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  4. Does my IR35 Status Affect my Pension Contributions?
  1. Home
  2. IR35 FAQ's
  3. Does my IR35 Status Affect my Pension Contributions?

Does my IR35 Status Affect my Pension Contributions?

If you are IR35 captured then you can continue to make pension contributions. However, the rules are different depending on whether you make the contribution through your company when captured or as an employee via an umbrella company.

Pension contributions working through an Umbrella Company 

Currently, government rules dictate that all employees who meet certain criteria must be auto-enrolled under a pension scheme. If you work through an umbrella company, this will probably apply to you, and if you wish to contribute more you usually can via a pension salary sacrifice arrangement.

Therefore, giving up part of your salary enables you to pay funds into a pension pot. Because you will be earning a lower wage, there will also be some tax and National Insurance savings.

Pension contributions working through your Limited Company when captured by IR35

If you choose to continue to work through your PSC when captured you’ll receive funds into your company with the income tax and National Insurance already deducted. 

Working whilst captured in this way through a whole accounting period will allow you to deduct company running costs and company pension costs-but since all your income has been taxed already then your profits will not be subject to corporation tax. This means there are no real tax benefits to making a company pension contribution, since you won’t get any tax relief on them. However, if you have a mix of captured and non-captured income, you may find that making company contributions is still tax efficient.

Updated on 1st April 2020

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