Self-employment and SIPPs – Contractors and Limited Company Directors

Getting set up with the right pension plan is vital to securing your future if you’re self-employed. You may be wondering if a Self-invested Personal Pension (SIPP) is right for you, or what other pension options are available for the self-employed.

Choosing the best plan for your circumstances can have a huge impact on your life later down the road, so it’s worth speaking to a specialist who can give you a clear overview and guidance on pension options. We get lots of these enquiries and can connect you with an expert pensions advisor to match your needs.

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We can arrange a free pension review for you today

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Is a SIPP the right pension for the self-employed?

Opening a SIPP gives you the freedom to select and manage your own investments. You can also choose to pay an authorised investment manager (making them the trustee) to look after your funds for you.

If your income is up and down as someone who’s self-employed, or if you just want flexibility over when you add funds and how you manage investments, a SIPP could be the right pension plan for you.

However, they usually come with higher charges than other personal or stakeholder pensions. Speaking to one of the pensions advisors we work with will help you understand the bigger picture of whether a SIPP pension is best for your level of self-employment income, what it might cost you, and how to reach your pension savings goals.

Are self employed SIPP contributions tax deductible?

A SIPP offers significant tax relief for the self-employed; no matter how much tax you pay, the government will add an extra 20% in tax relief to your pension.

If you are a 45% taxpayer you get the first 20% added to your pension contribution and you have to claim the additional 25% from HMRC.

SIPP for someone trading as a limited company

When paying into a SIPP from a limited company, you could make employer pension contributions directly from your company. Your limited company SIPP pension contributions can come from pre-taxed income; so by paying money directly into your pension, rather than paying in from your salary, you could gain greater tax efficiencies.

If you are a higher rate tax payer, you can put the sum of your choice straight into your pension instead of declaring the income as profit and taking it out as a dividend.

Call Online Money Advisor and we’ll connect you free of charge to a pensions expert who can advise you on the best SIPP for your limited company and your company directors.

Are there SIPPs for contract workers?

Yes. If you are a contractor with a limited company, a SIPP could help you get very significant tax advantages, while at the same time building up a fund which you can withdraw from in later years.

Contractors with variable income should feel they have flexibility in their pension payment commitments. A contractor’s SIPP pension should be flexible with freedom to increase, decrease, stop or start contributions as you please and as your employment status changes.

Contact Online Money Advisor to speak to one of the pensions advisors we work with about how to fully cash in on tax advantages and get the best deals for contract workers’ SIPP pensions.

How to set up a SIPP as a company director, contractor, or as self-employed

Setting up your own SIPP is a straightforward process, but before you can get started, there are two key decisions that you’ll have to make:

  • Which provider is best for my SIPP pension goals?
  • What kind of investments do I want to hold in my pension?

One of the pensions advisors we work with can guide you through the options that are the best match for your goals and risk appetite.

Once you’ve selected a provider you’ll need to fill out application forms and decide where to invest your funds to set up your SIPP. The advisors we work with can guide you through this process from start to end. Next, you will need to know who your current pension provider is so you can arrange to transfer your money into a SIPP.

If you’re a company director, contractor, or self-employed, you are solely responsible for managing your pension and wellbeing in later years, so getting professional advice on selecting and managing your SIPP could be the best option in helping you make the right choices.

Other pension plan options for the self-employed

Whether you are a contract worker, self-employed, or trading as a limited company, SIPPs are often a viable option for anyone who wants flexibility and the ability to manage their own investments.

However, there’s no one size fits all solution to pension plans. Other pensions schemes available for the self-employed include ordinary personal pensions and stakeholder pensions. Pension rules are also subject to change and tax reliefs can depend on your circumstances.

Speak to a pensions expert about SIPPs for the self employed

If you’d like information on best pension plan options and further details on how to set up a SIPP as a limited company director, contractor, or as  self-employed, call Online Money Advisor today on 0808 189 0463 or make an enquiry here.

We don’t charge a fee for connecting you with a pensions expert and there’s absolutely no obligation or marks on your credit rating.

We can arrange a free pension review for you today

70% of customers who have a pension review find a better deal

We can arrange a free pension review for you today

70% of customers who have a pension review find a better deal

Tony has worked in a vastly diverse array of areas in the pensions industry for over 2 decades. Tony regularly writes for trade press, usually on topical and pensions pieces as well as acting as a judge at prestigious national events. Tony is also a highly qualified Independent Financial Adviser in his own right. His mantra has always been "Hope for the best, but PLAN for the worst", and believes that the biggest impact that an adviser can have on a client's life journey is to take them on a journey from generally having little or no real idea of what their retirement will look like, to giving them the understanding of what their retirement looks like now, then helping them navigate a path to what they WANT their retirement to be.

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