As a company Director, you have unique opportunities to structure your pension in a way that benefits both you and your business. You can choose how contributions are made, giving you greater control over your retirement planning.

Why pensions matter for Directors

• Pension contributions made by your limited company are classed as an allowable business expense.

• This means they reduce your corporation tax bill, while boosting your retirement savings.

• It can be more tax-efficient than taking money as salary or dividends.

How it works

• Your company pays directly into your pension.
• There are pension funds set up specifically for Limited Company directors.
• The contributions are usually deductible against profits, lowering your tax liability.

• Over time, this allows you to build a significant retirement fund in a very efficient way.

The personal benefits

• You avoid income tax or dividend tax that would apply if you took the money personally.

• Every £1 your company contributes goes straight into your pension, untouched by personal tax.

• You’re building a long-term retirement fund that grows tax-free and is separate from the risks of your business.

Key benefits

✅ Reduce corporation tax
✅ Extract profits from your company tax-efficiently
✅ Avoid income and dividend tax personally on the contributions you make
✅ Build long-term financial security
✅ Flexibility in that you can contribute more in profitable years

Example

If your company pays £10,000 into your pension, it not only grows your retirement fund but also reduces your corporation tax bill by up to £2,500 (based on the 25% corporation tax rate). At the same time, you avoid personal dividend tax that could otherwise take a chunk of that £10,000 away.

Extra benefit for higher-rate taxpayers

If you’re a higher-rate taxpayer, pensions become even more attractive:

• Avoid higher personal tax: Taking money as income or dividends could see up to 33.75% lost to tax. A pension contribution avoids this entirely.

• Keep more invested: The full company payment goes straight into your pension pot.

• Faster growth: More of your profits are compounding for your future.

Example:

• Taking £10,000 as a dividend could leave you with as little as £6,625 after higher-rate tax.

• Paying £10,000 into your pension means the full amount is invested and your company still saves £2,500 in corporation tax.

• That’s a combined saving of up to £5,875 compared to taking the money personally.

Next steps

If you’re not already making use of a Director pension, it’s worth reviewing how it could work for you. Our team at DASH can guide you through setting one up and optimising your contributions.

Head over to our contact us page and book a call to discuss how we can help you.