Maximising Employer Pension Contributions

I've a ltd company and I'm the sole director / employee.

Now that an Employer can only contribute up to yearly salary of an employee tax free to their pension - I've a quick question how it works in practise.

Company year end is September. Can I just do a one off large salary payment to myself in September to reduce the company profit / corporation tax due for the company year. Then in December do one final large contribution to my Pension from the Company of total yearly salary - current employer contributions?

Revenue have received a lot of queries about the practical workings of employer contributions to PRSAs (which is what I presume is the pension product you are referring to) on foot of the recent legislative changes and so have updated their guidance (Chapter 24 - PRSAs) here with practical examples dealing with accounting periods straddling two years etc.

user180224 said:

in December do one final large contribution to my Pension from the Company of total yearly salary - current employer contributions?

Click to expand...

You can do the above.

I'm assuming re your LTD:
- it's currently making periodic employer contributions to a PRSA for you,
- the next accounting year runs from 01 Oct 2025 to 30 Sep 2026,
- the LTD will make a large pension contribution in Dec 2025 based on your 2025 calendar year salary.

It's worth noting that as your LTD's financial year (FY) does not correspond to the calendar year, if you had a good trading period in FY2025/2026 or you have the ability to already do so, your LTD could make two tax-deductible PRSA contributions of 100% of salary for Corporation Tax purposes in FY2025/2026, i.e. 200% in total.

The LTD could take a CT deduction for the December PRSA contribution but could also make a PRSA contribution in, say, June 2026, for 100% of your 2026 salary. Therefore, for FY2025/2026, the LTD could take a Corporation Tax deduction for employer PRSA contributions of up to 200% of your salary. Note, this amounts to an acceleration of PRSA contributions only, as there is no scope to pay any more contributions in 2026 and the LTD can only pay 100% of salary PRSA contribution in the whole of 2027. It's an option to consider.

Presumably you have a financial broker and/or accountant. Make sure that you are in the right pension product for your circumstances (i.e. PRSA vs Retail Master Trust) and confirm that they agree with the above approach if you do decide to avail of the acceleration option.

[please delete - linked document by previous poster addresses my query]