Pensions and net profit

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pd2006

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Hi
I have a meeting with my accountant next week and i wanted to run something by here before i speek to him

If we are showing a net profit of 700K this year that would lead us with a big tax bill. IS it possible for the Directors to pay their pension's 250K each for this finance year and thus reduce the overall profit to 200K and reducing the tax liability. any help would be appreciated as were looking at ways to legaly reduce our tax bill. Plus we dont think our accountant is to hot on tax issues. so atleast if we have suggestions he can check them out for us.
 
you can use pensions to reduce your tax bill (i do) you would probably better off talking to your pension provider about the amount you wish to put in as a lump sum, personally I have the pension comming out monthly and top it up at the end of the year, but my top up is not at the levels you are talking about
 
You should be looking at a small self administered pension, this is very flexible and allows you control your companies pension contribution and your salary.
Its a complex area but has a lot of tax advantages
 
pd2006

if your co has NP of 700k and your acct isnt too hot with tax issues I really think you need a new accountant
 
pd2006

A pension payment is only deductible when actually paid not accured
So if your year-end has passed and you accrue to make a pension payment and make it after the year-end you will only get a deduction in the year its paid
So in the year of accrual it will be addedback and not allowable
 
howareya said:
Is the amount of pension that a conpany can pay linked to the directors salary??
Click to expand...

NO there are no limits on the amount of contributions a company can make - there is however a limit on which tax relief can be obtaines for self employed and PAYE workers where it depends on your age and a % of your net relevant earnings
 
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