You are probably too busy running your company to think about your pension. You should give this some thought before the deadlines overtake you.
Your company can only claim deductions for pension contributions made within the accounting period. If it has a 31 December year end you should now review the level of contributions made on behalf of the directors and senior employees. Do you want to increase contributions to your own pension fund if you have had a good year?
Before you decide, check how much annual allowance you have available for pension contributions in 2018-19. The standard allowance is £40,000 but this is reduced to £4,000 if you have already flexibly accessed benefits from a defined contribution pension scheme, even if you received those benefits in an earlier year.
If your income is expected to be £110,000 or more for 2018-19 you need to check whether the total pension contributions paid on your behalf, plus your income, will top £150,000. In this case your annual allowance is tapered down by £1 for every £2 over the £150,000 threshold to a minimum of £10,000. We can help you with this calculation.
Check your employees workplace pension schemes too
It is worth checking whether any highly paid individuals on your payroll have been automatically re-enrolled into their workplace pension scheme. This should happen every three years on the anniversary of the date the individual was first auto-enrolled.
Even a small contribution made into the workplace pension can cause the individual’s annual allowance to be exceeded and they could lose the fixed protection of their pension lifetime allowance.
Would you like help and advice on this or any other issue?
Contact us straight away by telephoning 01932 564098 or email us using our ‘Contact Us’ page.
This note was published from our Winter 2018 Tax Briefing dated December 2018
Please be aware that the information above may have changed in subsequent months.
This note is written for the general interest of our clients and is not a substitute for consulting the relevant legislation or for taking professional advice.