Overview and Quotation

There are very good reasons why you should consider a pension, apart from the value of providing a retirement income for the future, it is by far the most tax efficient way of taking funds out of your company.

Pensions are important news whether you are inside or outside of IR35. If you don't currently have a pension, you could be paying massive amounts of tax unnecessarily when you should be making full use of the tax allowances available to you.

You can make pension contributions directly from your limited company saving you considerable amounts of both corporation tax and personal tax.

If you fall under IR35, you save on income tax and also avoid employers' and employees' national insurance contributions (NICs). The key here is that pension contributions funded by your company are taken out before any tax liability is calculated. This means you can save anything up to 48% tax relief, in other words, for each £100 invested you pay £52 and the tax man pays the rest.

Equally, for those contractors that fall outside of IR35, you too can direct money from your company back to yourselves using a pension. This saves you paying any income tax whilst at the same time avoiding corporation tax at 21% that is normally charged on profits.

Since the "A-Day" pensions reform in 2006, pensions have become considerably more flexible with many of the previous restrictions removed. Contractors are permitted to invest up to £245,000 a year up to a lifetime limit of £1.75 million, which is reviewed and increased annually.

Which Provider?

It is important to choose a provider that can offer a flexible pension that takes in to account your contractor status. Due to the changeable nature of your employment status you need to have complete freedom to decrease, increase, restart and freeze contributions made on a monthly basis.

Furthermore, it needs to be sufficiently versatile to enable contributions from any particular source of employment depending on whether you choose to continue contracting through a limited company or move back into permanent employment.

The credit crunch and financial crises has proven that no financial institution is infallible. It is vital that your pension is with a provider that is financially secure and has a good track record.

Why Freelancer Financials

As well as having a wealth of experience working with contractors, we have a fundamental understanding of the tax rules that affect contractors operating through limited companies and ensure you make the most of the tax breaks available to you as a contractor.

For more information on pensions and the tax breaks available to you as a contractor please complete the Pension Enquiry Form below:

Please note that pensions are long term investments and that the value of this investments can fall as well as rise. Past performance is also no guarantee of future performance.