Pension contributions by owner managed companies

Produced by Tolley in association with

Owner-Managed Businesses

Guidance

The tax treatment of pension contributions is complicated and can require specialist advice. This guidance note summarises the treatment of pension contributions into a registered pension scheme by owner managed companies and the relevant restrictions or planning points which apply.

For more detailed information on registered pension schemes, see the Taxation of pension contributions ― overview guidance note.

Unless advisers are suitably qualified and authorised to give investment advice, it is vital that they do not give investment advice of any sort. This includes advice concerning pensions. Advice should be restricted to the tax consequences of making contributions. For further information, see the Regulated investment advice guidance note.

Advantages of registered pension schemes

There are several advantages to using registered pension schemes to extract profits for owner-managed businesses:

•
taxpayers receive a measure of tax relief on pension contributions which they personally make to their pension schemes (see ‘Member contributions ― methods of tax relief’ below)
•
employer contributions are allowable deductions from trading profits to the extent that they are wholly and exclusively

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David Everett

Partner, Lane Clark & Peacock , Employment Tax

David Everett, is the head of the Pensions Research team at LCP. One of his key roles is to analyse and communicate regulatory and professional developments to audiences both within and outside LCP.David has built up many years of experience in the occupational pensions regulatory field covering a broad spectrum including government policy and legislation, particularly that emanating from the Department for Work and Pensions, the Pensions Regulator, the Pension Protection Fund and other compensation schemes, the Pensions Ombudsman and the Courts and the technical and ethical regulation of actuaries through the Financial Reporting Council and the Institute and Faculty of Actuaries respectively.He also assists the ACA in responding to government consultations.He's the editor of LCP's weekly Pensions Bulletin and undertakes other technical writing for the firm, as well as contributing to TolleyGuidance Employment taxes for the Pensions module.

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