10/05/2021Accountants for Contractors
To live a life like today after retirement, you need to invest in pensions. Pensions are the seeds that need to be planted and watered to reap the benefits in the future. In this blog, we’d discuss some important points about contractor pensions.
Most of the contractors fall within the below categories:
- Not committed to any pension
- Don’t maximize the allowances that paying into a pension fund through their limited companies’ earnings.
Now, it’s changed.
After IR35 regulations, contractors can get tax breaks on contractor pensions. It’s not by deducting pension contributions from the salary. Instead, it’s beneficial to contribute using your company bank account.
It’s one of the best ways to save 100% for your retirement without any tax liability. By transferring the contribution through the company’s bank account, you’d be exempted from Income Tax and National Insurance Contribution.
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Can I Claim State Pension?
Being a contractor, you’d be paying a small amount of your salary. By paying too little, you’d be saved from National Insurance.
The state pension is the full pension based on NI that you contribute through your earnings over a specific period. Its length is over 30 years. It may reduce if you don’t pay for the mentioned period.
With careful planning, you can secure your post-retirement lifestyle. Start paying the pension today for a better future.
How Contractor Pensions Save Tax?
Suppose you’ve £10,000 that you want to save. In case if you receive it as a salary or dividend, you’d either pay National Insurance or Income Tax.
Instead, if you pay that amount through your company account to your pension fund, you’d pay no tax at all. The accountant will deduct £10,000 from gross salary or gross company profile, as a result, it wouldn’t liable for any tax calculations.
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How Do I Pay?
You need to find out the niche-specific Independent Financial Advisor. He/She should know the tax-saving availed of limited company contractors. There are many ways to save tax. The IFA will help you in this regard.
You just need to bring some money from your company into your personal account to pay. Many limited company contractors wait until the end of the year before making the final decision.
Quick Sum Up:
The contractor pensions provider will manage the funds as per the suitability with the investor profiles. Your profile is what you have done. To get the best advice, we recommend you hire an IFA to provide you with advice on the best choice.
Still confused, get in touch with our certified accountants for help.
Disclaimer: The blog, ‘Why do contractors need pensions’, is only for informational purposes.