Ludlow Wealth Management Group is urging business owners to make the most of their tax efficient pension options in the run up to the end of the tax year.
Experts at Ludlow have said that pension funding still remains the most tax efficient way to extract profits from a business.
Contributions made to pension funds also have the increased benefit of reducing a business’ profits which would be subject to corporation tax.
Paul Witkiewicz at Ludlow Wealth Management said: “With the main rate of corporation tax falling by 1 per cent from April 1st to 20 per cent, it makes sense to bring forward pension funding to maximise any tax relief.
“In addition unlike paying pension contributions personally, company contributions aren’t restricted by the business owner’s earned income but the company does have to demonstrate that the contributions were ‘wholly and exclusively for the purpose of trade’.
“What you also have to bear in mind is that the company would need to have enough profits in the financial or accounting year to secure the tax relief benefit. However, the longer business owners leave it then there’s the possibility of missing out on valuable tax relief.”