Highest Return/Lowest Risk Pension Options

scrooge2008

Thank you that is extremely helpful.  My business owns one of the properties outright and that income/expenditure goes through Ltd Company, but the other two properties are in my name and accountant does them through self assessment.  Am I right in thinking the profit on these properties is counted as pensionable earnings, but income from my pensions or investments is not?  

scrooge2008

So I have missed my chance to put money in pension for the last tax year and my last accounting year.

If the above is correct and my pensionable income is around £22,500.00 then potentially I could put in £18,000.00 into the pension and get an uplift of £4,500.00?  Could I do that as a lump sum, this month to benefit from any interest, investment, rather than drip feed it?

My question is could I pay this out of the Ltd company business, this financial accounting year, even though some of the pensionable income will be from outwith the business, as a personal contribution and offset that against profits and also put a further £20,000.00 of my projected profits into the pension, on which I would get no uplift but save the 19% corporation tax? 

This would mean I would pay very little tax, but not sure if it is legitimate and whether the £22,500.00 would need to come out of personal savings or split?

 

Roger175

scrooge2008 said:

Thank you that is extremely helpful.  My business owns one of the properties outright and that income/expenditure goes through Ltd Company, but the other two properties are in my name and accountant does them through self assessment.  Am I right in thinking the profit on these properties is counted as pensionable earnings, but income from my pensions or investments is not?  

To the best of my knowledge, rental income from such properties is counted as un-earned income by HMRC and you cannot get pension tax relief against it. Certainly that was what we were told when we looked into it a couple of year ago when trying to minimise the tax earned on our rental property.

scrooge2008

Thanks Roger175, that doesn't seem fair, but hey ho!  

I am going to spend quite a bit of time playing about with my calculator because it may make sense to increase my salary through the business then to get maximum pension uplift for minimum input through the SIPP, as opposed to saving money on tax and NI , by paying self low salary.

Is there a formula for this? 

Roger175

scrooge2008 said:

Thanks Roger175, that doesn't seem fair, but hey ho!  

Don't even get me started! The writing has been on the wall ever since the Government decided private landlords were the scum of the earth. We're now in the process of selling our rental property, with the current tax regime and and the increased mortgage rate looming, we reckon we will be just as well off by putting our capital on deposit (will get into ISA's as the years go by and max out pension contributions etc). 

scrooge2008

Yes, I have a number of friends who are selling up rental properties, at the moment, for same reasons. It does not make a great deal of sense now to invest in property.    This private landlord exodus is going to have a huge knock on effect on the number of properties available to rent.  It is particularly onerous in Scotland, where I am, as extremely difficult to evict problem tenants.  Fortunately, have great tenants in all the properties, at the moment, and hopefully long term, but would review if any of them left.

Dazed_and_C0nfused

scrooge2008 said:

Thanks Roger175, that doesn't seem fair, but hey ho!  

I am going to spend quite a bit of time playing about with my calculator because it may make sense to increase my salary through the business then to get maximum pension uplift for minimum input through the SIPP, as opposed to saving money on tax and NI , by paying self low salary.

Is there a formula for this? 

It's your accountant you need to have these discussions with.

Normally personal contributions aren't the best option when a limited company is part of the picture but you really to looks at the whole picture to understand the best way for your particular situation.

And rental income is rarely counted when determining how much someone can personally contribute to a pension.