Pension Contributions

[ASB]

p.s. In actual fact your best option is to start a Ltd company! Even if IR35 caught you will be better off.

If IR35 caught pension contributions can be a great mitigation strategy, especially for old farts approaching 50 like me. I haven't needed to do this because I was never caught but with the increasing flexibility in how one can use the contributions and arrange the lump sum without the annuity it can make sense for us oldies - especially maxing out income is not required.

[dx4100]

You're absolutely correct, I overlooked the obvious! I forgot that Umbrellas can't pay dividends any more. OP if they money is coming from PAYE not dividends (which re-reading is exactly what you said) you will be worse off as you have to pay both employees and employers NI on the money before it goes into the pension and you won't get relief for that. In which case probably better to go with the Parasol pension.

Sorry for the confusion.

p.s. In actual fact your best option is to start a Ltd company! Even if IR35 caught you will be better off.

Dam dam dam dam

Good point....forgot about NI I was focusing too much on tax. Would quite a bit worse off then. So I have a couple of options.
• Use parasols pension scheme so i can make payments before tax and NI
• set up my own LTD and make payments before tax and NI to my current stakeholder pension
• Put the money into a private pension and live with the loss
• Put the money into a ISA until i decide what my long term plan is


I was trying to stay clear of the LTD route due to this being my first contract. After this first contract I might not get another and need to go back to perm employment. Decisions, decisions :P

Time lines are now short. I have registered with Parasol and they have my contract and are preparing it for me to sign. Am I right in thinking I can leave them if no contract has been signed? Maybe I should just bite the bullet and go down the LTD route.

Decisions, decisions :P

[Lewis]

Dam dam dam dam

Good point....forgot about NI I was focusing too much on tax. Would quite a bit worse off then. So I have a couple of options.
• Use parasols pension scheme so i can make payments before tax and NI
• set up my own LTD and make payments before tax and NI to my current stakeholder pension
• Put the money into a private pension and live with the loss
• Put the money into a ISA until i decide what my long term plan is


I was trying to stay clear of the LTD route due to this being my first contract. After this first contract I might not get another and need to go back to perm employment. Decisions, decisions :P

Time lines are now short. I have registered with Parasol and they have my contract and are preparing it for me to sign. Am I right in thinking I can leave them if no contract has been signed? Maybe I should just bite the bullet and go down the LTD route.

Decisions, decisions :P

Assuming Parasol is operating a stakeholder why not get them to pay into that. You can transfer the money into your stakeholder later if you want. No harm in having two pensions anyway (eggs in many baskets etc.). What is the pension company/scheme? With regards to a Ltd. Defintely best option financially but more work and only worth it if you like contracting I reckon. Maybe do Parasol for first contract, see how you like it and decide from there.