Harnett Accontants

Tag: pension

  • Employers Or Personal Pension? You Accountants In West London Have The Answer.

    Tax Insights

    Employers Or Personal Pension? You Accountants In West London Have The Answer.

    While our 7 staff members diligently serve the Small and Medium sized businesses of West London, we ask them to relay our clients’ concerns and questions. One of our accountants in Twickenham recently helped with this question. Is it more efficient for the employer or the employee to contribute to their pension?

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    Reviewed for 2026/27: All tax figures and HMRC rules in this article reflect current guidance for the 2026/27 tax year.

    Key Considerations

    Our accountant in Twickenham responded thus:

    Who should pay contributions into your pension fund: you or your employer? If you control the company you work for, the most tax efficient solution is almost certainly for the company to pay as your employer.

    The company can set a reasonable level of pension contributions against its profits subject to corporation tax (at 20%, 24% or 25%), and it pays no employers’ NI charges on those pension contributions. A ‘reasonable level’ is where the salary plus benefits, including pension contributions, form a commercially reasonable remuneration package for the work done. As long as the total package is set at a commercial level or below, the company can receive tax relief for the remuneration payments.

    If you pay pension contributions as an employee, you need to extract the funds from your company. If you do this by a salary, this creates an income tax charge in your hands. The company receives tax relief on salary payments but it must pay employers’ NICs at 13.8%, with no upper limit. You are also subject to NICs on your salary at 12%, which then reduces to 2% on salary over £42,475 per year. So unlike pension contributions paid directly by the company, salary payments carry NICs of up to 25.8%.

    If you take dividends from the company to pay your pension contributions, there are no NICs payable by you or the company. But the company does not receive tax relief on the payment of dividends. So the only tax relief due on the pension contributions is due at your marginal tax rate, on up to 100% of your earned income, capped by your annual allowance (see below). Dividends are not earned income, so if you only take dividends and no salary or other employment benefits from your company, the tax relief on your pension contributions is limited to £3,600 per year, which is the maximum for a person with no earned income.

    Your annual allowance caps the amount of your pension contributions which attract tax relief. If this allowance is exceeded by pension contributions paid by you or your employer, you will pay a tax charge at your marginal rate. The annual allowance is now £50,000 per year, but this is extended by unused allowances brought forward from the previous three tax years. Thus the exact amount of annual allowance will be different for each individual, depending on his or her pattern of pension contributions.

    What This Means For You

    We can help advise you on this for your own specific circumstances.

    As with our accountants in Twickenham, if you’d like advice on any business matters, we offer free consultation. Just contact our accountant in Richmond

    📌 Important: Tax rules change regularly. Always verify current figures at gov.uk/hmrc or speak to a qualified accountant.
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    Need help with corporation tax planning?
    Harnett and Co are ICAEW chartered accountants in Kingston upon Thames, Surrey. We give clear, practical advice to businesses and individuals across West London and Surrey. Book a free consultation today.

  • Harnett Accountants In Twickenham: The New Workplace Pensions Cost

    Tax Insights

    Harnett Accountants In Twickenham: The New Workplace Pensions Cost

    Harnett Accountants in Twickenham are here to tell you that a compulsory pension scheme for all employees is to be introduced over four years from October 2012.

    💡
    Reviewed for 2026/27: All tax figures and HMRC rules in this article reflect current guidance for the 2026/27 tax year.

    Key Considerations

    The largest employers (120,000 or more employees) will be forced to sign up first. Those who employ less than 50 workers will be required to take part in the scheme from a date sometime in 2014 to 2016, depending on their PAYE reference number. Only one-man companies, workers aged under 22, over state retirement age or those paid less than £7,475 will be exempt from the scheme. If employees want to opt out they have to make an active decision to do so and sign a form. The employer will not be permitted to induce employees to opt out, or to screen out potential employees who do not wish to opt out of the pension scheme.

    Employers and employees will be required to make contributions to the pension scheme totalling 8% of the workers earnings, including tax relief given on the employees’ contributions. The employer must contribute at least 3% of the workers’ earnings. This level of compulsory contributions will be imposed gradually over five years to 2017.

    Employers can still use an existing pension scheme, set up a new one, or use the new low cost Government pension scheme, NEST (National Employment Savings Trust). If using an existing scheme the employer will have to certify that it meets all the requirements of the compulsory pension saving scheme and register with the pensions regulator.

    Harnett Accountants in Twickenham advice that you talk to your pension scheme provider to prepare for these new regulations, alternatively, we offer a free hour no obligation consultation. You can also .

    📌 Important: Tax rules change regularly. Always verify current figures at gov.uk/hmrc or speak to a qualified accountant.
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    Need help with pension and retirement planning?
    Harnett and Co are ICAEW chartered accountants in Kingston upon Thames, Surrey. We give clear, practical advice to businesses and individuals across West London and Surrey. Book a free consultation today.

  • Harnett Accountants Fulham Brings You This Report On Sipp’s

    Accountancy

    Harnett Accountants Fulham Brings You This Report On Sipp’s

    Two in three SIPP’s are being mismanaged or ignored according to this report from The Telegraph, brought to you by Harnett Accountants Fulham:

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    Reviewed for 2026/27: All tax figures and HMRC rules in this article reflect current guidance for the 2026/27 tax year.

    Key Considerations

    Self Invested Personal Pensions (Sipps) have been dubbed Self ‘Ignored’ Personal Pensions by Investec Wealth & Investment, after their new research showed that less than one in three investors feel they have the expertise to manage them properly.

    Significant numbers of investors are failing to maximise the potential of their Sipps with only 37pc of people saying they had enough time to devote them.

    The idea of managing one’s own pension can be initially appealing, but in reality, many people subsequently find they do not have the time or knowledge required to achieve maximum returns on their investments. As a result many are paying extra charges for the flexibility of a Sipp which they are not then using.

    Chris Aitken, spokesperson for Investec Wealth & Investment, said: “Managing a Sipp properly requires time, expertise and a strong understanding of market risk and appropriate set allocation. Unfortunately, for many people this is simply too difficult. We’d advise anyone who is concerned about having a ‘Self-Ignored Personal Pension’ to take professional advice.”

    The survey showed that just under half (45pc) of those self-managing their Sipps actually fully understand the charging structures from their providers., while 15pc of those who currently managed their own Sipp said they were likely to appoint an investment professional to do so within the next 12 months.

    Mr Aitken said: “This is a poor reflection of some Sipp providers and it’s also a call to action for investors to better understand what they are paying for, and whether or not their current plan represents good value and is the right product for them. Many Self ‘Ignored’ Personal Pension holders probably don’t fully understand the flexibility and power that a Sipp can provide.”

    What This Means For You

    Alternative and less costly choices to Sipps include company pension schemes and cheaper stakeholder or personal pension plans, both of which do not require investors to monitor holdings as frequently.

    Pension experts said that anyone saving for retirement should first of all maximise workplace pension schemes, particularly if their employer also paid into the plan. Although Sipps offer greater flexibility, many personal pension now offer a wide range of funds, sometimes at a fraction of the cost of a “full-Sipp” which also allows investors hold property, direct shareholdings, investment trusts and exchange traded funds.

    Please contact us to arrange a free one hour no obligation consultation. Also you can . Additionally, you can keep reading our daily blogs.

    📌 Important: Tax rules change regularly. Always verify current figures at gov.uk/hmrc or speak to a qualified accountant.
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    Need help with property tax advice?
    Harnett and Co are ICAEW chartered accountants in Kingston upon Thames, Surrey. We give clear, practical advice to businesses and individuals across West London and Surrey. Book a free consultation today.