Pension contributions are one of the most powerful — and frequently overlooked — tax planning tools available to business owners and the self-employed across Surrey, Kent and Sussex. Making additional contributions before 5 April can reduce your tax bill significantly while building your retirement fund.
How tax relief on pension contributions works
When you contribute to a pension, you receive tax relief at your marginal rate. For basic rate taxpayers, every £80 you contribute effectively costs £100 in the pension. For higher rate taxpayers, the effective cost of a £100 pension contribution is just £60, with an additional £20 claimed through self-assessment.
The annual allowance
The annual allowance — the maximum you can contribute and still receive tax relief — is £60,000 for most people in 2026/27, though it is tapered for those with adjusted income above £260,000. Unused allowances from the previous three tax years can be carried forward.
For company directors
Directors can make pension contributions directly from the company. Company contributions attract no NI (employer's or employee's) and are deductible from corporation tax. For a company paying 25% corporation tax, a £50,000 company pension contribution saves £12,500 in tax immediately — making this one of the most tax-efficient forms of remuneration available.
For sole traders and the self-employed
Personal pension contributions attract tax relief at your marginal rate and are claimed through your self-assessment return. The payment must clear by 5 April to count in the current tax year.
The planning opportunity before April
If you are approaching the higher rate threshold (£50,270), a pension contribution can keep your income within the basic rate band. If you receive Child Benefit and your adjusted net income is between £60,000 and £80,000, a pension contribution can eliminate or reduce the High Income Child Benefit Charge.
Talk to us about your situation
Our chartered accountants work with small businesses, landlords and contractors across Surrey, Kent and Sussex. Get in touch for a free initial consultation.
