How will the rumoured pension allowance changes change your approach to contracting?

[TheDude]

Interested in peoples opinions and surprised there is not already a thread on this.

[SueEllen]

Won't.

I'm no where near retirement.

Next.

[ladymuck]

I'm not in a position to increase my contributions so it won't make any difference at all.

[TheDude]

I'm 50 and have been pretty bad about contributing to pensions for a good eight or so years because I wanted to provide experiences for my family.

I am in a position to pay the full tax free amount back dated for three years from my inside IR35 contracting income whilst using a modest inheritance to live on.

[mattster]

I'm slightly nervous that the fact that they seem to be tinkering with pensions means they might go after the top tax rate(s) deductions, as there have often been rumours of in the past. Hopefully not. My plan in general as long as I am caught by IR35 is to put as much as possible into the pension so this could help with that. £60k pa is quite generous - can't really see it being broadly popular since so few would really benefit - but I'll take it.

[mattster]

I'm 50 and have been pretty bad about contributing to pensions for a good eight or so years because I wanted to provide experiences for my family.

I am in a position to pay the full tax free amount back dated for three years from my contracting income whilst using a modest inheritance to live on.

This is absolutely the right approach. If you are in IR35 then pension contributions are almost doubled immediately - far better to live on savings and contribute 100% of earnings if poss. I also haven't maximised recently, so potentially could put in £130k+ this year if I was earning enough.

[Guy Incognito]

I will be paying the max into my pension whatever that is.

[jamesbrown]

Approach to contracting, not remotely. Approach to pension savings, marginally (in the sense that, by contributing more, it helps to offset the increase in CT at the margins). However, watch out for more significant reforms to come, probably raising the age at which pensions can be accessed (currently due to increase to 57) and reducing the tax free lump sum from 25%. In other words, you may end up with a larger pot, but it may become less attractive in deferring tax because you cannot access it until much later and/or in a less tax-efficient way.

[Hairlocks]

Will depend on IR35 status of contract. Inside then I will max out pension and take minimum wage and live of savings dividends. Outside I will plan to work 6 months a year and not put into pension.

[SueEllen]

However, watch out for more significant reforms to come, probably raising the age at which pensions can be accessed (currently due to increase to 57) and reducing the tax free lump sum from 25%. In other words, you may end up with a larger pot, but it may become less attractive in deferring tax because you cannot access it until much later and/or in a less tax-efficient way.

It's increasing to 58 when the pension age increases to 68.

For some reason the government is just stalling on putting the bill through. They have been stalling for years.