Contributing to a pension through a Limited Company

·      What would contributing £1,500 a month after 20 years be worth, assuming 5% net a year average growth?

·      That’s just over £600,000!

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·      Total contributions throughout the term are £360,000.

·       This provides corporation tax savings of £90,000.

·       It only cost £270,000 for a pot worth over £600,000!

This is a really effective way of extracting funds from the business and building up assets in your own personal name.

Please get in touch if you like to know more.

Additional Info

-         Access to a pension is limited to age 55 ( 57 from 2028)

-         Growth in a pension is tax free which is a further benefit.

-         Current legislation means any pension funds are free from Inheritance Tax until April 2027.

-         25% can be withdrawn from the pension, subject to a cap of £268,275 (2024/25 tax year )

-         Income above the Tax Free amount is subject to marginal rates of income tax.

-         Death before 75 means your beneficiaries can withdraw the entire pot tax free.

-         Death after 75 means the beneficiaries would be subject to their own marginal rate of income tax on any withdrawals.

-         Past performance is no guarantee to future performance

-         You must be willing to accept risk to invest for the longer term.

-         Inflation can erode the true value of the funds.

-         Corporation Tax assumed as 25% - aimed at those with over £250,000 of profits.

Disclaimer

-         This is not financial advice. I would strong urge you seek professional financial advice before proceeding with any pension contributions and setting any pension contract up. This is primarily for financial education.

-         Charges can impact the performance, if net returns are higher or lower than 5% a year the overall returns will be different.

-         A pension is a long-term investment and any value can fluctuate and go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates, and tax legislation.

-         Tapering of the pension contributions can apply to those with higher earnings.  

-         Tax planning is not regulated by the Financial Conduct Authority

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