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Help your employees by boosting their pension savings
Help your employees by boosting their pension savings

Things to consider if you wish to make one-off contributions for your employees.

Written by Smart Pension Support
Updated over a week ago

What are the benefits of making one-off contributions?

  • One-off employer contributions can usually be deducted as a business expense and therefore the company can benefit from a reduction to its Corporation Tax liabilities.

  • Any employer payments made as a one-off contribution for the benefit of a specific member of the scheme can have a positive impact on the amount in their pension account at retirement – the earlier you pay the contribution, the bigger the potential impact.

  • You only make these payments when you can afford it – you’re not committed to large regular payments.

When do I need to make payments?

Business tax relief on employer contributions can only be given on contributions that have actually been paid in the relevant accounting period. Aspects to note:

  • It is only the amount paid in the relevant accounting period that can be considered for tax relief.

  • It is not possible to carry the contribution back or forward to other accounting periods (although the spreading of contributions over several tax years may be possible).

One-off contributions can be made at any time during the year. So don’t leave things to the last minute before the end of your accounting period. It would be best practice to:

  1. Start planning well before the deadline.

  2. Contact your payroll department / financial adviser, or the Smart Pension administration team to discuss any questions you may have

  3. Aim to complete these steps at least two months before the end of your accounting period and inform the above professionals about your intention to make a one-off payment.

What do I need to know, as an employer, about one-off pension contributions?

For information about the different methods of how to pay a one-off contribution and what you need to know before doing so, please visit our information page.

How do I use bonus sacrifice to increase the efficiency of a one-off pension contribution?

Depending on the composition of your remuneration package for employees, you may wish to consider a bonus sacrifice arrangement which could provide some, or all, of the one-off employer contribution to be paid. This is sometimes referred to as a ‘bonus exchange’. When processed correctly, such bonus sacrifice payments can generate a saving in employer national insurance contributions.

Bonus sacrifice arrangements can be an effective way of making pension contributions on behalf of an employee, but they are not right for everyone.

For more detailed information, visit our information page.

Important to note

The aim of this article is to give information about one-off contributions. It doesn’t give financial advice or any specific recommendations to you as an employer participating in the scheme.

If you need any specific advice about the contribution allowances and rules and how much you can, or should, contribute, you should speak to your financial adviser. If you don’t have one, you can find one using the find a retirement adviser guidance on the MoneyHelper service website.

All the information in this article has been prepared to reflect the relevant legislation and the general procedures in place as at November 2021.

Get in touch

If you have any questions, you can get in touch with us by our employer contact form or by calling us on 0333 666 2323.

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