If you work through your own limited company, you can claim tax relief through pension contributions and build your own personal pension.
There are two ways of making contributions to your pension fund: personal and company pension contributions.
Personal pension contributions
If you want to transfer some of your personal savings into a pension scheme, you will be entitled to personal tax relief. Pension providers can reclaim the basic rate of tax on the contributions that you make and this will be added to your fund, meaning that an £80 payment will be worth £100. If you are a higher or additional rate tax payer, tax relief will also be available through your tax return at the top rate of tax that you pay.
Company pension contributions
Pension contributions made by a company are deductible for corporation tax purposes and as a director of your own company it should be straight forward to demonstrate that the expense is wholly and exclusively for business purposes. If the total remuneration package is reasonable, then the contributions can be deducted.
Annual Allowances can be carried forward from the previous three years if they have not been used, meaning that up to £160,000 can be contributed in the tax year.
Also remember that if your current contract is within IR35 the contributions to a pension scheme will reduce the amount that has to be paid through PAYE as wages and salary. This could be useful if you are in a short contract that has fallen within IR35. You could make enhanced pension contributions for this period. You can go back to your usual low salary and dividends on your next contract.