Executive Pensions (40 second read)
The Executive Pension is a superb tax planning tool for self-employed Company Directors. After a brief hiatus it has recently been re-introduced to the market by four providers. This new iteration of the product will not look any different to you as a member but rather than being a one-member arrangement it will now be based on a master trust structure. This means that it will conform with the requirements of IORPS II without any additional costs for you.
Why is the Executive Pension such a good tax planning tool?
Current pension legislation allows a company to make very substantial contributions to an Executive pension established for your benefit, without you being subject to benefit in kind (BIK) taxation. These contributions are a fully allowable expense against corporation tax so they are a great tax planning opportunity. The company can also fund for the years you have missed and there is no PRSI liability for the company as a result of remunerating you this way.
The advantages of an Executive Pension are as follows;
- The contributions made by your company are deductible against trading profits in the accounting period in which the contribution is made*, thus reducing your corporation tax bill.
- Even though they are for your benefit, contributions made by your company to your Executive pension are not treated as a benefit in kind.
- Your company can back-fund for the years you have missed.
- There is no PRSI or USC liability for the company as a result of remunerating you this way.
- Your funds grow tax free within the pension
*the age related tax relievable amounts don’t apply to company contributions. Your company will generally have far higher scope to fund than you would have personally (see more information about how much you can have your company contribute to your pension in our Executive Pensions Frequently Asked Questions).
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The material and information contained on this website is for general information purposes only. Neither the writer nor Highfield Financial Planning Ltd makes any warranty as to the completeness, accuracy or reliability of the information or the suitability or availability of products or services, referred to on the website, for any purpose. You should not rely on any information contained on this website as a basis for making any financial, legal, taxation or other decision. The information presented does not include all the considerations which are relevant to the topic discussed as to do so would render it un-readable. When considering any financial issue you should seek the advice of a suitably qualified adviser.
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By Telephone 01 546 1100
Use the Form on this Page
Email to [email protected]
Book a Zoom call with us here.
Happy to start the process? Click here to complete a factfind and tell us your objectives
The material and information contained on this website is for general information purposes only. Neither the writer nor Highfield Financial Planning Ltd makes any warranty as to the completeness, accuracy or reliability of the information or the suitability or availability of products or services, referred to on the website, for any purpose. You should not rely on any information contained on this website as a basis for making any financial, legal, taxation or other decision. The information presented does not include all the considerations which are relevant to the topic discussed as to do so would render it un-readable. When considering any financial issue you should seek the advice of a suitably qualified adviser.
About Highfield Financial Planning
We provide superior advice on Financial Planning services to business owners, professionals and their families. The principal of the firm Eoghan Gavigan has over 27 years’ experience in banking and finance across Treasury, Lending and Wealth Management and is a Qualified Financial Adviser (QFA) and a Certified Financial Planner (CFP). The CFP qualification is the world’s most respected industry designation, held by only a select number of advisers. As Specialist Investment Advisers we can provide you with detailed investment advice on your pensions and investments.
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