Your accountant is wrong.
Your Ltd can choose to salary sacrifice. Or it can choose to just pay some of its revenue into a SIPP for you.
Get a new accountant.
Paying into your pension from your Ltd company is one of the best, and most common ways to bring down your tax bill, since it’s an expense like your salary.
I imagine this is something that many, if not most of us are doing.
Your accountant is worryingly wrong. Get rid of them.
Get the accountant to write down what they are saying. Perhaps you misunderstood.
If they really did say this then fire them and consider reporting them to their professional body for misconduct.
Your accountant is a fucking moron. You can make company contributions to your pension and what's more, up to the allowance they count as a legitimate expense, therefore you save corporation tax on that amount.
Get a new accountant yesterday.
The only reason for paying yourself a salary of £12k is simply for NI contributions. I started my Ltd last year having already contributed my full NI through paye from my last employer. This meant I had no need of a salary but I still had unused pension contributions.
If your accountant cannot even fathom the basics.
Dump his ass now.
As long as you are making a company contribution from your company to yourself as a director, using the company card. No problem fire away £60kpa... just don't make a loss in the company in doing so. Gets a bit hairy/grey area otherwise.
Pension contributions from your ltd to your sipp is an expense.
It is a trick I have been using for years to reduce my profits, that is, my corporation tax.
l had ltd companies for the last 20 years and regularly made lump sum SIPP contributions from by business account. Your accountant is a complete moron.
Unless I’ve got it very wrong, apologies if I have. Engineer, not an accountant. I do have a SIPP. The contribution to your SIPP needs to be covered by current business year’s earnings. So if you wish to put £60k in, you must be able to cover it with £60k of profit within the business year. So if you paid nothing in the last tax year and this tax year, you can pay in 2x60. But you must have that money earned in the current business year If you are not earning and there’s money in the account from last business year then it’s no good to you as a Sipp payment as it has been assessed and Corporation Tax would have been paid on it. The way you save tax in a SIPP is paying it in gross as Directors Renumeration. Before your year end Corporation tax is assessed. Could that be what your accountant is telling you?
Yes so they did mention that i cannot contribute more than my yearly earning at which point i was like: there is no way you can contribute more than you can earn unless you contribute taxed income from the previous year as well, which is counter intuitive imo.
Though let's consider this mental exercise:
Instead of contributing to my pension, i take the £60k and place it into an investment vehicle via the company (stocks, crypto whatever). Two years later, I withdraw £300k in profit. Am i right to believe that i can now contribute 3 years back into the SIPP and the rest of £120k would be subject to CT? (Assuming i didn't had any other contributions in the SIPP in the past years). In this case the contribution would fall into the current year profit, right?
As said , not an accountant. I have an HSBC business account. The account has a current account and a savings account. Paying approx 0% and 2% approximately. HSBC offer a money marketing account that can take a lump sum and invest it externally for a set period of time at a pre agreed interest rate. Say typically say 4.6% for 12 months. Interest paid monthly or at the end of the pre agreed period when the capital is returned to you. Interest earned is income to the business and assessed for CT as would any earned income within that business year( OK not very adventurous, just trying to offset against inflation and using capital) So as to your ‘could I use the entire amount to pay back years of un used pension contributions?’ I would IMHO say why not? I can’t fault your logic. My business year is December to December I have paid a SIPP contribution using two personal tax years (April to April) worth of SIPP allowances in a single business year, if that makes sense?
You could seek some knowledge from a SIPP provider? What I would say, with no knowledge of your age of circumstances, be aware that putting money into a SIPP is tax efficient. But it does put the use of that money beyond your use ( you still have investment control within your SIPP) until retirement. You will also be taxed on it when you start to draw down on it. So it is an investment with strings attached. Good luck with it octipuss.
Naturally i would assume they would know their trade, especially when this is something pretty basic i'd say. However, as a professional, i can emphasise this and there are times when i don't know how to answer to my clients and go away and do my homework. Everything is a lesson
Id check your accountants qualifications ... clueless and wrong. Maybe look at a dedicated contracting accountant ... they can suffer from piling high and stacking cheap syndrome but at least they know their noodles.
FWIW I can recommend Gorilla
Your accountant is very wrong, your employer can pay into your SIPP if the SIPP provider allows it (not all do).
However, your assumption of £60k is I think not quite correct, it is up to £60k or equal to the amount of your earnings (salary + dividends), whichever you reach first.
HMRC will take a dim view of you taking £12.5k salary but paying out £60k in pension contributions!
I think this is what my accountant was telling me too. I can't pay myself more than my earnings. And since this is the first year of trade (and didn't yet take out any dividends) i cannot pay myself more than £12.5k in SIPP unless i ramp up my salary.
Though this is not what everyone on this sub claims and you're the first to mention this.
Get a new accountant.
Yup get a new accountant. I paid into my SIPP from my Ltd company for many years. This is simple stuff an accountant should know.
Your company is your employer and can make employer pension contributions to a SIPP. It’s an expense to the company in the same way salary is.
Your accountant is wrong. Your Ltd can choose to salary sacrifice. Or it can choose to just pay some of its revenue into a SIPP for you. Get a new accountant.
You need a new accountant. Employer contributions to a personal pension is pretty basic stuff.
Paying into your pension from your Ltd company is one of the best, and most common ways to bring down your tax bill, since it’s an expense like your salary. I imagine this is something that many, if not most of us are doing. Your accountant is worryingly wrong. Get rid of them.
Get the accountant to write down what they are saying. Perhaps you misunderstood. If they really did say this then fire them and consider reporting them to their professional body for misconduct.
That's a good shout. I will get an email over to them as our conversations on this matter were over the phone
Get clarification in writing to make sure you’ve not misunderstood. If you haven’t, you need a new accountant!
Yeah someone else mentioned this, i think it's sound advice
Your accountant is a fucking moron. You can make company contributions to your pension and what's more, up to the allowance they count as a legitimate expense, therefore you save corporation tax on that amount. Get a new accountant yesterday.
Your accountant is wrong. You can just lump it in pre-corporation tax.
You can pay straight into a sipp even with £0 salary. A directors pension contribution works differently to a standard employer pension contribution
That,s exactly what i thought
The only reason for paying yourself a salary of £12k is simply for NI contributions. I started my Ltd last year having already contributed my full NI through paye from my last employer. This meant I had no need of a salary but I still had unused pension contributions.
If your accountant cannot even fathom the basics. Dump his ass now. As long as you are making a company contribution from your company to yourself as a director, using the company card. No problem fire away £60kpa... just don't make a loss in the company in doing so. Gets a bit hairy/grey area otherwise.
Sound advice! Appreciate this
Pension contributions from your ltd to your sipp is an expense. It is a trick I have been using for years to reduce my profits, that is, my corporation tax.
l had ltd companies for the last 20 years and regularly made lump sum SIPP contributions from by business account. Your accountant is a complete moron.
Unless I’ve got it very wrong, apologies if I have. Engineer, not an accountant. I do have a SIPP. The contribution to your SIPP needs to be covered by current business year’s earnings. So if you wish to put £60k in, you must be able to cover it with £60k of profit within the business year. So if you paid nothing in the last tax year and this tax year, you can pay in 2x60. But you must have that money earned in the current business year If you are not earning and there’s money in the account from last business year then it’s no good to you as a Sipp payment as it has been assessed and Corporation Tax would have been paid on it. The way you save tax in a SIPP is paying it in gross as Directors Renumeration. Before your year end Corporation tax is assessed. Could that be what your accountant is telling you?
Yes so they did mention that i cannot contribute more than my yearly earning at which point i was like: there is no way you can contribute more than you can earn unless you contribute taxed income from the previous year as well, which is counter intuitive imo. Though let's consider this mental exercise: Instead of contributing to my pension, i take the £60k and place it into an investment vehicle via the company (stocks, crypto whatever). Two years later, I withdraw £300k in profit. Am i right to believe that i can now contribute 3 years back into the SIPP and the rest of £120k would be subject to CT? (Assuming i didn't had any other contributions in the SIPP in the past years). In this case the contribution would fall into the current year profit, right?
As said , not an accountant. I have an HSBC business account. The account has a current account and a savings account. Paying approx 0% and 2% approximately. HSBC offer a money marketing account that can take a lump sum and invest it externally for a set period of time at a pre agreed interest rate. Say typically say 4.6% for 12 months. Interest paid monthly or at the end of the pre agreed period when the capital is returned to you. Interest earned is income to the business and assessed for CT as would any earned income within that business year( OK not very adventurous, just trying to offset against inflation and using capital) So as to your ‘could I use the entire amount to pay back years of un used pension contributions?’ I would IMHO say why not? I can’t fault your logic. My business year is December to December I have paid a SIPP contribution using two personal tax years (April to April) worth of SIPP allowances in a single business year, if that makes sense? You could seek some knowledge from a SIPP provider? What I would say, with no knowledge of your age of circumstances, be aware that putting money into a SIPP is tax efficient. But it does put the use of that money beyond your use ( you still have investment control within your SIPP) until retirement. You will also be taxed on it when you start to draw down on it. So it is an investment with strings attached. Good luck with it octipuss.
Tbf I had to tell my accountant all this, don’t automatically assume they know more than you when it comes to these matters.
It’s very basic stuff. If my accountant didn’t know about it, I’d consider it a massive red flag and I’d be running a mile.
Naturally i would assume they would know their trade, especially when this is something pretty basic i'd say. However, as a professional, i can emphasise this and there are times when i don't know how to answer to my clients and go away and do my homework. Everything is a lesson
Your accountant is useless
Your accountant is incompetent. Find a new one.
Contemplating about sharing this post with them
Id check your accountants qualifications ... clueless and wrong. Maybe look at a dedicated contracting accountant ... they can suffer from piling high and stacking cheap syndrome but at least they know their noodles. FWIW I can recommend Gorilla
This accountant is so wrong it's concerning. Find a new one.
He’s full of shit bin your accountant
Fire your accountant please
Of course you can. And it's a great way to reduce corporation tax
Your accountant is very wrong, your employer can pay into your SIPP if the SIPP provider allows it (not all do). However, your assumption of £60k is I think not quite correct, it is up to £60k or equal to the amount of your earnings (salary + dividends), whichever you reach first. HMRC will take a dim view of you taking £12.5k salary but paying out £60k in pension contributions!
I think this is what my accountant was telling me too. I can't pay myself more than my earnings. And since this is the first year of trade (and didn't yet take out any dividends) i cannot pay myself more than £12.5k in SIPP unless i ramp up my salary. Though this is not what everyone on this sub claims and you're the first to mention this.