Pensions for thickies!

meester

ffacoffipawb wrote: »

So does this look acceptable to you ....

Year ending 31/5/2008 ....
Earnings after VAT sent to HMRC, travel expenses and accountancy/set-up/payroll = £68k
less Salary £6k
less Eer NI = £0 (pretty much)
less Pension £24k
Gives Pre Tax Profit = £38k
less CT £8k (say)
Net Profit £30k
distributed as ...
Interim dividends already received £9k net (this tax year)
Final Dividend in June £21k (next tax year).

Full CT relief on the pension contribution, despite the fact it is 400% of salary??

Do we have a tax inspector to comment on this?

You are not making the distinction between personal tax year and company tax year very clear. Are you paying salary (director's fee) annually or monthly? Have you been paying a higher salary up todate?

But suffice to say, if you really have paid £6k salary in fy ending 31/5/08, then you would be able to pay 30k dividend before april 5th (plus £6k salary), and whatever's left over after april 5th.

If you've been paying a higher salary monthly, then you can reduce down to £6k/year, but the true effect won't be seen until your NEXT financial year.

The % size of the pension payment is not restricted as it is with personal pensions.

ffacoffipawb

meester wrote: »

You are not making the distinction between personal tax year and company tax year very clear. Are you paying salary (director's fee) annually or monthly? Have you been paying a higher salary up todate?

But suffice to say, if you really have paid £6k salary in fy ending 31/5/08, then you would be able to pay 30k dividend before april 5th (plus £6k salary), and whatever's left over after april 5th.

If you've been paying a higher salary monthly, then you can reduce down to £6k/year, but the true effect won't be seen until your NEXT financial year.

The % size of the pension payment is not restricted as it is with personal pensions.

Co year is 1/6-31/5.

Cannot take more this tax year (2 months in prior employment got a large payoff and a lot of it was taxable - the 2 months salary from old employer, 10 months at £500pm salary plus £9000 net dividend taken this tax year plus grossed-up PERSONAL deposit interest less some PERSONAL pension contributions have reduced my taxable income to basic rate, just). That's why I am keeping £21k until next tax year.

I just hope HMRC accept the large employer pension contribution, though in terms of company earnings it isn't too over the top!