Pension payments Ltd company

runcyclejc

My pension provider doesn’t accept payments directly from a business account, I’m a bit concerned about how this affects my situation with HMRC. If I continue transferring funds from the business account to my personal account and then to the pension, could that raise any flags? I want to make sure I’m compliant and not inadvertently classifying those payments as dividends or salary.

Dazed_and_C0nfused

runcyclejc said:

My pension provider doesn’t accept payments directly from a business account, I’m a bit concerned about how this affects my situation with HMRC. If I continue transferring funds from the business account to my personal account and then to the pension, could that raise any flags? I want to make sure I’m compliant and not inadvertently classifying those payments as dividends or salary.

Given the two things highlighted does this mean the pension provider is adding basic rate tax relief to the contributions?  This would be 25% of the amount paid from your personal account.

runcyclejc

Dazed_and_C0nfused said:

runcyclejc said:

My pension provider doesn’t accept payments directly from a business account, I’m a bit concerned about how this affects my situation with HMRC. If I continue transferring funds from the business account to my personal account and then to the pension, could that raise any flags? I want to make sure I’m compliant and not inadvertently classifying those payments as dividends or salary.

Given the two things highlighted does this mean the pension provider is adding basic rate tax relief to the contributions?  This would be 25% of the amount paid from your personal account.

Correct the  tax relief is being added to the net contribution 

Hoenir

runcyclejc said:

 If I continue transferring funds from the business account to my personal account and then to the pension, could that raise any flags?

Two distinct transactions. Money being transferred to yourself either being a loan or remuneration paid.  Monies you then pay across in your own name are yours not the company's. 

Dazed_and_C0nfused

runcyclejc said:

Dazed_and_C0nfused said:

runcyclejc said:

My pension provider doesn’t accept payments directly from a business account, I’m a bit concerned about how this affects my situation with HMRC. If I continue transferring funds from the business account to my personal account and then to the pension, could that raise any flags? I want to make sure I’m compliant and not inadvertently classifying those payments as dividends or salary.

Given the two things highlighted does this mean the pension provider is adding basic rate tax relief to the contributions?  This would be 25% of the amount paid from your personal account.

Correct the  tax relief is being added to the net contribution 

Basic rate tax relief is only ever due on employee contributions, not employer ones so it is clear what the pension company thinks is happening.

runcyclejc

The short answer is yes. Pension contributions are among the few tax breaks available to limited companies. Putting money into your pension isn't only about saving for your retirement but is also a tax-efficient way of using profits from your business.

As a company director  you can contribute to your director's pension both as employer contributions  and as an individual. And it's possible to claim pension tax relief on both.

However, contributing through our limited company is usually more tax-efficient than contributing your funds as an individual, as you'll reduce your company's taxable profits and your

Taken from Unbiased web page

dunstonh

My pension provider doesn’t accept payments directly from a business account

That is very unusual with individual plans.     Is it a group scheme or a robo?  (some robos don't support employer contributions).

 If I continue transferring funds from the business account to my personal account and then to the pension, could that raise any flags?

Technically, you are not required to have a business bank account for the limited company and can run it through a personal bank account, if the bank allows.  However, its messy and often makes accountant costs larger.  Plus, it wouldn't solve your issue as its your provider that wont accept employer contributions.  Not the bank account.

Correct the  tax relief is being added to the net contribution 

And that is your problem.  You are trying to make personal contributions from a limited company account.  You need to be making employer contributions.  Not personal.

Personal contributions will not be treated as a business expense and will be treated as a draw from the company and taxed accordingly.

molerat

runcyclejc said:

The short answer is yes. Pension contributions are among the few tax breaks available to limited companies. Putting money into your pension isn't only about saving for your retirement but is also a tax-efficient way of using profits from your business.

As a company director  you can contribute to your director's pension both as employer contributions  and as an individual. And it's possible to claim pension tax relief on both.

However, contributing through our limited company is usually more tax-efficient than contributing your funds as an individual, as you'll reduce your company's taxable profits and your

Taken from Unbiased web page

But at the moment your company is not making any contributions.  You are making personal contributions as demonstrated by the tax being added and those payments from the company to your bank need to be treated as a remuneration and taxed as appropriate.  The tax relief on pension contributions claimed by an employer is a completely different process to that of employee contributions.  What does your accountant say about this ?

runcyclejc

molerat said:

runcyclejc said:

The short answer is yes. Pension contributions are among the few tax breaks available to limited companies. Putting money into your pension isn't only about saving for your retirement but is also a tax-efficient way of using profits from your business.

As a company director  you can contribute to your director's pension both as employer contributions  and as an individual. And it's possible to claim pension tax relief on both.

However, contributing through our limited company is usually more tax-efficient than contributing your funds as an individual, as you'll reduce your company's taxable profits and your

Taken from Unbiased web page

But at the moment your company is not making any contributions.  You are making personal contributions as demonstrated by the tax being added and those payments from the company to your bank need to be treated as a remuneration and taxed as appropriate.  The tax relief on pension contributions claimed by an employer is a completely different process to that of employee contributions.  What does your accountant say about this ?

She tells me she is not able to give advice,and I should seek a IFA !

Marcon

runcyclejc said:

molerat said:

runcyclejc said:

The short answer is yes. Pension contributions are among the few tax breaks available to limited companies. Putting money into your pension isn't only about saving for your retirement but is also a tax-efficient way of using profits from your business.

As a company director  you can contribute to your director's pension both as employer contributions  and as an individual. And it's possible to claim pension tax relief on both.

However, contributing through our limited company is usually more tax-efficient than contributing your funds as an individual, as you'll reduce your company's taxable profits and your

Taken from Unbiased web page

But at the moment your company is not making any contributions.  You are making personal contributions as demonstrated by the tax being added and those payments from the company to your bank need to be treated as a remuneration and taxed as appropriate.  The tax relief on pension contributions claimed by an employer is a completely different process to that of employee contributions.  What does your accountant say about this ?

She tells me she is not able to give advice,and I should seek a IFA !

Sounds as if you're asking her the wrong question, although she should have been able to confirm that what you're currently doing isn't a great idea. 

What's your current pension scheme? Anything to stop you opening a pension with a provider which will accept employer contributions?

dunstonh said:

 If I continue transferring funds from the business account to my personal account and then to the pension, could that raise any flags?

Technically, you are not required to have a business bank account for the limited company and can run it through a personal bank account, if the bank allows.  However, it's messy and often makes accountant costs larger.  Plus, it wouldn't solve your issue as it's your provider that wont accept employer contributions.  Not the bank account.

Wrong. A limited company is a persona at law and it would cause utter chaos to try and run it through a personal account, not least because payments need to be in the name of the limited company. It's a legal requirement for a limited company to have its own bank account.

xylophone

Do you mean that you wish to make personal contributions from the salary your company pays you? These will be made from your personal account.

Or do you mean that your company will make contributions  to your pension as your employer? These will be made from the company's account.

https://getpenfold.com/pension-guides/what-is-a-director-pension

If you require advice, you could try

https://adviserbook.co.uk/

Tick "confirmed independent" and other options required when the menu comes up.