Ltd. Co. Pension Contributions

gazhawkins

Hello MSE's,

Anyone know how to calculate the maximum personal and maximum company contributions that can be made into a personal pension in one tax year ?


I'm aware that under the 2006 pension act, it is now possible to contribute 100% of company earnings into a pension up to a maximum of about 215,000 pounds.

I need to know how to calculate "personal" and "company" earnings, thus avoiding pension over subscription.

Many thanks for your assistance.

shaunrc

Hi Gaz

Firstly I work as an IFA but there are rules for regulated people so please do not take this as formal advice....

For personal contributions the limit is rising each year. So for the current tax year you could make a personal contribution and get tax relief of up to £225k.If this is not enough there is a quirk in the rules where you could pay in twice this ( use 2 years allowances in one go).

For company ones it is more complicated. The same limit in theory applies but your local tax office also has discretion.

My suggestion as someone who does ltd. company business regularly is for you to find yourself someone as an IFA who is familiar with this. Then they can organise it for you. The real plus of a company contribution is the national insurance savings. So if you have a choice definitely pay from the company! It does not have to relate to your earnings in a formal sense.

There are other gains from a ltd. company in areas such as life cover, private medical insurance and income protection which only reinforces my suggestion above of finding an IFA experienced in ltd. company business.

Good Luck

shaunrc

I thought I would quickly add that you can get tax relief only on personal contributions up to £3600 or your level of earned income.