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Pension contribution

PinkDalek
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Re: Pension contribution

#399660

Postby PinkDalek » March 27th, 2021, 10:53 pm

Purchase of own shares

I’m perfectly aware of the concept of distributable reserves and most on TLF know about how to report Chargeable Gains, when applicable, so there’s no need to try and explain here at Pensions - Practical.

Some way in to this you’ve only now stated those distributions were not disclosed to HMRC. It is irrelevant that the sums involved were below the Capital Gains Tax Annual Exempt Amount. The sums should have been reported as taxable income distributions. You keep saying things such as “There is no tax being avoided” but fail to address the links to the legislation/articles/HMRC Manual which state the opposite. Have you read any of them at all?

I can only assume you’ve been poorly advised.

Definitely out as this isn’t Taxes and must be a complete distraction for the OP.

Chrysalis
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Re: Pension contribution

#399693

Postby Chrysalis » March 28th, 2021, 8:19 am

@Mel
I’m not sure if this got answered for you up thread .
The limit on income tax relief on personal pension contributions (made by you) is 100% of current year’s relevant earnings or £40,000, whichever is the lower.
Employer contributions (ie those made from your company) can be made up to £40k (or more if you have carry forward availability), and are not limited by your relevant earnings in the current tax year. Obviously these are not subject to income tax relief.
Others can advise on any other rules that may limit pension contributions from your ltd company. I don’t know if it makes a difference that you aren’t taking salary (I don’t think so, as you remain a director).

taken2often
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Re: Pension contribution

#400223

Postby taken2often » March 29th, 2021, 11:51 pm

To PinkDalek
I was not going to respond, but you created the need for all this extra dialog. You may have a wide knowledge of these matters, but others do not. I have read the 2010 Act and I cannot identify any part of it, that relates to our situation. It is very complicated to deal with very complicated situations. It seemed to relate to exemption and indicated that a company may make an application.
We were very uncomplicated Two controlling Directors with equal shareholding. The transaction was subject to capital gains if applicable. You are probably right that a nil return should have been made, but that would be no offence under Self Assessment. The penalty would be, the false manipulation of the share value, to avoid CG. If that had taken place This is why our Account always provided the share value and the transaction noted in the company minutes.

As it is the company has now been closed and no doubt well scrutinised, before closure was approved.

PinkDalek
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Re: Pension contribution

#400293

Postby PinkDalek » March 30th, 2021, 11:28 am

taken2often wrote:To PinkDalek
I was not going to respond, but you created the need for all this extra dialog. You may have a wide knowledge of these matters, but others do not. I have read the 2010 Act and I cannot identify any part of it, that relates to our situation. It is very complicated to deal with very complicated situations. It seemed to relate to exemption and indicated that a company may make an application.
We were very uncomplicated Two controlling Directors with equal shareholding. The transaction was subject to capital gains if applicable. You are probably right that a nil return should have been made, but that would be no offence under Self Assessment. The penalty would be, the false manipulation of the share value, to avoid CG. If that had taken place This is why our Account always provided the share value and the transaction noted in the company minutes.

As it is the company has now been closed and no doubt well scrutinised, before closure was approved.


I've replied at Taxes viewtopic.php?p=400292#p400292.

melonfool
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Re: Pension contribution

#400603

Postby melonfool » March 31st, 2021, 1:59 pm

In Other News, my employer and Aegon cannot confirm or otherwise that my March pension contribution will hit my occupational pension in this tax year. So I have no way to ensure I use all the allowance this year - other than to watch my Aegon account like a hawk tomorrow (when I'm working) and dump in the missing funds at 4pm if no sign of them, and hope they don't get credited in this tax year.

They usually seem to appear on 4th, payroll manager said she sent them the same day she always does, but 2nd to 5th are non working days so I think it's a reasonable bet they will appear on 6th!

Mel

PinkDalek
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Re: Pension contribution

#400673

Postby PinkDalek » March 31st, 2021, 8:18 pm

melonfool wrote:In Other News, my employer and Aegon cannot confirm or otherwise that my March pension contribution will hit my occupational pension in this tax year. ... payroll manager said she sent them the same day she always does


I’m sure someone in the know will be along soon but, from someone who isn’t, is not the date the contribution was deducted from your salary the relevant date, as against when it arrives in the pension scheme?

https://www.thepensionsregulator.gov.uk/en/employers/managing-a-scheme/contributions-and-funding states employers have up to the 22nd of the next month to ensure the contributions reach the scheme.

melonfool
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Re: Pension contribution

#400680

Postby melonfool » March 31st, 2021, 8:45 pm

As far as I know, no. It's the date of hits the pension.

The pension, as far as I know, cannot credit to your account on a date before they got the money.

I think it's 19th, by the way. It always was 19th. My payroll manager told me it was 19th when I asked her when it might hit.

But my employer sends it the same day they send the payroll BACS, and it normally hits on 4th.

But it would be nice to know if a payment that arrived on 6th would be credited to this year. In reality, I don't see how it can be. Aegon has no idea when we get paid or when the deduction was made, as far as I know.

Interesting. I have about 18 hours to find the answer!

Mel

melonfool
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Re: Pension contribution

#400682

Postby melonfool » March 31st, 2021, 8:46 pm

Oh, 19th if you pay by cheque.

Weird.

Mel

melonfool
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Re: Pension contribution

#400684

Postby melonfool » March 31st, 2021, 8:52 pm

Hmm....another important point is that because it's deducted at source, I've already had the tax and NI relief in this tax year, which would then seem odd of the actual fund counts it as a 21/22 contribution.

Aaargh!

Mel

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Re: Pension contribution

#400691

Postby bluedonkey » March 31st, 2021, 10:04 pm

melonfool wrote:Hmm....another important point is that because it's deducted at source, I've already had the tax and NI relief in this tax year, which would then seem odd of the actual fund counts it as a 21/22 contribution.

Aaargh!

Mel

Depends. It's likely either:

a) salary sacrifice and therefore an employer contribution, or
b) deduction from your net pay, and therefore an employee contribution.

a) = tax and NI relief contemporaneous with salary payment
b) = tax relief linked to date of payment into pension fund (no NI relief).

melonfool
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Re: Pension contribution

#400696

Postby melonfool » March 31st, 2021, 10:19 pm

bluedonkey wrote:Depends. It's likely either:

a) salary sacrifice and therefore an employer contribution, or
b) deduction from your net pay, and therefore an employee contribution.

a) = tax and NI relief contemporaneous with salary payment
b) = tax relief linked to date of payment into pension fund (no NI relief).


I think it's slightly different to that, or we use different terminology.

There is an employer contribution (no tax relief) of 15% which is in addition to my pay (so, say my pay was £100, if I pay nothing to the pension, my employer pays £15 and I still get £100).

Then there is my contribution of 35% - my contribution is made by salary sacrifice, which means I do get NI relief on it, because it comes out of salary pre tax and NI. So, from my £100, I now only get £65 as I have sacrificed 35% of it. But £50 goes into the pension. I pay tax and NI on £65.

Salary sacrifice means you sacrifice your salary in order for your *employer* to make a pension contribution on your behalf and, as such, you get both the tax and the NI relief, but it is your own money, just you have reduced your salary and on your payslip it shows as deducted from net pay. (there are other ways to make pension payments but this one enables the NI relief, the other way only enables the tax relief).

So, I have had both tax and NI relief at source on the amount my employer removed from my salary in order to pay it into the pension, so on £35, but not on the £15.

It hasn't gone in today....

Mel


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