There are two main sources of pensions 1) occupational pension scheme or employer funded / employer administered pensions scheme, and 2) personal pension scheme.
This video will discuss occupational pension scheme. There are various tax benefits available if a person contributes pension during their working life. Tax relief is given at source, which means no tax deductions are made from their salary for their pension contribution. However, National Insurance Contributions are payable on pension contributions. If a person is retires at the age of retirement, they can take a 25% lump sum amount tax free. On an annual basis, pension contributions can be maximum 100 percent of earnings or 3,600 pounds on an annual basis from employment income, trading income and profits from furnished holiday letting business. Tax free contributions are subject to annual allowance – for tax year 2017 / 2018, up to 40,000 pounds is treated as an annual allowance.
For a company director, pension contributions are also corporation tax deductible for the company.
Please contact the team at IBISS & CO for assistance and for more information: 0203 808 0999