Can my limited company contribute to a PRSA if I don’t take a salary from it?

M

MelF

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I’ve set up a new limited company which will make a significant profit this year. I already pay myself a salary from another company I own so I don’t need to take a salary from the new one but would like to minimise taxation on the profits.
Trying to establish whether the new PRSA salary-linked rules prohibits the new company from making any pension contributions on my behalf. Is the new rule linked to a specific salary source or does it refer to salary overall?
 
MelF said:
Trying to establish whether the new PRSA salary-linked rules
Click to expand...
You answered your own question there.


Even under the unlimited funding rules, you had to earn a salary for the company to make a pension contribution, it could have been nominal though. Now it is pension contribution equals salary from the company.
 
MelF said:
I already pay myself a salary from another company I own so I don’t need to take a salary from the new one but would like to minimise taxation on the profits.
Click to expand...

Don't let this drag on.

Do a tax plan with your tax advisor on how to extract the profits in the most tax-effective manner.
It will probably be a combination of salary and pension contributions to avoid Corporation Tax.
But it could also be a plan to exit the company and pay CGT, but availing of Entrepreneur Relief or Retirement Relief.
 
A good starting point would be this key post

Key Post - Should I leave profits in the company and pay Corporation Tax?

The big mistake a lot of company owners make is the very simple statement "Corporation Tax is 12.5% while total taxes on income are 50%, so I will leave the profits in the company and pay less tax." The problem with this is that they will have to pay tax on the profits when they extract them...
www.askaboutmoney.com
 
GSheehy said:

Can my limited company contribute to a PRSA if I don’t take a salary from it?​


No.
Click to expand...
"No" as in it's illegal, or "No" as in the limited company cannot include the PRSA contribution as an expense in the corporation tax computation and the PRSA holder will be subject to BIK?
 
Great info thank you. So then if I were to pay myself a salary from this company alongside the salary I’m taking from another, could I technically then put matching salary amounts from each info my PRSA? Any drawbacks in doing so.
 
You could put matching amounts into a PRSA set up in the name of each company. So, two separate PRSAs.
 
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