company profits into directors pension 16 March at 5:42PM in Pensions, annuities & retirement planning 2 replies 205 views

Spinybif

End of company tax year August.  If  I wanted to put the entire profits into a directors pension when do you have to decide.  By end of company tax year or when accountant has calculated profits ?.  Aim to pay no corporation tax if possible.

spider42

In order to get tax relief on an employer contribution, the company needs to physically pay it over to the pension provider before the year-end. Making an accrual for it in the accounts isn't sufficient - it needs to be be paid to get the relief.

Also bear in mind your annual allowance capacity and tapering. An excessively large contribution could exceed your annual allowance, or result in the annual allowance being tapered down from £60,000 (now increased from £40,000 in yesterday's budget from 23/24 tax year onwards).

David99M

If you are are a Ltd Company director then you should be making pension contributions as a company expense and this will be taken out before profit is calculated. I believe you can even make a loss for the year and claim back from previous years corporation tax if needed. Also remember you can use the 3 previous years pension allowance if you have more than £40k of profit