For an extremely limited time ROI businesses still have a huge opportunity to invest substantial sums into pensions on behalf of company directors, business owners or key employees, before new restrictions come into effect on 1 January 2025 or possibly sooner.
As had been widely predicted the recent Finance Act introduced funding limits for PRSAs. In future employers annual contributions will be restricted to 100% of an employee’s or director’s annual salary. Any excess contributions with be treated as a BIK and subject to income tax in the hands of the employee, and the employer will not get tax relief on them.
Due to the much anticipated upcoming general election these changes could now come into effect as soon as the signing into law of Finance Bill (now likely to happen in the second week of November), or if not done then they will become effective from 1 January 2025.
So, in advance of these impending changes there is still a final opportunity to make significant contributions to pension funds much earlier than might have been previously possible, or may well be possible in the future, whilst still availing of full tax relief on the contributions made.
Pensions are still the most tax efficient way to extract funds out of your business and into your personal name, with the added advantage of tax free growth on those funds to provide for you in your retirement. They should form an integral part of tax planning for your future exit from your business and/or retirement.
If you have a profitable business with cash reserves now is the opportune time to either consider starting a pension or to review your existing pensions to see whether you and your business could benefit from these tax effective options, while they are still available.
Call us today on 0749321420 for a no-obligation discussion on your pension options.