Limited Companies Tax Relief on Pensions

Limited Companies Tax Relief on Pensions

A good way for limited companies owners/directors to minimise their tax exposure is by setting up an executive pension.

Any pension contributions to an executive pension can be treated as a business expense in order to minimise any corporation tax the company may have to pay.

How much corporation tax can a company save?

Please see the table below which shows the maximum contributions that a company can make.

Contribution age            % of Salary max tax-deductible contributions

30                                       54% per annum

35                                       65% per annum

40                                       81% per annum

45                                      108% per annum

50                                      163% per annum

So a 50 yr old director on a salary of €60,000 per year the company could contribute €97,800 to the directors pension and avoid corporation tax on this amount.

The employee above can also avail of tax relief available from their own personal contributions to an executive pension. A 50-year-old can contribute up to 30% of their salary to a pension and get tax relief on that amount. So putting €300 a month into a pension would only cost you €180 in your take-home pay. The more you contribute the more tax relief you can avail of.

Please get in touch with me if you have any questions or would like some assistance on the above topic or any topic I have discussed.

Thanks for your time