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Improve your company’s cash flow and save more tax!

Shared from Tax Insider: Improve your company’s cash flow and save more tax!
By Kevin Read, October 2021

With corporation tax rates due to rise, Kevin Read explains why OMBs may want to consider deferring directors’ pension contributions.

Tax-efficiency of company pension contributions

Employer pension contributions are very tax-efficient. They will become even more so from April 2023, when corporation tax (CT) is increasing for companies with profits exceeding £50,000. For stand-alone companies, the marginal CT rate on profits between £50,000 and £250,000 will rise to 26.5% from the current flat rate of 19%, while for profits above £250,000, it will become 25%. 

The director of an OMB will typically draw only a personal allowance-level salary, which restricts their own personal tax-relievable contributions, due to the rules on net relevant earnings [FA 2004,  s 189(2)]. Company contributions are not restricted in this way, but a director may suffer an annual

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