Ltd Company Director SIPP Contributions

ali_bear

Just as an aside to all of the good advice already given. If you pay too much into your pensions you will just end up paying higher rate tax on it after retirement. Exactly how big a DC fund has to be for this depends on retirement age, investment growth, the tax rates and thresholds applying then, etc.

BethBC

https://forums.moneysavingexpert.com/discussion/comment/81908946#Comment_81908946

Thanks for taking the time to respond and flag these issues with me. I think the package is comparable, yes. As for the shareholding issue, that's just sat in the too difficult pile - I set up the business 25 years ago…this is a second marriage 10 years ago and my son (not his son) has just joined the business with a view to longer term succession planning and so shares will probably, ultimately go his way and I haven't been able to clearly assess the pros and cons of giving shares to my husband!

Marcon

https://forums.moneysavingexpert.com/discussion/comment/81908989#Comment_81908989

Don't forget that you can have more than one class of share, giving you flexibility in terms of both dividends payable and voting rights. It's not difficult to do, but the fact this is still in your 'too difficult' pile (we all have one of those!) suggests that this has perhaps not been considered?

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81908989#Comment_81908989

This is where a Chartered Accountant with a wealth of family business succession and corporate fiscal planning experience would be an asset here.

The fact you are asking questions on pensions here that a decent accountant should be able to help you navigate together with an IFA, suggests you and your business may have outgrown the competencies of your present accountancy firm. Would this be an accruate statement?

Certainly your circumstances seem fairly typical of the kind of scenario my old firm ( at partner level) used to address with private company owners and their families.

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/comment/81909049#Comment_81909049

HMRC can be cautious when it comes to "alphabet shares" and their attention may be drawn to check the details of the arrangement as being genuine and not simply tax avoidance

BethBC

https://forums.moneysavingexpert.com/discussion/comment/81909079#Comment_81909079

Yes, that would be a very accurate statement! I would describe them more as a bookkeeper. It's only really been the last 3 or 4 years that excess profits and being able to pay large SIPP contributions has been a feature! If you have any recommendations for a suitable professional adviser on the Herts/Essex border, I would be grateful.

Marcon

HMRC can be cautious when it comes to "alphabet shares" and their attention may be drawn to check the details of the arrangement as being genuine and not simply tax avoidance

Indeed and that's the sort of response you get if you google on the point. But as OP's husband is working full time in the business, the reality is that in this case it's unlikely to create an issue, especially if (as sounds likely) OP will be seeking more sophisticated accounting advice than they have at present.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81909112#Comment_81909112

Best I can do is point you in the direction of the ICAEW and their directory of practitioners below -

https://www.icaew.com/

Can I also suggest you expand your search to include London Chartered Accountancy firms (who may have regional branch offices), where there is a greater concentration of firms with the competencies I identified.

Your final choice of firm, should also be able to link you up with ancillary legal practitioners they work with, assuming you have similarly outgrown your solicitor.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81909112#Comment_81909112

I don't think people are allowed to make recommendations on here.

If you belong to a local business people organisation then maybe people there would have some names for you. And perhaps some warnings of who to avoid.

Otherwise (and granted it may be a tricky conversation) you could try asking your book-keeper. They are likely to have a handle on the local competition and you could put it in terms of tax planning/corporate succession planning which they may admit is not their thing but could steer you towards the sort of outfit you require.

Dead_keen

https://forums.moneysavingexpert.com/discussion/comment/81909172#Comment_81909172

I think it depends what you mean by alphabet shares.

1. No dividend rights on one class of shares - absolutely fine, fill your boots.
   
2. No entitlement to a dividend unless the directors want to pay you a bonus - bang to rights.
   
3. Some entitlement to dividends but it can change depending on various factors that may or may not be based on the personal characteristics of the shareholder or the part of the business they work in - hmmm.

Historically, HMRC has taken little interest in different shares in a company with different dividend rights. It manual's are clear that the extreme version of (google it) "Alphabet Soup" creates a double tax charge.

Will HMRC take a different view going forward? They have not told me so I will have to guess. And my guess is that HMRC will start to focus on it as (i) HMRC will soon get a whole heap of extra dividend data for smaller companies (**), and (ii) it is trivial to analyse that data and look for "interesting" patterns.

** for the geeky, have a look at reg 5 SI 2025/84