Let's talk PENSION CONTRIBUTIONS.

📌As with salary, a pension contribution made by the company on behalf of the Director will attract Corporation Tax relief. The contribution is justified by the work the Director does for the company.

📌So long as you stick within the appropriate limits, company pension contributions are free from National Insurance and will not give rise to any Income Tax charges at the point of payment.

📍Your company can generally make a maximum contribution of £40,000 per year on your behalf.

📌This can be “rolled up” for up to four years in many cases, but further restrictions are also considered.

📌The MAIN DISADVANTAGE of pension contributions for younger directors is that the funds are effectively locked away until they reach the age of 55 (rising to 57 from 2028).

📌However, company pension contributions will become more attractive in the coming years, as many companies see their marginal Corporation Tax rates increasing.

📌Finally, whilst Income Tax will rise on future withdrawals (apart from an initial 25% tax-free lump sum), pension income is exempt from National Insurance and will also be exempt from the Health and Social Care Levy.

📌As always, if you have any questions - give us a call.