For some years now, company directors have taken low salaries and high dividends to maximise income via lower National Insurance contributions. However, with the new legislation introduced in April 2006, directors may need to take another look at how their pay and pension contributions are structured.
From 6 April 2006, pension contributions attract tax relief up to 100% of pensionable earnings (which excludes dividends). Clearly there is a case for a director to take a higher salary, invest heavily in his or her pension scheme asnd take advantage of the tax relief on the contribution made.
Directors also have a wide choice of pension arrangements into which they can make their contributions. The new legislation has opened up the self-investment route to those business owners who want to put their business premises into their pension scheme, by removing the connected party rules.
We believe that Directors and business owners should carry out a full assessment of their pension arrangements in the light of the changes that are being introduced.
Contact us to arrange a free initial no-obligation meeting to discuss the assessment process.
Publications and Links
Please be aware that by clicking on some of the links below you are leaving the Almary Green website. Please note that Almary Green are not responsible for the accuracy of information contained within the linked sites accessible from this page.
Department of Work & Pensions: www.dwp.gov.uk
The Pensions Service: www.thepensionservice.gov.uk
HM Revenue & Customs: www.hmrc.gov.uk
Guide to Self-Invested Personal Pensions
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