For company contributions it’s “pre tax” money you’re putting in. Whilst it may seem like you’re getting a lot of tax relief here, bear in mind it was your own “post tax” personal money that you were putting in. If you’re a higher rate taxpayer, you need to remember to declare the pension on your personal tax return, where higher rate tax relief is available. Ie if you put in £800, they reclaim £200 from HMRC leading to £1,000 in the pension. The pension scheme will gross this up for basic rate tax. Personal/employee contributions – it is possible to make personal pension contributions from your own after tax funds. You therefore also don’t have to remember to tot up what your pension contributions were over the tax year come personal tax return time. It reduces your company’s profit by £10k, hence reducing corporation tax accordingly. Say your company puts £10k into a pension scheme for you. Therefore often company owners would be limited to circa £8k (ie your salary).Ģ) Simpler. Critically for small Ltd Co owners these exclude dividends. Personal contributions are also limited to the individual’s “net relevant earnings”. Company contributions are only limited to the annual/lifetime caps (2019/20 £40k and £1.03m respectively). There are two different ways you can contribute:Ĭompany/employer contributions – we tend to recommend going purely with these. PensionĬontributing to a pension scheme is very tax efficient. The technical term here is that personal usage is merely incidental. Where there is clearly a major business motive, HMRC generally accept it is fine. If something has both business and personal usage, then, by definition, it is not wholly and exclusively for business purposes. Common examples would be the home broadband costs, computers that the kids also use in evenings/weekends, and mobile phones. Typically as a small business owner there will be many things which are used both for business and personally. So business owners have it relatively easy. For employees, the costs must not only be wholly and exclusively for business purposes, they must also be necessarily for business purposes, which makes it harder to justify. As a business owner, the basic rule is you can claim any expense that is wholly and exclusively for business use.
0 kommentar(er)
