Contractor Pension (SIPP) Calculator
Compare employer pension contributions through your limited company against personal SIPP contributions, with £60,000 annual allowance and carry-forward.
Annual Allowance is £60,000 (unchanged for 2026/27) or 100% of UK relevant earnings if lower, covering personal + employer + third-party contributions combined. Tapers down to a £10,000 minimum for high earners: reduces by £1 for every £2 of adjusted income above £260,000 (threshold income over £200,000 also required to trigger the taper). Unused allowance from the previous 3 tax years can be carried forward. Relief at source: a personal contribution is topped up by 20% basic-rate relief automatically; higher/additional-rate relief is reclaimed via self-assessment.
Personal SIPP or employer pension via your limited company — which wins?
Contractors trading through a limited company have an option employees don't: paying pension contributions directly from the company as an employer contribution, rather than drawing salary or dividends first and then contributing personally. Employer contributions count as an allowable business expense (subject to the usual 'wholly and exclusively' test), reducing the profit that's charged corporation tax at the company's marginal rate — 19% to an effective 26.5% for 2026/27 — while sitting entirely outside the income tax, employee/employer National Insurance and £500 dividend allowance system that a personal contribution from dividend income would otherwise have to pass through first.
Both routes share the same Annual Allowance for 2026/27: £60,000, or 100% of your UK relevant earnings if lower, covering personal, employer and third-party contributions combined. That allowance tapers down to a £10,000 minimum for high earners — reduced by £1 for every £2 of adjusted income above £260,000, and only where threshold income also exceeds £200,000 — and unused allowance from the previous three tax years can be carried forward. This calculator compares both routes on your actual numbers rather than treating 'contribute more' as advice in itself.
Employer contribution via your limited company vs personal SIPP
- Employer contributions reduce your company's corporation tax bill directly, at the marginal rate of 19% to an effective 26.5% for 2026/27, and avoid income tax, employee National Insurance and dividend tax entirely on the amount contributed
- Personal SIPP contributions (relief at source) get an automatic 20% basic-rate top-up, with any higher or additional-rate relief reclaimed through self-assessment — but the money used to contribute has usually already been through dividend tax if it came from your company
- Both share the same £60,000 (or 100% of relevant earnings, if lower) Annual Allowance for 2026/27, tapering to a £10,000 minimum once adjusted income exceeds £260,000 and threshold income exceeds £200,000
- Unused allowance from the previous three tax years can be carried forward under either route, which matters if you've had a particularly profitable year and want to contribute a lump sum
- For most contractors extracting profit through salary and dividends, an employer contribution direct from the company is the more tax-efficient route, since it sidesteps dividend tax on the contributed amount altogether
