We went with NEST in the end: that's not a particular recommendation, just the decision made at the time. 

I think that if you need to get a decent pension set up for both of you that it would be worth taking 'proper' advice about this. If it's just an add-on to an already established and well-funded scheme from other employment, that becomes less critical. 

There is a whole Pensions board, but I understand it can get quite scary there ... There is also a sub-board for Auto-Enrolment: not very busy but may have some useful stuff.

billy2shots

Why a workplace pension in particular. 

Why not a SiPP? 

Far more control over the process. 

jillybroon

billy2shots said:

Why a workplace pension in particular. 

Why not a SiPP? 

Far more control over the process. 

Yes, we thought about this, but if I pay, say 20% of his salary into his pension, it would come off my tax bill , making more savings, than a SIPP?  
Upon thinking about this further, can employee pension payments for sole traders come off my tax bill? I know they can as a LTD Co.
Do you know if there any SIPP's out there , that would let me do this , if I changed to LTD Co ?

Thanks

Jeremy535897

Sole traders can pay into an employee's SIPP and get a deduction:
https://help.fidelity.co.uk/site/dealing-and-managing-cash/sole-trader-contributions
https://eumultisitev4prod-live-eb461540d2184169bb77db2b062d9318-f268f99.s3-eu-west-1.amazonaws.com/PI UK/pdf/sipp-employer-contribution.pdf
https://www.ecommerceaccountants.co.uk/post/what-are-sipps

There might be issues for pension contributions in respect of a spouse, though. The wage and pension contributions paid would have to be at a level that could be demonstrated to be wholly and exclusively for the purposes of the trade. Conceivably there might also be an issue if any death in service benefits were nominated to the employing spouse.

jillybroon

Found the answer I needed re. sole trader + employee pension contributions on the Quilter website, so still ok with sole trader at the moment :-)

Business structures

Sole Traders

A sole tradership is the simplest business entity, whereby the business and the individual are the same legal entity. They are typically one-man enterprises without any employees (but there is nothing stopping them taking on employees).

The sole trader is self-employed. As the business owner the individual carries the personal responsibility for the debts and obligations of the business. If the business runs into difficulty so does the individual, which means their personal assets may be at risk.

A sole trader can make employer contributions in respect of any employees but not for themselves. If they make employer contributions in respect of their employees these are tax relievable as a business expense against the sole traders’ pre-tax profits subject to 'wholly and exclusively' rules.

As sole traders can only make individual contributions in respect of themselves they are limited to 100% of their pre-tax profits (effectively their Relevant UK Earnings).

 

jillybroon

Jeremy535897 said:

Sole traders can pay into an employee's SIPP and get a deduction:

There might be issues for pension contributions in respect of a spouse, though. The wage and pension contributions paid would have to be at a level that could be demonstrated to be wholly and exclusively for the purposes of the trade. Conceivably there might also be an issue if any death in service benefits were nominated to the employing spouse.

Must have posted roughly the same time :-)
The Fidelity SIPP looks perfect, thanks for the links :-)
I will see what I can do re. the  wholly and exclusively rules. Will seek out a tax/ business expert I think :-)

Thanks

Jeremy535897

jillybroon said:

Jeremy535897 said:

Sole traders can pay into an employee's SIPP and get a deduction:

There might be issues for pension contributions in respect of a spouse, though. The wage and pension contributions paid would have to be at a level that could be demonstrated to be wholly and exclusively for the purposes of the trade. Conceivably there might also be an issue if any death in service benefits were nominated to the employing spouse.

Must have posted roughly the same time :-)
The Fidelity SIPP looks perfect, thanks for the links :-)
I will see what I can do re. the  wholly and exclusively rules. Will seek out a tax/ business expert I think :-)

Thanks

Probably wise, but the best test is for you to imagine employing a stranger to do the same work, and decide what you would be prepared to pay them.

jillybroon

Jeremy535897 said:

jillybroon said:

Jeremy535897 said:

Sole traders can pay into an employee's SIPP and get a deduction:

There might be issues for pension contributions in respect of a spouse, though. The wage and pension contributions paid would have to be at a level that could be demonstrated to be wholly and exclusively for the purposes of the trade. Conceivably there might also be an issue if any death in service benefits were nominated to the employing spouse.

Must have posted roughly the same time :-)
The Fidelity SIPP looks perfect, thanks for the links :-)
I will see what I can do re. the  wholly and exclusively rules. Will seek out a tax/ business expert I think :-)

Thanks

Probably wise, but the best test is for you to imagine employing a stranger to do the same work, and decide what you would be prepared to pay them.

Thanks Jeremy,

I will see what I can get away with, when I make a appointment :-)