Directors' Pensions Advice in Cambridge

Directors pensions remain one of the most tax-efficient ways for business owners and directors to reduce the company's taxable profits and accumulate wealth for their retirement.


Directors' Pensions Advice Cambridge

Company funded contributions into your pension are treated as a business expense on which you do pay income tax or national insurance, unlike many other benefits.

Further, personal contributions benefit from tax relief at your highest marginal rate (2019/20).

Contributions of up to £40,000 per annum can be paid in to a pension on behalf of 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 also possible to go back three years and “carry forward” unused allowances. This means more than £40,000 could be paid in to a pension scheme for the benefit of the directors.

Therefore, put aside the word “pension” 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.

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Things to consider

  • HMRC limits – the annual allowance for contributions is £40,000 and subject to earnings, and unused annual allowances can be carried forward from the previous 2 years. However, higher earners may have their annual contribution limit reduced to as low as just £10,000 per annum for someone earning £210,000 per annum.
  • HMRC limits – The lifetime allowance for a pension fund has also been reduced to £1 million since 6th April 2016 having previously been as high as £1.8m in 2011. Unless pension protection has previously been applied for in respect of larger funds, any pension savings in excess of this limit will be subject to a lifetime allowance tax charge. If it is taken as a lump sum it is 55% and if it is taken as a pension it is 25%.
  • Legislation – The rates and limits on pension tax-relief are set by government legislation. As with all legislation, these are subject to change in the future.
  • Values – The investments held within a pension can fluctuate in value and are not guaranteed, neither are the benefits as retirement which will be affected by economic circumstances.
  • Registration – The pension scheme must be registered with HMRC in order to benefit from tax relief.

What people say about us:

I have always been very satisfied with the advice and service I receive from them.

- Jennifer Hoyos

My adviser Chris Galpin is very good at explaining how our investments and pensions work, and he is always available should we need advice.

- Annie Roberts

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.

- Fiona Gilbert

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.

- Michael Dearman

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.

- Patricia Revel

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.

- Penny Henderson

I have been with Dartington since before they were Dartington, and the level of service has continued at the same high standard.

- Adrian Moxon

They were recommended to me and I have already recommended them to others. They are good at explaining things in a way I understand.

- Sheila Thomas

Never had any problems. Friendly consultancies.

- Roger Stratford

I trust my adviser.

- Jon Daly

The financial adviser I have dealings with has been excellent over the years.

- Janet Huskinson

My experience has been very good, especially the personal help from Philip Bowden-Pickstock.

- Christine Jolly

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.

- Dr Michael Gifford

Our Address

Dartington Wealth Management Ltd.
5b Clifton Court,
Cambridge CB1 7BN

Tel: 01223 211 122

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