Since 6th April 2006 (A day) a company has theoretically been able to pay up to £215,000 into each employee’s pension fund and attract full Corporation Tax relief regardless of the Salary of the employee. Unfortunately, the problem was that HMRC then gave each individual local tax inspector discretion over whether or not the large contribution would be allowable for Corporation Tax relief. In our dealings on behalf on quite a few clients, the local inspectors have rarely been willing to give any prior guidance to the large contribution, creating a situation of great uncertainty.

HMRC have recently confirmed that they are reviewing and issuing updated guidance regarding employer pension contributions which should be issued within the next month or so. We hope that these guidelines will give us clarity, but it is quite likely that the guidelines will be less favourable than the interpretation we can currently work with.

If you are considering a large lump sum pension contribution you may wish to consider bringing this decision forward, although you must be aware that in making the large pension contribution under current rules, unless we can obtain prior approval, there is no guarantee of tax relief being approved. The current rules regarding pension contributions can be found at http://www.maaltd.co.uk/pdf/factfile_pensions_a_day1_contributions.pdf

Special clearance on a cheque/special presentation

Continuing from last weeks article about banker’s drafts and the increased activity of the use of forged bankers drafts there is an alternative way to make large purchases.

Special clearance involves a small fee but in turn will enable the seller to know for sure that the cheque has been paid before the goods are released to the customer.

Your bank will then send the cheque by first-class post directly to the paying bank, contacting them by phone on the following working day to confirm whether it will be paid. The payee may not receive the funds any sooner, but has the knowledge that there are sufficient funds to pay the cheque.

Remember the 31st January deadline for getting your self-assessment personal and partnership tax returns to the Inland Revenue.

Quote of the week

“The average man finds life very uninteresting as it is. And I think that the reason why, is that he is always waiting for something to happen to him instead of setting to work to make things happen.”

AA Milne