The Telegraph’s consumer affairs editor Dan Hyde has rounded up some of the top ways self-employed workers can boost their contractor pension.
More than one in seven people in the UK now works in self-employed contractor jobs. Some are concerned that the UK faces an impending retirement savings crunch as many contractors fail to put money away for a pension. In some cases freelancers fear that pension savings will eat into much-needed cashflow, especially when contractor pay can be irregular.
Hyde advises using tax relief allowance to pay into a pension. Savers can put up to £40,000 annually into a pension fund without paying income tax on the money. Tax relief can also be back-paid for the previous three years.
Another way to save pensions tax is to employ a spouse. This way contractors can pay up to 100 per cent of their salary into a pension scheme adjusting their own earnings to compensate.
Hyde also notes in his article: “Savers are blocked from putting residential property in a pension, but investing in commercial buildings is allowed. You can buy the premises where your business operates through a pension scheme to reduce your tax bills. For example, a veterinary surgeon might put their surgery in a pension.”