SIPP - 0 - £400,000.00 in 11 years - is this a realistic plan?

scrooge2008

Spoke to him again and he said in my method It would be counted as drawings and that from a tax perspective you were right the other method would be ultimately more tax efficient, but could be done.  Probably would be safer to put drawings into personal bank account and pay the Pension Provider from there or use savings.  Will give it some thought.  

noitsnotme

Yes so it would be salary sacrifice and you would be essentially increasing your wage but then reducing it again by salary sacrifice.  You would not get tax uplift on that contribution.  But you would save corporation tax and NI as it’s still an expense to the company.

So why bother with the additional hassle of the extra payroll steps.  Just have the company pay directly in to the pension, same result.

As said before, the only tax uplift would come from contributions from personal funds, either directly by you or from your post-tax wages by the company on your behalf.  If your accountant is saying anything else I would really like to see a detailed explanation so I can challenge my own accountant.

scrooge2008

Yes - will concede to you and ultimately the accountant who agreed with you it is not the best way of doing things.  I will use savings for uplift and stick all company profits in the SIPP, but I have learned a huge amount in the last couple of weeks so grateful for that and everyone's patience lol .

noitsnotme

No worries.  I was concerned that I had been given some bad advice in the past and was worth checking.

billy2shots

Keep it simple. 

If you are only using business  money then these should all be 'employer contributions ' .

Don't forget to check if you have carry forward available  to you (have you maxed pension contributions  in recent years)  

Marcon

scrooge2008 said:

noitsnotme said:

You don’t get a tax uplift if your company pays directly in to the pension.  The saving and the benefit you get is by not paying corporation tax on the amount contributed (and possibly not paying NI compared to if it were to be paid as wages instead).

Not sure this is necessarily correct.  Pension Bee in its self employed SIPP gives you the option to put in £9960.00 a year into the earnings section and get the tax relief up to £12,570 and also to put employer contributions in as LTD company, so you can benefit from both.  It looks like this is going to become more mainstream in 24/25. 

Someone who is self employed doesn't have an employer unless they have a 'second' job on an employee basis.

AlanP_2

scrooge2008 said:

Thanks D and C - as mentioned before I have spoken to the accountant and he will not advise on pensions and I do not need any further NI years.

They may not advise on pensions, quite sensible.

In my view however any accountant worth their charges should be able to advise on tax efficient methods of funding a pension / get money out of limited company etc.

scrooge2008

Yes, the old accountant, who used to advise on all sorts of issues and keep me right, retired a couple of years ago and I really miss him, he was so knowledgeable. I could have sat with him and talked all this through.  He sold his firm to a much bigger one and the guy assigned to me now is great with invoices and payroll and very efficient, but will not advise on much else.