Thousands of limited companies can make employer pension contributions to reduce their corporation tax and National Insurance, said Richard Foreman, chartered financial planner at NFU Mutual, a specialist provider of insurance, pensions and investments.
“More than half a million limited companies in the UK have an accountancy year end before 31 March and many will be already taking action to reduce their future tax bill,” said Richard.
“There are more than 130,000 limited companies across Yorkshire which are often likely to be run by directors and other employees from the same family.
“Arranging employer pension contributions to directors and other employees now can be a tax-effective way of sharing success across the family. They can also reward key workers who have played their part in the company’s results.
“Contributions to employees’ pensions are normally allowable deductions for Corporation Tax. The limits are generous too as they’re not limited to annual salary.
“For any amount, a simple process called ‘salary sacrifice’ can reduce National Insurance bills for the company and its staff and will cut income tax for employees too.
“However, it’s important to remember that tax depends on individual circumstances and may be subject to change.
“New pension regulations, set to come into force this April, will make pensions a much more attractive way for people to save for retirement as they can be used much more flexibly and with additional inheritance tax benefits from age 55.”
For further information on corporate and personal pensions and the associated tax reliefs, contact your local NFU Mutual agency.
As with all investments, the value of a pension fund can go down as well as up, so you may get back less than you invested.