Pension Contributions – Tax Relief For Business Owners

Profits from Private Limited companies attract Corporation Tax, currently at 19% at the time of writing. Business expenditure such as staff wages, supplies, bills etc are deductible from gross profits before the Corporation Tax is calculated.

Pension contributions made by the Limited company are also seen as a business expense and therefore deducted from the gross profit before tax is calculated, thereby saving corporation tax on the amount of pension contribution.

For Example: –

No Pension Contribution £
Limited company gross profits after wages, bills etc 50,000
Corporation Tax payable at 19% 9,500
Pension Contribution £
Employer Pension contribution 40,000
Remaining Taxable profits 10,000
Corporation Tax payable at 19% 1,900
Corporation tax reduction/saving £7,600

 

Take Action Today

The above is a generic example of how pension contributions can be used to extract profits from your business tax efficiently. To discuss your personal circumstances and how you could benefit please contact us on 01270 250800 or email awm@alextragroup.co.uk.