Back to News & Insights
/ Business, SME, Tax, Tax Saving

Can you save tax by upping your pension contribution game?

Author: Henry Ejdelbaum

Tags: Corporation Tax, Dividend, income tax, pension, Tax

You should stay onpage if you run your own company business and are looking at ways to extract your profits in a tax efficient fashion.

We all know that the dividend rules changed in 2016, and as a result you may have to pay more tax if using dividends to extract profit from your company. But you can reduce the effect of the rule change by getting your company to pay a contribution into a pension scheme for you.

If the payment is below the annual allowance (£40,000 in a lot of cases), not only is there no potential personal tax charge, but you can also use it as an allowable cost for tax within the company if there are enough profits to cover it.

Not only do you increase your pension fund tax free, you can also save on corporation tax. Win. Win.