Paying into SIPP - Director of Company
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maximoose94
Posts: 48 Forumite
Hi all
My parents own two properties for BTL. They are also both directors of a small limited company (only 1 of them is really involved in the company).
The 1 who is involved in the company has a work pension that pays out from the civil service which he is taxed upon. The other we are trying to build up a SIPP - we have maximised the personal contributions this year and are now working on employer contributions as a director. Are there any limits to how much we can put in? We're just aware that this person doesn't have much involvement in the day to day running of the company and don't want to run into a problem.
Cheers all. Happy Friday. :beer:
My parents own two properties for BTL. They are also both directors of a small limited company (only 1 of them is really involved in the company).
The 1 who is involved in the company has a work pension that pays out from the civil service which he is taxed upon. The other we are trying to build up a SIPP - we have maximised the personal contributions this year and are now working on employer contributions as a director. Are there any limits to how much we can put in? We're just aware that this person doesn't have much involvement in the day to day running of the company and don't want to run into a problem.
Cheers all. Happy Friday. :beer:
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maximoose94 wrote: »Hi all
My parents own two properties for BTL. They are also both directors of a small limited company (only 1 of them is really involved in the company).
The 1 who is involved in the company has a work pension that pays out from the civil service which he is taxed upon. The other we are trying to build up a SIPP - we have maximised the personal contributions this year and are now working on employer contributions as a director. Are there any limits to how much we can put in? We're just aware that this person doesn't have much involvement in the day to day running of the company and don't want to run into a problem.
Cheers all. Happy Friday. :beer:
Presumably 'this person' is an employee of the company (and not merely a director)? If so, have a word with your accountant who should be able to give sensible advice on how much the company could contribute without raising eyebrows at HMRC.Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!0 -
Are there any limits to how much we can put in?
Directors of "own" companies can usually go to £40k each and utilise carry forward where applicable.
However, there are some caveats. Pension contributions are a business expense. So, whilst employer contributions are better than employee contributions, that is only the case where there is sufficient profit to reduce the Corp tax bill. Also, the earnings of the company have to by way of trade. If the limited company is technically an investment vehicle then you need specific advice.We're just aware that this person doesn't have much involvement in the day to day running of the company and don't want to run into a problem.
If they are a shareholding director, not normally a problem. If they are not a shareholding director or the split is not 50/50 then you normally have to reduce the amount.0 -
Yes they are an employee and a shareholding director (they both hold 1 share each). Think I'll get them to double check with the accountant. Thanks for your advice.0
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