Quantcast

Do pension contributions count as a Business Expense for self-employed sole traders?

Anna | Warwickshire| 11/06/2019 | 7

  • Private Pension

Anna's question in full

I am a self-employed sole trader. If I was to open a Personal Pension, as I am self-employed, would my pension contributions count as a Business Expense, on my Excel spreadsheet of expenses, incurred in running a small business? I would just like to know a Yes or No answer please. Many thanks in advance for answering my question!

Danny Cox's Response

In short...

No.

As a sole trader...

If you employ any other members of staff and make contributions to their pensions, that’s a business cost, so you can get tax relief on contributions as a business expense.

However, any contributions you make for yourself are not a business cost, they are personal contributions, so you don’t claim tax relief in the same way.

If you’re a basic rate taxpayer, the tax relief is added automatically by the provider to your contributions. For every £100 you put in, £25 is added.

If you are a 40% taxpayer, you also need to include your total personal pension contributions (including tax relief) on a separate part of your self-assessment form, under Tax Reliefs. This will ensure you get the additional £25 tax relief you would be entitled to.

Hope this helps.

 

You may find these pages helpful:

Annoyed Self-employed - Flying solo in business is thrilling. But the twists, turns and bureaucracy can be tricky to navigate.

Private Pensions - Free money from the Government (hallelujah!)

 

 

Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

Our Expert

danny-cox.jpg (1)

Danny Cox

Danny is currently Head of Communications at Hargreaves Lansdown, and has over 27 years’ experience in personal finance & helping people make the most of their money. Amongst his awards is Money Management Financial Planner of the year, and he is qualified as both a Chartered and a Certified Financial Planner.

Related Questions

Got a Question?

Got a question? Ask our experts

Ask Our Experts

Sign up for Holly's blog

Stay up to date

Our free weekly blog with Holly's
no-nonsense opinions, tips & food for thought.
If you change your mind, you can unsubscribe at any time. We'll never share your details and you can unsubscribe any time.