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  • FIRST POST
    • happyandcontented
    • By happyandcontented 9th Mar 18, 9:22 PM
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    happyandcontented
    Employee or Director for pension purposes?
    • #1
    • 9th Mar 18, 9:22 PM
    Employee or Director for pension purposes? 9th Mar 18 at 9:22 PM
    Which is the best status? Currently, a shareholder doing admin work for the Ltd Company, but looking to make a status change to facilitate pension contributions. Which is the best option?
Page 1
    • Brynsam
    • By Brynsam 10th Mar 18, 12:09 AM
    • 934 Posts
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    Brynsam
    • #2
    • 10th Mar 18, 12:09 AM
    • #2
    • 10th Mar 18, 12:09 AM
    Nothing to stop you being both - but remember that being a director carries legal responsibilities which can't be shrugged off on the grounds you only did it for pension reasons.... Being an employee should give you all the flexibility you need e.g. contributions via salary sacrifice, employer contribution can exceed your earnings as an employee (within reason).
    • dunstonh
    • By dunstonh 10th Mar 18, 1:55 AM
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    dunstonh
    • #3
    • 10th Mar 18, 1:55 AM
    • #3
    • 10th Mar 18, 1:55 AM
    but looking to make a status change to facilitate pension contributions.
    Do you mean as an employee or an officer position (e.g. director or company secretary)? it can make a big difference.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • happyandcontented
    • By happyandcontented 10th Mar 18, 10:03 AM
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    happyandcontented
    • #4
    • 10th Mar 18, 10:03 AM
    • #4
    • 10th Mar 18, 10:03 AM
    Do you mean as an employee or an officer position (e.g. director or company secretary)? it can make a big difference.
    Originally posted by dunstonh
    Yes, it is the difference that I am trying to work out. I do the admin currently unpaid and my OH is the sole Director at the moment. He is at LTA so it makes sense to pay into a pension for me via the company.

    I understand that as an employee I must be paid fairly for my work but that means that I cannot pay more into a pension than any salary - is that correct?

    If I was a Director would there be more flexibility? I understand the legal obligations I think but leaving those aside is that the best status to be able to maximise pension contributions tax efficiently?
    • Brynsam
    • By Brynsam 10th Mar 18, 10:55 AM
    • 934 Posts
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    Brynsam
    • #5
    • 10th Mar 18, 10:55 AM
    • #5
    • 10th Mar 18, 10:55 AM

    I understand that as an employee I must be paid fairly for my work but that means that I cannot pay more into a pension than any salary - is that correct?
    Originally posted by happyandcontented
    See post 2 above - employer contribution can exceed your earnings, within reason.
    • dunstonh
    • By dunstonh 10th Mar 18, 12:03 PM
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    dunstonh
    • #6
    • 10th Mar 18, 12:03 PM
    • #6
    • 10th Mar 18, 12:03 PM
    A shareholding director wouldnt require an auto-enrolment scheme to be set up. You could also go to 40,000 annual contributions.

    An employer can only have pension contributions at a level appropriate to their role (left to the discretion of HMRC). It would introduce the need to set up an auto-enrolment scheme. It may also force NI to be paid.

    The legal obligations and the real world are two different things. If the company is being run well and it is trading fairly and lawfully, the risks for a spouse being on the company are low. HMRC are less likely to look at a shareholding director being paid large pension contributions than they are a non-shareholding director or company secretary. A spouse employee on paper is also something HMRC would not like.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • happyandcontented
    • By happyandcontented 10th Mar 18, 12:19 PM
    • 1,088 Posts
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    happyandcontented
    • #7
    • 10th Mar 18, 12:19 PM
    • #7
    • 10th Mar 18, 12:19 PM
    Thank you that is just the information I needed.
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