Tax relief at your highest marginal rate is available on all personal contributions and company contributions do not attract income tax or national insurance, unlike other benefits. Further, company contributions are treated as a business expense and, therefore, offset against profits when calculating the company’s liability to corporation tax.
Contributions of up to £40,000 per annum can be paid in to a pension on behalf of the directors and provided the current financial year’s allowance is fully used and the director was a member of a registered pension scheme during that time, it is possible to go back three years and “carry forward” unused allowances which means a lot more than £40,000 could be paid in for a director’s benefit.
Put aside the word “pension” for a moment and think of it like this – a pension is a way of extracting business profits tax-efficiently for the benefit of a director or business owner to help fund their retirement. Yes, you can’t spend that money now but it will grow free from most taxation and when you retire it will provide a tax-free lump sum and an income for life thereafter.
Since the new pensions freedoms were introduced in April 2015 the tax rules were changed to give people greater access to their pensions. Drawdown of pension income is taxed at marginal income tax rates rather than the previous rate of 55% for full withdrawals.
The tax-free lump sum continues to be available. There are six options available including, leaving the pension pot untouched, purchasing an annuity, getting an adjustable income (Flexi Access Drawdown), taking cash in chunks (Uncrystallised Funds Pension Lump Sum), cashing in the whole pot in one go and mixing any of the options.
However, taking professional financial advice is essential to avoid unwelcome tax charges arises as in the case of cashing in your pension pot, anything above the 25% tax free allowance could be taxed at your highest marginal rate.
My experience has been very good, especially the personal help from Philip Bowden-Pickstock
I was very happy with the service that Dartington provided with respect to our new mortgage and I have already recommended them to a friend
I have always been very satisfied with the advice and service I receive from them
My adviser Chris Galpin is very good at explaining how our investments and pensions work, and he is always available should we need advice
We used the services of the Chris Galpin and I cannot rate his helpfulness, knowledge or patience highly enough. He very efficiently soughted out the best mortgage for us and then got on with the application process with the minimal amount of fuss. Nothing was too much trouble and I will be using him in the future
All our dealings to date have been excellent, they have listened to our requirements made suitable suggestions and implemented them in a friendly and professional manner
I have had honest advice and when my husband died they did all the necessary paper work for me very swiftlly and did not charge. A friendly professional firm who quickly understand your needs – no hard sell – your protection paramount
I get a good personal service from an experienced and thoughtful person whom I have known for 30+ years, and trust. That’s very valuable to me even when we don’t entirely agree on priorities! He also advises me on things I need to get around to doing, and I usually follow his advice
I have been with Dartington since before they were Dartington, and the level of service has continued at the same high standard
They were recommended to me and I have already recommended them to others. They are good at explaining things in a way I understand
Never had any problems. Friendly consultancies
I trust my adviser
The financial adviser I have dealings with has been excellent over the years