Backdating pension contributions

rjbell

rjbell

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I'm almost 40 with no pension. I know silly boy. I'm trying to figure out how lump sum contributions work. So for account purposes you're a year behind. So when my accounts are calculated for last year and it has £5k taxable profit in the business let's say. Could i put this £5k in my pension and not be liable for corporation tax or would i be too late and this money should have been paid in in that financial year?
 
Speak to a financial advisor.
 
Alastair said:
Speak to a financial advisor.
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This.
It's been 15 years since I worked as a financial adviser, but there used to be ways that allowed you to backdate pension contributions for several years, allowing you to invest more than your current allowance would allow.
A financial adviser will keep you right.
 
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If i had one I'd have a pension by now! :)
 
To put it another way, if there was someone on the forum in a position to answer your question (ie. a financial adviser with an interest in photography) they could not answer your question. The giving of financial advice is a regulated activity, the closest you can get to an answer is along the lines Robert gives above.. there's probably a way you can do this but you need to speak to a financial adviser for the details.
 
Bobsyeruncle said:
:) True.
There are other ways of planning for retirement that could be better than a pension.
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Yeah i plan to do a bit of everything and spread the risk. I want to open a sipp where i can buy commercial property as well as some investment trust. I'll open a lifetime ISA too before turning 40.
 
rjbell said:
I'm almost 40 with no pension. I know silly boy. I'm trying to figure out how lump sum contributions work. So for account purposes you're a year behind. So when my accounts are calculated for last year and it has £5k taxable profit in the business let's say. Could i put this £5k in my pension and not be liable for corporation tax or would i be too late and this money should have been paid in in that financial year?
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not sure on the backdating side and even if you could for 5k it probably isnt worth it.
i am a company director and can pay up to £40k/year into my private pension from my company.
this also comes off your profits so isnt liable for coorp tax.
it is the only way now to essentially get free money.
i take a minimu wage of £7k a year and everything else as pension now as dividends are now more aggresively taxed.
this keeps the HMRC very happy.
 
Mr Bump said:
not sure on the backdating side and even if you could for 5k it probably isnt worth it.
i am a company director and can pay up to £40k/year into my private pension from my company.
this also comes off your profits so isnt liable for coorp tax.
it is the only way now to essentially get free money.
i take a minimu wage of £7k a year and everything else as pension now as dividends are now more aggresively taxed.
this keeps the HMRC very happy.
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I plan on doing something similar to this on going i was just wondering if i could go back. How do you know how much to pay in and not leave the business short?
 
rjbell said:
I plan on doing something similar to this on going i was just wondering if i could go back. How do you know how much to pay in and not leave the business short?
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what i tend to do is as the my years runs i make add hoc contrus during the year and then do some sums at the end and make a biggie.
bear in mind you don't have to commit to making monthly contributions, you can just do lump sum payments.
 
rjbell said:
Could i put this £5k in my pension and not be liable for corporation tax or would i be too late and this money should have been paid in in that financial year?
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This isn't really a pensions question. It's a corporation tax question. So I *think* the regulations about the giving of financial advice don't apply here. But I'm not a financial advisor anyway.

I think the answer is "probably not"; it might be deemed by HMRC to be an artificial transaction for the purposes of tax avoidance. That seems to be the consensus in this discussion I found on Accounting Web - it refers to backdating a bonus rather than a pension contribution, but I think it's the same principle.
http://www.accountingweb.co.uk/any-answers/can-i-back-date-a-salary-bonus-to-utilise-a-personal-allowance

Your accountant will be able to give you a definitive answer.
 
Have a look here https://www.pensionwise.gov.uk/

The cost of financial advice isn't cheap these days and would take a big chunk of your £5000.

However there are plenty of providers you can deal with direct and have guidance on risk levels and funds.

Pensions are far more flexible these days in terms of when/ how you take benefits and if you are lucky enough to be a higher rate taxpayer its well worth trying to contribute as much as you can from that higher rate tax band. Still worth it as a basic rate taxpayer too!

There's nothing illegal in making a contribution to save tax and aside from the £40 k limit mentioned above there is a rule where you can carry forward the past 3 years unused allowances up to the limits at that time which were higher. You do however have to have earned enough income in the current year to support the contribution.

The Lifetime ISA is a good idea too so jump on board before you are 40......

The key is how you take benefits when you finish but access is extremely flexible and you do this quite tax efficiently if you are careful.

Ask for a state retirement forecast too online or using form BR19 as the amounts have changed recently and state retirement ages have changed for some....!
 
IIRC, you can backdate pension contributions for Income Tax purposes.
But it sounds like you intend to make the contributions out of your company, so, as Stewart has already said, it is Corporation Tax that is relevant here.
Profits for corporation tax basically start with accounting profit so the question here is whether you can put a pension accrual through for a period of account already ended. That probably won't work - under GAAP, IIRC there must be a constructive obligation to pay at the balance sheet date in order to support an accrual. As you're asking the question after the year-end, it sounds like no such obligation exists.


(Caveat - this is my personal opinion, whilst on holiday and after a beer. It should not be relied upon!)
 
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