Best pension option for cash in a Limited Company?

ddh76

I am the sole Director of my own Ltd Company - I work as a contractor and I invoice through this company.  I am soon to be joining a company full time, permanently probably and wondered how I can get the cash in the Ltd company in to a pension somehow.  

Facts of my situation:

New employer will be providing a new pension with a contribution.

Current Pension pot does NOT accept payments made in to it from a Business so although not ideal, I’ve been contributing to this pension personally with the 25% contribution.

I understand that I can contribute £60k this tax year and I’m nowhere near that level of contribution but wanted to know which type of pension should I/can I setup to pay into from my limited company?  I want to get the money out as will probably be winding it down.

Would I be able to add lump sum from my Ltd company to my new Full time role pension provider or will that only typically accept contributions from the employer company and not my limited company?

am hoping this makes sense?!

or do I just open a new pension and make contributions in to that for now and consolidate at a later date?

Thanks in advance!

wjr4

Which pension is your current pension? You’re leaving it a bit late in the tax year if you’re hoping to do it this tax year. 

Find a pension which accepts employer contributions (not ‘business’). It might get a bit messy with your new workplace pension if you try to use that for your Ltd company contributions too. 

Gary1984

How Much money are we talking about here? If you're not planning on contracting for 2 years I would suggest a Members Voluntary Liquidation of the company may be your best option. You'd pay a reduced Capital gains tax of 10% which works out more tax efficient than the pension (as you need to pay income tax on future pension withdrawals probably at 20%).

Talk to your accountant and also have a look at 

https://www.mvlonline.co.uk/

Grumpy_chap

It is unusual that your current pension does not accept employer contributions.  That might have been worth challenge / clarification but there is not really time left this financial year to conclude that now.

You have not said when you will start the new employment, but I would not count on the payroll and pension being set up and able to receive external contributions this financial year.

That therefore means that the best solution is probably to make the employer contributions from the Ltd Co. to any SIPP that can be put in place quick enough.  You can then consider transfer / consolidation at leisure once the end-of-tax-year rush is passed.  It may even make strategic sense to keep the new SIPP separate.

Your contributions this tax year are limited to £60k plus any available carry forward.  You seem to suggest that this is not a concern in any case.
The other restriction is that personal contributions cannot exceed earned income.  That restriction does not apply for employer contributions made from your Ltd Co.

dunstonh

Current Pension pot does NOT accept payments made in to it from a Business so although not ideal, I’ve been contributing to this pension personally with the 25% contribution.

Its very unusual for a pension not to accept employer contributions.   Auto enrolment schemes or closed (for new business) plans tend to the only types that don't.  Who is the pension with?
Using personal contributions has been costly.

I understand that I can contribute £60k this tax year and I’m nowhere near that level of contribution but wanted to know which type of pension should I/can I setup to pay into from my limited company?  I want to get the money out as will probably be winding it down.

You can only do £60k (potentially £200k minus the current year and last 3 years contributions) if you make employer contributions or have a salary of £60k.

Would I be able to add lump sum from my Ltd company to my new Full time role pension provider or will that only typically accept contributions from the employer company and not my limited company?

Auto-enrolment schemes typically do not allow third party payments or employer contributions as they are linked to a default employer to begin with.
Normally you would use an individual personal pension.

Slinky

I'm suspecting the issue may have been the OP using the wording 'business' contributions rather than 'employer' contributions which may have caused the issue with their current pension provider. I never had any problems making employer contributions from my ltd company.

Marcon

dunstonh said:

Current Pension pot does NOT accept payments made in to it from a Business so although not ideal, I’ve been contributing to this pension personally with the 25% contribution.

Its very unusual for a pension not to accept employer contributions.   Auto enrolment schemes or closed (for new business) plans tend to the only types that don't.  

I think that bald statement has the potential to seriously mislead! Auto enrolment schemes must accept employer contributions, given that there's a requirement for the employer to contribute.

For the benefit of novice readers, I think you must mean contributions from employers other than the sponsoring employer of the auto-enrolment scheme in question?

dunstonh

Marcon said:

dunstonh said:

Current Pension pot does NOT accept payments made in to it from a Business so although not ideal, I’ve been contributing to this pension personally with the 25% contribution.

Its very unusual for a pension not to accept employer contributions.   Auto enrolment schemes or closed (for new business) plans tend to the only types that don't.  

I think that bald statement has the potential to seriously mislead! Auto enrolment schemes must accept employer contributions, given that there's a requirement for the employer to contribute.

For the benefit of novice readers, I think you must mean contributions from employers other than the sponsoring employer of the auto-enrolment scheme in question?

For clarification, "not accept employer contributions" was in relation to OPs company.     By default an AE scheme will accept AE contributions from the employer that the scheme is linked to but they are not set up to receive employer contributions from different employers.

amyfairweather

As this is a time sensitive situation for the OP, they may wish to consider something like Penfold / PensionBee, etc. - which will allow you to open a SIPP and contribute from your LTD in minutes.  Just make sure to choose correctly on the employee/employer contributions screen.

dunstonh

As this is a time sensitive situation for the OP, they may wish to consider something like Penfold / PensionBee, etc. -which will allow you to open a SIPP and contribute from your LTD in minutes.

Its tight but there is almost three weeks still and it doesn't take that long.  So, as long as focus remains, there is plenty of time.

Neither Penfold or pensionbee offer a SIPP.

dharm999

Grumpy_chap said:

It is unusual that your current pension does not accept employer contributions.  That might have been worth challenge / clarification but there is not really time left this financial year to conclude that now.

Vanguard SIPP doesn’t accept employer contributions, maybe the OP has a SIPP?