SIPP contributions around year end
Options
looknohands
Posts: 390 Forumite
Hi I have a SIPP that I have been contributing to through my company, my company just had it's first year end and I'm a bit unsure on a few things.
By way of background my company year end was May 31st and there is £30k in capital and reserves, (£10k is accounts receivable, the remaining £20k is cash in the bank)
I was advised to make contributions before my year end to lower corp tax liability by a friend, however most of the cash was paid at the start of June so I didn't have the capital to invest in a pension before year end, and some is still in invoices due, so now I will owe 20% corp tax on that £30k capital, reducing this to £24k.
Is making a pension contribution now a bit daft as I've missed the tax relief. And is there anyway to avoid this in the future, without the cash there I can't make the contributions, so seem impossible to avoid.
My accountant doesn't advise on matters like this (understandably) and I don't have an FA. Maybe this is something I will look into but my fund size is currently small as only started this year.
By way of background my company year end was May 31st and there is £30k in capital and reserves, (£10k is accounts receivable, the remaining £20k is cash in the bank)
I was advised to make contributions before my year end to lower corp tax liability by a friend, however most of the cash was paid at the start of June so I didn't have the capital to invest in a pension before year end, and some is still in invoices due, so now I will owe 20% corp tax on that £30k capital, reducing this to £24k.
Is making a pension contribution now a bit daft as I've missed the tax relief. And is there anyway to avoid this in the future, without the cash there I can't make the contributions, so seem impossible to avoid.
My accountant doesn't advise on matters like this (understandably) and I don't have an FA. Maybe this is something I will look into but my fund size is currently small as only started this year.
0
Comments
-
Get a new accountant.0
-
Thanks bigadaj,
Could you let me know how would a different accountant may have helped? I didn't have the cash available, is it possible to back-date pension payments perhaps?0 -
Couldn't you have got a short term loan into the company, even if it was your own personal money? Use that to get over the cash flow problem?0
-
Is making a pension contribution now a bit daft as I've missed the tax relief. A
it will be in this business year and offset current year profit. You havent missed it. It is just coming a year later.And is there anyway to avoid this in the future, without the cash there I can't make the contributions, so seem impossible to avoid.
You need money to pay money. So, if its not there then short of borrowing money, you cannot do it. If you have the money personally, you could consider a directors loan to the company.
This is discussion between your IFA and Accountant if you are not sure what is best.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
It is often said a good accountant can save you more than his fee. I am still looking for that accountant."A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
Ride hard or stay home :iloveyou:0 -
I had a similar situation some years ago, but my accountant arranged to move my tax years forward 1 month, so I had a 13 month year in that particular year.0
This discussion has been closed.
Categories
- All Categories
- 343.2K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.3K Work, Benefits & Business
- 608.1K Mortgages, Homes & Bills
- 173.1K Life & Family
- 247.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards