The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:
This note outlines some additional factors to take into account regarding pension contributions on cessation or sale of a business.
Clearly, one of the biggest issues on paying pension contributions on the sale of a company is the issue of the £40,000 annual limit for pension contributions, relevant for years 2014/15 onwards. Above this limit, the tax relief provided is effectively withdrawn. However, there might be scope for paying pension contributions in excess of this, depending on contributions in previous years. See the Pension contributions guidance note for more information.
The biggest issue for the company, is whether such payments will qualify for corporation tax relief, whether it be a sale of shares or cessation. For guidance on tax relief for employers making payments into employees’ pensions, see the Pension contributions ― employee tax relief for contributions guidance note.
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