Top Tax Tips for Owner Managed Businesses
5. Pensions
Pensions are a highly effective and tax efficient manner in which to remunerate employees. Not only are contributions deductible for the employer but they are a tax free benefit for the employee.
A major consideration for the employer is the fact that no Employers’ NI is payable on the contributions. This makes the cost to an employer lower and may also help to meet their commitments under the imminent NEST (National Employment Savings Trust) rules.
Care should be taken where both the employee and employer make pension contributions because the employer contributions are taken into account in determining whether the annual allowance has been reached. The annual allowance is the maximum amount of pension contributions that receive tax relief and is set at £50,000 for 2011/12 (subject to carry forward of unused allowances in the previous 3 years).
Top Tax Tips for Owner Managed Businesses – Tip 5 – Pensions
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Tax Planning