Company pension contributions

The company paying into a director's or employee's pension. Usually the most tax-efficient extraction there is.

What it means

Employer pension contributions are generally deductible for corporation tax and are not subject to National Insurance or income tax at the point of payment.

Why it matters

For an owner-director it is often the most efficient way to take value out of the company, and it is under-used.

What it looks like in practice

Contributions must be wholly and exclusively for the purposes of the trade. Annual and lifetime limits apply and have changed; unused annual allowance can sometimes be carried forward.

What to watch out for

Very large contributions for a director doing little work, which HMRC may challenge on the wholly and exclusively test.

Where to get proper advice

Your accountant. and an independent financial adviser — the tax and the investment are separate questions.