salary or pension

M

migaloo

Guest
I am contractor with a limited company. I have profit of 45,000 and will be taking a salary from this.

What are my options regarding pensions?
I have an RAC which I have not paid into in a couple of years.

Should I go with a savings plan?
 
As a director of a limited company, you can set up a scheme whereby your company pays a pension contribution which is completely seperated from your salary. This would be the most tax efficient method.

Whether or not you should pay into a pension or save requires a lot more consideration. Very broadly, if your anticipated income in retirement is likely to be sufficient to put you in the 41% tax bracket, then there's less incentive to put money into a pension, all things considered. But if your anticipated income in retirement is likely to be taxed at 20% or less, but you're currently paying tax at 41%, there's more of an incentive.

Liam D. Ferguson
 
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