Contractor Pensions

How much can I contribute?
Is there a benefit as a contractor with a limited company in paying into a Pension?
Pension or property?
Is it a company pension or personal pension if I’m a director of my own limited company?

Any accountant and financial adviser will recommend that you make full use of any available tax breaks to ensure that you receive the maximum possible proportion of your gross contract. Pensions as a contractor is one of the ways of maximising your tax allowances.

As a contractor working through your own limited company you can redirect part of your gross income into a pension scheme. By doing this you save substantial amounts of both personal and corporation tax.

As a contractor who is outside IR35 and works through their own limited company you can virtually contribute your entire income into a pension directly from your own company or personal bank account and claim tax relief on the whole amount.

The news is even better if you’re a contractor who is inside / caught by IR35, you save not only the income tax that would have normally paid but you also avoid the employers and employees national insurance contributions. The amount of tax relief can be as much as 45% meaning that for each £100 invested you pay £55 and the Revenue pay the rest.

To benefit from a higher tax relief the government is encouraging contractors to invest as much into their pensions as possible per year. If you strip out the techno mumbo jumbo, it means you can now invest up to £50,000 per year (2011 threshold), the 2010 threshold amount was previously £255,000. There is also a personal lifetime limit of £1.8m (2011 rate – This will decrease to £1.5m in 2012).

Contractors will personally be able to place up to 100% of their salary into a pension if they choose to do so. The rules for funding a pension scheme direct from your limited company allow an investment of up to £50k per year (this is the amount in 2011).

If you would like to discuss your pension options further please contact your accountant at SJD who will put you in touch with an Independent Financial Advisors.

If you have any questions about contracting or would like any further advice please call our New Client Services helpdesk on 0500 152 500 / 01442 275789 or email michelle.turbutt@sjdaccountancy.com

SJD Accountancy

SJD Accountancy are the UK's largest specialist provider of fixed fee, limited company accountancy services to contractors; we've been acting for contractors across the UK since 1992 and have more than 11,000 clients.

We are the only National specialist firm of accountants with offices in all major UK cities so you’ll never be far from your accountant. SJD also have more qualified staff than any other firm in our market with qualifications from the following major tax and accountancy bodies - ATII, ATT, ACCA, CA, ACA, FCCA, ACMA. You’ll also be pleased to know that we are one of the lowest priced as well.

SJD have also won every relevant industry award possible, including:

Best Contractor Accountants - Contractor UK 2011 - 2007
Accountant of the Year - The British Accountancy Awards 2011
Best Professional Team of the Year - UK Customer Experience Award 2011
Customer Commitment Award - Institute of Customer Service 2011
National Chamber of Commerce Award 2010
Medium firm of the Year - Finalist Accountancy Age 2010
Excellence in Customer Service - Finalists National Customer Service Awards 2009
Sunday Times Best Small Companies - Award 2009 - 2007
Small firm of the Year - Accountancy Age 2007 & 2004 and finalists in 2010 and all years since 2003
Deemed PCG accredited accountants and fully MSC compliant

We offer all clients:

Free face-to-face meetings. This is another unique service, only SJD offers free face to face meetings - tax is complicated and sometimes only a meeting will do.
Unlimited access to your own dedicated accountant. No call centres, no outsourcing, no automated call handling. Simply telephone, email or meet your own dedicated accountant face to face.
Money back service guarantee. All your telephone calls and emails will be answered the same day or we will refund your monthly fee's.
Outstanding reputation. We have won more awards for customer service and accountancy excellence than any other firm in our market.
All inclusive low cost monthly package which includes completion of accounts, payroll bureau, dividends and corporation tax computations, personal taxation, free bookkeeping software, unlimited access to your accountant and all company returns.

All this for a fixed monthly fee of £110 plus VAT, which is one of the lowest prices in the market. And most importantly, in a recent survey 98% of our clients rated SJD as 'better than other accountants' - we are working hard to convince the other 2%!

If you have any question about contracting or would like any further advice please either contact your SJD Accountant or call our new client services helpdesk on 0500 152500 / 01442 275789 or email nikki.hanlon@sjdaccountancy.com.

Appoint SJD Accountancy and never worry about your tax or accountancy affairs again!

You may also find the following pages, guides and case studies useful:

Take home pay calculator - How much could you be taking home
Contractor FAQ - All your frequently asked questions and their answers
First time Contracting or Freelancing? - A summary of the alternatives along with pros and cons
Choosing an accountant - For a full review
Step-by-step Guide to Contracting - Download a FREE copy of our guide
Limited or Umbrella? Can't decide? - We help you decide which is best for you
Guide to Contracting - All the best guides to contracting in one place
Expenses Guide - Know exactly what you can claim
Umbrella company guide - Everything you ever wanted to know about umbrella company services
IR35 Guide - A great plain English guide to IR35.