Yes, and the relief works differently depending on your structure — as a sole trader, personal pension contributions attract tax relief through your Self Assessment return, while as a limited company director, the company can pay pension contributions directly as an employer contribution, which is deductible against Corporation Tax and doesn't count as your personal income at all.
There's an annual allowance (currently £60,000 for most people, tapered for very high earners) on total contributions across all sources that attract relief, and exceeding it triggers a tax charge rather than extra relief. For a director drawing a small salary and dividends, employer pension contributions are often more efficient than an equivalent amount taken as salary or dividends and then paid into a personal pension, because it sidesteps both Income Tax and National Insurance on the way in. If you haven't looked at whether employer pension contributions would suit your company's profit position better than your current salary/dividend split, that's worth reviewing at your next planning conversation.
Frequently asked questions
Speak to James Fitzpatrick — free consultation
Haven't reviewed employer pension contributions against your salary/dividend split? Let's look at it together.
Book a free consultation Call 07534 476727