Contractor Pension Guides
When are you going to retire? 55? 65? Never? Right now, you probably love what you do, love the money you’re earning and think you can carry on doing it forever.
When you’re young, fit and agile, that’s an understandable assumption. As we get older, irrespective of our ability to do or not do our job, our priorities change. Ask anyone over 40!
Pensions are one of the safest ways to ensure that, on that day when you come to realise that there’s more to life than contracting, you have a fund in the background with enough clout to allow you to enjoy the fruits of your labour.
Pensions secure your lifestyle in the future, but save on your tax bill now!
The great news for contractors is that pension contributions paid through your limited company work positively in two ways:
- they start building your retirement fund and earning interest from day one;
- allow you to divert a considerable amount of tax from HMRC to your own future!
Corporate pension contributions are tax free, meaning that you avoid both corporation tax and tax on net dividends. Furthermore, you can take a full quarter of your total pension fund tax-free when you retire, even if you’re only 55!
Unlike many of the advantages that become inaccessible when you’re caught by IR35, pensions retain their tax-relief status for all contractors. Not only are the contributions free from PAYE tax, but employers and employees NICs, too.
There’s much more to pensions than simply providing an annuity when you retire!
Our pensions guide goes beyond the tax benefits associated with limited company contributions. It explains why it’s easy to fall into the trap of paying too little NICs to qualify for state benefits. More importantly, how to ensure you’re not reliant upon the state when you retire.
John Yerou is a pioneer of contractor mortgages and owner and founder of Freelancer Financials, Contractor Mortgages®, C&F Mortgages and Self Employed Mortgages, trading styles and brands of the award-winning Mortgage Quest Ltd.