National Pension Awareness Week runs from 14 to 18 September, and if you run a limited company, this is a good moment to look at one of the most underused reliefs available to directors: pension contributions made through your business. Our Principal Accountant, Victoria Cooper, explains more.

How it works

When your company pays into your pension, that contribution can usually be deducted from your profits before Corporation Tax is calculated. HMRC allows this as long as the payment is "wholly and exclusively" for the purposes of the trade, which for most owner-directors it comfortably is.

Compare that to taking the same amount as salary or dividend. Salary carries employer's National Insurance on top. Dividends come out of profit that's already been taxed at the Corporation Tax rate, then taxed again personally. A pension contribution avoids both of those layers.

What to check before you pay anything in

The annual allowance for tax-efficient pension contributions is £60,000 for 2026/27, though it tapers down for higher earners and can be lower if you've already accessed pension flexibly. You can also carry forward unused allowance from the previous three tax years, which often means directors can pay in more than they realise.

Timing matters

Contributions need to land in the pension scheme before your company's year end to count against that accounting period. If your year end is approaching, this is worth sorting sooner rather than later.

This isn't financial advice, and pension decisions should factor in your wider retirement plans, not just this year's tax bill. But if you haven't looked at director pension contributions before, it's worth a conversation. Get in touch and we can look at what makes sense for your business.