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Can contractors take a state pension?

Yes, as long as they are eligible and have paid the correct level of National Insurance.


Because contractors are employees of their limited company, they have to pay National Insurance on any salary income they take between certain thresholds. This is one of the ways that contractors can make the National Insurance payments required to claim a state pension when they reach retirement age. 

Dividends are not subject to National Insurance. So while it is more tax efficient to pay yourself with dividends, a small salary is still advisable to ensure you are making the contributions you need for a basic and additional state pension, when the time comes. 

Updated on 3rd November 2020

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