Paying SIPP charges

coldandconfused

Does anyone know if I can pay charges from a personal bank account when the SIPP is funded from a business (limited company) account ? 

snarffie

My monthly ii fee (ISA and SIPP) of £21.99 is paid from my personal bank account. (SIPP is funded from Ltd co)

jimjames

I prefer to try to get all my SIPP charges taken from inside the SIPP to benefit from tax relief. If you pay from outside then you are paying the full amount of the charges

dunstonh

coldandconfused said:

Does anyone know if I can pay charges from a personal bank account when the SIPP is funded from a business (limited company) account ? 

Whilst it is possible, it's not tax efficient to do it.  So, most people wouldn't do it.

MallyGirl

jimjames said:

I prefer to try to get all my SIPP charges taken from inside the SIPP to benefit from tax relief. If you pay from outside then you are paying the full amount of the charges

Not always possible- I can't do this with II because I have both an ISA and a SIPP with them

snarffie

MallyGirl said:

jimjames said:

I prefer to try to get all my SIPP charges taken from inside the SIPP to benefit from tax relief. If you pay from outside then you are paying the full amount of the charges

Not always possible- I can't do this with II because I have both an ISA and a SIPP with them

Thanks MallyGirl,

I checked jimjames'/dunstonh's idea and it does seem that you can't do this if you have and Investor (ISA) and SIPP with ii, as you said.  Shame-it would have been a nice little bonus!

dunstonh

I checked jimjames'/dunstonh's idea and it does seem that you can't do this if you have and Investor (ISA) and SIPP with ii, as you said.  Shame-it would have been a nice little bonus!

For reference, we were talking genrically.  i.e., you shouldn't be paying pension charges externally from the pension even when some providers allow it.

Lets say the charges are £1,000.

If the op pays £1,000 out of money held personally, it has already had corporation tax and dividend tax deducted.   If we assume the scenario of 19% corporation tax and 8.75% dividend tax and disregard the personal allowance/dividend allowance (as former will be used by salary and latter is likely used for other personal spending)
That will require £1352.95 from the company to receive £1,000 net of taxes.   (£257.06 corporation tax and £95.89 dividend tax)

Whereas the op can pay £1,000 from the limited company into the pension, reducing the corporation tax bill by £190, giving a net cost of £810.

If the OP has profits over £50k, the corporation tax saving is greater, and if they are a higher rate taxpayer, the personal taxation would be greater.  Both of these make paying via the limited company even more tax-efficient.