Pension contribs to reduce business profit

RL

My other half and I have a fairly new small business and have made more profit than we thought so our working and family tax credit estimate was out by quite a long way. Would it make sense to invest the right amount of money in a pension so as to take us to the level of profit we thought we would be at and therefore not have to pay back any of the over payment we have received in tax credits (as our income would then match our estimate for tax credits). We have some savings which we could use for this, then at least it is benefitting us in the long run as opposed to being paid back to the IR.

Also, this may be a very silly question, but could the amount which we need to invest into a pension go to just one of us ? ie. we need to invest £3600 each but could this be put into a pension just for me (I don't have one and other half has 2 already so we would both prefer it to be for me).

RL

DavidLaGuardia

It appears that you will not only get the usual tax relief for the pension contribution, but it could be additionally advantageous in terms of tax credits. It sounds like an excellent idea to consider on the face of it and providing you can afford the contribution being tied up to retirement

If your income (net relevant earings) is sufficient you can put more than £3,600. You cannot use the allowances of others.