Employer pension contributions, can I backdate or amend?
Basically, I had no idea until recently that it was possible for my company to pay into my pension on my behalf, reducing my corp tax bill. So I missed taking advantage of this in my tax year just gone (Nov 18-19). I now have quite a chunky corporation tax liability (and a still-empty pension).
My question is, is there any possible way to amend my accounts to incorporate a company pension payment? The accounts are not due to submit until August. Would extending my business tax year enable me to do this? Or is there any other way?
- Hi Beifang,
Hope you and your family are coping fine during this pandemic.
It is possible to extend your company year end to the maximum allowed of 6 additional months, i.e. to May 2020 and then make employer contributions to your pension scheme.
However for corporation tax submissions HMRC require them to be submitted on a 12 month basis so if you have an extended accounting period you would submit 2 CT submissions; one from Dec 18 - Nov 19 and one from Dec 19 – May 20. The net effect of the 2 submissions would mean that you pay less CT overall for financial period Dec 18 – May 20.
If you didn’t change your year end you would still eventually get the benefit of contributing into the pension scheme but in the next financial year Dec 19 – Nov 20.
So to answer your question in short: yes, you could extend your accounting year end if you wanted to benefit sooner from your company paying into your pension scheme. However, there is no benefit in the long run (assuming your company continues to be profit making).
Bear in mind that there is also a cap to the tax free amount that your company can pay into your pension scheme each year (£40k for 20/21). You can take advantage of HMRC’s carry forward rule if you have more than £40k to contribute and meet the criteria. Please message me if you want to discuss further or the above is unclear.
Moneytree Financial accountants