Pension Contributions - Ltd Company Contractors/Freelancers/Consultants

If you are a Ltd company contractor/freelancer or consultant who is exempt from auto enrolment but would still like to make voluntary pension contributions, you can choose to do so either from your personal funds or from your Ltd company income.

For contributions made from your personal funds after the deduction of income tax, you will benefit from personal tax relief of 20% , i.e. your pension provider will top up your pension contributions by 20%. Please note that the amount you can directly invest from your personal income is linked to the amount that you earn as a salary. You can therefore not contribute more than your gross salary.

Pension contributions made directly from your company’s income are paid out of profit before tax and count as a tax deductible expense. Your company will thus save on what it would have paid in corporation tax on pension contributions.

There is no need to set up a company scheme - the company can make employer contributions to an existing personal pension. Employer contributions are not capped at your salary but should not exceed your Ltd company income and should fall within the annual allowance threshold of £40,000.00.