Business Owners – Don’t sleep on Pensions

Pensions don’t get talked about enough in small business circles – but they should. Most limited company directors and sole traders are missing a really useful tax relief here.

Here’s what you need to know:

If you’re self-employed (sole trader):
– Pension contributions reduce your taxable profits
– That means less income tax and potentially less Class 4 NICs
– You still have full control — you can stop and start contributions depending on how your year is going
– You can contribute up to 100% of your earnings (capped at £60,000/year) and still get tax relief

This isn’t just about retirement – it’s a smart way to cut your tax bill while saving for your future.

If you run a limited company:
– The company can contribute directly to your pension — this isn’t taken from your salary or dividends
– It’s treated as a business expense, reducing your corporation tax bill

No National Insurance to pay on it either
– Again, up to £60,000 a year (assuming no carry-forward rules apply)

Even small, consistent contributions add up. A £500/month pension from your company could save you around £1,000 in corporation tax every year — and you’re still keeping the money (just for later).

A few rules to bear in mind:
– Your pension provider must accept employer contributions
– You need to make the payments before your company year-end to get the relief in that year
– You still need to stay within the Annual Allowance (£60k) and avoid the high-income charge if your total income is over £260k

I’m not a financial adviser – but I’ll work alongside one, or with your provider, to make sure the numbers make sense and the paperwork stacks up. This isn’t about chasing loopholes – it’s about using the system properly.

Want me us to model some options for your business? Get in touch

info@kcaccountancyservices.co.uk
01691 674792