Max Company Pension Contributions

EdInvestor

Oh dear, I seem to have hit quite a nerve there.:D

Dithering_Dad

EdInvestor wrote: »

Oh dear, I seem to have hit quite a nerve there.:D

How amusing. Were you trying to "hit a nerve" when you did your original post? On the football forum I frequent, they call people who do that a WUM (Wind Up Merchant) and on here they call them trolls.

I don't tend to come to the pensions forum much these days but when I did, I found your posts to be useful and so had a good impression of you, even to the point coming to your defence(http://forums.moneysavingexpert.com/showpost.html?p=10214509&postcount=32) when someone else accused you of being a troll.

Perhaps though I was misguided, and you've changed since I was last in here? Have you become a little bored with just posting advise and have decided to spice up your MSE life by engaging in a little bit of trolling or 'hitting of nerves'? For shame Ed, for shame.

Do you also go onto the DFW board and tell them to stop "whinging" about their debt problems because as far as you're concerned the war in Iraq is a far more important issue?

If you're not interested in the tax/pension question I raised (and clearly you don't know anything about the employer pension contribution levels, or about taxation on dividends for that matter), then please refrain from posting.

Dithering_Dad

Thanks to Debt_Free_Chick & MickKnipfler for your contributions, though it's a shame the discussion was broken up due to ED Investor's fascile postings.

I've seen these sort of nuisance postings occur in other threads on MSE, so shouldn't be surprised that it happened here. I am surprised with the individual involved though. Perhaps because ED practically lives on the MSE Pension and Investment boards (10,000 posts and counting!) that she feels she is more important than everyone else and should be able to decide whether a post should merit inclusion on 'her' board?

Anyway, I've emailed my accountant to try and find out what the rules are and if I glean any further information, I'll keep you posted (ED permitting :rolleyes:).

MickKnipfler

It really is a grey area. I push the salary limit a bit (about25%) but didn't want to take liberties. Others say contribute as much as you want, it won't be a problem.

With the CGT now being charged to 18%, I'm now thinking about taking the hit on higher rate divvies and making capital investments as an allowance of over £9k and 18% thereafter is not to be sniffed at.

dunstonh

Contributions can also be paid by the employer and these count towards the Annual Allowance. The Annual Allowance for the tax year 2008/09 is £235,000, inclusive of your own contribution and any other amounts paid into an approved pension scheme.

Theoretically, an employer can pay any amount of pension contribution to a registered pension scheme in respect of one of their employees or an ex-employee, regardless of their salary. The problem is that tax relief is not automatic, it is up to the employer’s local inspector of taxes whether or not the employer receives tax relief on the entire contribution.


One situation where all or part of a contribution may not have been paid wholly & exclusively for the purposes of the trade is where the level of the member's remuneration package is much higher than it should be based on the work done by the employee. If this happens the local inspector of taxes will look at the employee’s total remuneration package, not just the amount of the pension contribution to see if it was paid wholly and exclusively for the purposes of the employer’s trade.

Where the remuneration package paid in respect of:

• a director, who is also a controlling shareholder,
• an employee who is a close relative or friend of the business proprietor or controlling director

and their remuneration package is comparable with that paid to unconnected employees, the local inspector will probably accept that the contributions are paid wholly & exclusively for the purposes of the trade.

purch

I bet that Ed also thinks that getting paid your bonus in Gold Bullion in order to avoid National Insurance and Tax is also wrong !!!!

Not that I know anything about it :rolleyes: of course

borntobefree

Dithering_Dad wrote: »

Anyway, I've emailed my accountant to try and find out what the rules are and if I glean any further information, I'll keep you posted (ED permitting :rolleyes:).

See http://forums.moneysavingexpert.com/showthread.html?t=873525&page=11

Note the SIGNATURE of !!!!!! Here


You wind up merchant! See post on Private School fees (above). How dare you call my kids Feral beasts! Hope you were joking:mad::rotfl:

meester

borntobefree wrote: »

See http://forums.moneysavingexpert.com/showthread.html?t=873525&page=11


You wind up merchant! See post on Private School fees. How dare you call my kids Feral beasts! Hope you were joking:mad::rotfl:

can you please keep the off-topic garbage to the applicable forum.

thanks

borntobefree

meester wrote: »

can you please keep the off-topic garbage to the applicable forum.thanks

Oh pleeeeease:rolleyes:

meester

EdInvestor wrote: »

Oh dear, I seem to have hit quite a nerve there.:D

I don't have an objection to you trying to make a political point, but you could at least get it right.

The 25% higher rate dividend tax is on top of Corporation Tax at 21%

So that is 0.79 * 0.75 = 59.25% = 40.75% taxation.

The real issue is not that at all, but the fact that National Insurance is not being paid.

So for an employed worker, 40% Income tax + 12.8% Employer's National Insurance is being paid = 52.8%

And at the basic rate it is 20% + 11% + 12.8% = 43.8% vs. 21% CT

And FWIW the OP will be affected by the 10% tax withdrawal because he has to pay more tax on the income he does pay himself.

As to the OP's questions, they come up about once a month.

Here is one of the most recent, I won't bother repeating myself:

http://forums.moneysavingexpert.com/showthread.html?p=9652761