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Paying pension contributions through your Company

6th June 2018

Using your Company to fund your pensioncontributions can be the simplest and most tax efficient method of funding your pension, and – because of dividend tax - there is a tax advantage of about 5% from paying through your Company.

So long as your Company has available profit, it can pay up to £40,000 (the Annual Allowance) into your pension in the current tax year and receive tax relief on the contributions. Also, if your Annual Allowance has not been used up in the previous 3 years, you can use it up by making higher contributions in the current tax year.

If you are an owner/director of your own Company, you ought to be thinking seriously about using your Company to fund your retirement package.  Consulting a professional Financial Advisor is vital to ensure you make the right decisions. N.B. for high earners (income >£110,000) the £40,000 Annual Allowance can be restricted – so take advice!