Self employment and pensions, notes from 26th March 2025
Posted by Paul Silver
On the 26th March, eleven freelancers gathered in the Lord Nelson Inn to talk all thinks freelancing and tech. This is some of what we talked about:
- Working when tired
- Getting new work via open source and your network
- Limited company tax setups
- Sole trading and claiming expenses
- Walking as exercise and distracting yourself while exercising
- Working for a client in the USA
- Self employment and pensions
- Intense car chat
- Bungeroosh and Brighton properties
- Self unemployment
- Japanese Kitkats (thanks Sam!)
- A potential cure for rheumatoid arthritis
- Nostalgia corner – rental TVs and VHS recorders, retro consoles and games, Panda pop
- Pebble watch returns!
- Home assistant and home automation, yes or no?
Self employment and pensions
This is not going to be comprehensive as I know I don’t know enough about pensions to give proper advice about them.
If you are self employed, you can pay into a pension.
You should pay into a pension as it’s a really good way of saving money for when you’re retired. The best time to start one is when you’re young, but I missed that and it will still help me even though I started one in my 40s. Having anything is better than having nothing.
If you have a Limited company, pay into your pension direct from the Limited company as you can pay up to £60,000 from the company into the pension in a year and you won’t have to pay tax on it (this is because you don’t get the tax relief you would as a Sole Trader or employee.) So it’s better than paying from your company to your personal account, then out to the pension, as you’ll pay tax on the money as it is paid to you first.
If you’re a Sole Trader, you pay into your pension from your bank account and most pension plans will automatically collect tax relief for you.
You can have a pension from a standard provider like PensionBee, or have a SIPP (Self Invested Personal Pension) which gives you a bit more control. Popular SIPP providers are Vanguard, Hargreaves Lansdown, Interactive Investor.
A low-hassle set up is to pay money from your company into, say, Vanguard, then invest the money in an Index fund, which is a collection of shares the company have chosen for you. The general idea is an Index fund of, say, all the companies in the FTSE 100, will perform better than you will picking individual shares. Vanguard specialise in Index funds. If you do want to pick the shares of individual companies as there are some you are sure will do well, a company like Hargreaves Lansdown let you do that within your SIPP.
Many pension funds are struggling at the moment as the tariffs and general uncertainty from the United States are affecting the stock markets. In a long term investment like a pension, it’s best to try to ignore things like this. Getting money into a pension and keeping it there works out over the long run.