Is it sometimes better to make personnel pension contributions after two years of losses.

[steve01252]

As a business owner I am aware that it is usually better to make company pension contributions rather than personnel contributions, given the savings in company tax etc.

Myself and partner are winding our business down but still trading and expect to retire in 18 mths time. We still have over 100k retained in the business
and in normal circumstances this figure would soon be depleted if we continued with the usual company pension contribution of 40k each.

We made 20k loss last year and likely to make a loss this year and therefore would not receive any corporation tax rebate, having received some rebate for last year’s lost.

Would it now make sense to just make personnel contributions and the receive a 20% tax relief given the unlikely prospect of making substantial profit in the next 18mths.
I appreciate there are limits to what can be contributed, in my case £9500 per year PAYE salary. I understand dividends can’t be included.

Appreciate what members thoughts are on this - Regards Mark.

[robbob]

We made 20k loss last year and likely to make a loss this year and therefore would not receive any corporation tax rebate, having received some rebate for last year’s lost.

Long shot but there is enhanced ability to carry terminal losses back - if the company is formally ceasing to trade soon - so that could perhaps help a little if you get your timing right and there is sufficient earlier profits available "in time".

https://www.gov.uk/guidance/corporation-tax-terminal-capital-and-property-income-losses#terminal-losses.

Other than that your logial thinking seems pretty sound - albeit you ideally want to make sure there is never any wasted losses - sometimes that is easier said than done though

[steve01252]

Hi Robbob
Thanks for your reply, just wanted to check i was on the right track.