Directors Pension Lump Sum

by **towat** on Wed Oct 05, 2011 1:15 pm

My client provided consultancy through a limited Co, he ceased trading in 2010 and is now terminally ill.

The accounts to Mar 2011 show a pre-tax profit of £12k before pension conts and after directors remuneration of £4800.

He/the company paid an amount of £20k (2010 £24k) into the directors money purchase pension scheme.

The company has unrelieved profits for 2010 of £32k.

I haven't kept up to date with changes to pension rules as I don't give investment advice and most of my clients can't afford pensions, so my question is:-

Can we get CT relief for the £20k? and if so do we use £12k in 2011 and relate £8k back against 2010?

If not how does it work?

by **Incredulum** on Wed Oct 05, 2011 3:34 pm

What date did he cease trading?

What is the company doing now?

"He/the company paid" Well who did. They're not the same thing.

By 2010 do you mean March 2010?

What do you mean by "relating back"? That's what you used to do with pensions if you were an individual.

When was the 20k paid?

Is the 32k/12k before or after allowing for pensions.

Actually I think you're utterly confused. I certainly am. I suggest finding yourself an accountant rather than trying to DIY. You will find it it worth the cost.

A Di CT deduction is due on a cash basis. If it gives rise to a Di loss then it can be carried back one year (up to three years on cessation). If the trade has ceased then it is probably not available for relief.

by **towat** on Wed Oct 05, 2011 3:52 pm

I am not confused at all.

The company has ceased trading, he is terminally ill, and we are talking in weeks rather than months.

Obviously when I say 2010 and 2011 I am referring to the company's financial years.

I mean relating back, surely that is self explanatory.

The £20k was paid in Dec 2010 is that relevant?

The £12k is before pension costs as stated, the £32 is unrelieved therefore after pension conts.

I am a CTA with 30 years experience I just don't happen to have done much work on pensions in the last 10 years.

Thank you, you answered all my queries with your final paragraph.