Directors Pension - Employers Contribution - Gross or Net?

j_netprofit

I'm currently making an employers contribution towards my SIPP. My pension provider has asked me if the amount is gross or net? Surely it's gross? 

DullGreyGuy

Yes if your LTD is paying it directly to the pension provider

j_netprofit

Thank you!

I thought as much, she just put me on the spot and I began to question my self!

Of of curiosity, from a ltd company, in what scenario would any payment be net?

Marcon

j_netprofit said:

Thank you!

I thought as much, she just put me on the spot and I began to question my self!

Of of curiosity, from a ltd company, in what scenario would any payment be net?

It wouldn't if the employer is paying.

If an employee's personal contribution is deducted from their salary and paid over, that would be paid net.

Salary sacrifice is an 'employer' contribution, so would still be paid gross. 

j_netprofit

Thanks for confirming! 

The service agent at my provider knows the payment is coming from a limited company so shouldn’t have even asked.

housedesign1

On the topic, I have been given conflicting advice as regards total allowable pension contribution per annum from a limited company to its director.  Several times the ceiling of £60,000 pa has been offered, but some IFAs are stating there is no limit in any one year.  If anyone knows the rules, I would be most grateful.

dunstonh

j_netprofit said:

Thanks for confirming! 

The service agent at my provider knows the payment is coming from a limited company so shouldn’t have even asked.

As the limited company can make net or gross contributions, it is right for them not to assume.

On the topic, I have been given conflicting advice as regards total allowable pension contribution per annum from a limited company to its director.  Several times the ceiling of £60,000 pa has been offered, but some IFAs are stating there is no limit in any one year.  If anyone knows the rules, I would be most grateful.

Employer contributions are not limited by salary.    You also have the ability to use carry forward which could allow you up to around £200,000

j_netprofit

dunstonh said:

As the limited company can make net or gross contributions, it is right for them not to assume.

How? I did ask this above and somebody said if the employer is paying the contributions wouldn't be net?

j_netprofit

housedesign1 said:

On the topic, I have been given conflicting advice as regards total allowable pension contribution per annum from a limited company to its director.  Several times the ceiling of £60,000 pa has been offered, but some IFAs are stating there is no limit in any one year.  If anyone knows the rules, I would be most grateful.

If you have no carry forward, yes the the maximum you can invest into a pension would be 60k pa. You can carry forward up to 4 previous years allowance. The reason it would equate to £200k is because '21-'23 the allowance was 40k pa.

dunstonh

j_netprofit said:

dunstonh said:

As the limited company can make net or gross contributions, it is right for them not to assume.

How? I did ask this above and somebody said if the employer is paying the contributions wouldn't be net?

The employer contribution being paid by the employer would be gross
The employee contribution being paid by the employer would be net unless salary sacrifice was being used.

A director of own company wouldn't make net contributions as there is no need unless their accountant has misunderstood auto-enrolment (I say that last bit as it happened in the early days of auto-enrolment where accountants thought owner shareholding directors had to have auto-enrolment applied to them). 

housedesign1

j_netprofit said:

housedesign1 said:

On the topic, I have been given conflicting advice as regards total allowable pension contribution per annum from a limited company to its director.  Several times the ceiling of £60,000 pa has been offered, but some IFAs are stating there is no limit in any one year.  If anyone knows the rules, I would be most grateful.

If you have no carry forward, yes the the maximum you can invest into a pension would be 60k pa. You can carry forward up to 4 previous years allowance. The reason it would equate to £200k is because '21-'23 the allowance was 40k pa.

Really brilliantly and succinctly explained, thank you.