Pension schemes provide a great opportunity to make tax efficient investments for your future. Once funds are in a pension they can be used to invest in assets such as shares, bonds and funds, and occasionally commercial property.
There are limits on how much a taxpayer can put into a pension tax-free and how much they can take out tax-free.
A Self Invested Personal Pension (SIPP) is a type of personal pension for one or several members. A SIPP allows the member(s) to control their investments personally. Contributions to a SIPP will receive pension tax relief up to certain limits.
A Small Self-Administered Scheme (SASS) is designed for the directors of a business and is generally not available to other employees. A SASS can result in large tax liabilities if not properly administered.
We can advise clients on innovative ways to use UK SIPPS and SASSs to fund commercial projects.
QROPS and QNUPS are non-UK pension schemes but with varying degrees of recognition from HMRC.
A QROPS is a Qualifying Overseas Pension Scheme. It is a recognised overseas pension scheme that is regulated in the country of its origin.
A QROPS may be of benefit if you are currently living overseas or planning to do so in the future. Additionally those with a UK pension scheme who now live overseas or are planning to leave the UK, can now transfer their existing pension into a QROPS.
A QNUPS is a Qualifying Non-UK Pension Scheme and is a flexible structure for funds that are not currently in a pension scheme. They can be particularly useful where you want to hold UK-based property through a pension scheme and benefit from an inheritance tax exemption in appropriate circumstances.
We can help you identify situations in which these types of schemes may be appropriate for your circumstances, specifically but not exclusively in relation to IHT planning.
In preparing a tax return for our client, we identified that in prior years he had not been considering his pension contributions and how this could impact his tax liability.
The issue was that our client may have been liable to pay the pensions annual allowance tax charge due to his excessive levels of contributions.
The contributions were excessive as his income levels were above the thresholds which tapered his annual allowance each tax year.
It is an area that is not particularly well-known to the layperson, so it can be easy to be caught out with unexpected liabilities and penalties from HMRC.
We conducted a review of his income and pension input position in order to establish whether he was liable to pay the tax charge. This included looking back from 2017/18 to 2022/23 at the available allowances, any carried forward amounts and whether his income met the high thresholds.
Once we understood this, we assisted the client in reporting the charge on his self-assessment tax return accordingly.
It was calculated that he was due to pay a small pensions tax charge for 2022/23, however for previous years he had sufficient carried forward allowance to cover his excessive contributions.
It gave the client certainty that he remained compliant with HMRC, and due to our advice ensured he was able to plan for his contributions going forwards.
There are annual limits to how much you can contribute to your pension tax-free. For higher earners, these allowances may be tapered down. We help you calculate your allowance and avoid unexpected tax charges.
A SIPP (Self-Invested Personal Pension) is available to individuals who want control over their investments. A SASS (Small Self-Administered Scheme) is typically used by company directors and in certain circumstances can allow the pension fund to invest in the business. Both have tax advantages but come with specific rules, and we can advise on what’s right for you.
Yes. Both SIPPs and SASSs can be used to invest in commercial property in a tax-efficient way. We can guide you through the structure, including any tax reliefs and reporting obligations involved.
QROPS and QNUPS are non-UK pension schemes. QROPS is useful for UK pension holders moving abroad, while QNUPS can offer flexibility for non-UK pension provision.We help assess if these are suitable for your situation and how they fit into your overall tax plan.
If your pension contributions go over the allowed annual limit, you may face a pension tax charge. We review your contributions, calculate any charge due, and help you report it correctly on your tax return, minimising penalties and ensuring compliance.
