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

Anna | Warwickshire| 11/06/2019 | 8

  • 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...


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!)



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Our Expert

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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.

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