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Am I correct in thinking that a SIPP contribution is an allowable company expense?

25 October 2021

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Question by Mark

I am 62. I have been personally been paying into a a small personal pension for many years. I have had a limited company for 15 years. This year, I would like my company to put the max amount into a new Sipp (including 3 years carry forward) I understand that I must make an allowance for existing personal pension contributions when calculating how much to transfer.
Is there anything I haven’t mentioned that I should be aware of before making this decision. Am I correct, that the contribution is a allowable company expense?


Answered by Joshua Gerstler

Hi Mark,

On the face of it, it sounds like a really good idea.

Normally the contribution is an allowable company expense. Your accountant should be able to confirm if for any reason it would not be for you.

The main thing I think you should be aware of is the Tapered Annual Allowance.

For every £2 of Adjusted Income over £240,000, your Annual Allowance is reduced by £1.

This can reduce your Annual Allowance to as little as £4,000.

Sometimes a SIPP can be more expensive than a traditional Personal Pension so I would suggest you look at the charges too.

I hope that helps!

Josh

Answered by

Joshua Gerstler

Chartered Financial Planner

I have been working in Financial Services for over 16 years. I started out at Deloitte where I trained and qualified as a Chartered Accountant before moving to Financial Advice/Planning at The Orchard Practice in 2011.