For limited company contractors, saving into a pension remains one of the last tax breaks available and if they want to have a better retirement, these benefits should not be overlooked. We look at all the latest developments and what it means for contractors.

Contractors can currently save up to £40,000 per year tax free into their pensions (with a lifetime allowance of £1.25m) The big benefit is that their contributions can be made from their limited company’s income – these are invested before tax and are classified as a business expense, resulting in a 20% corporate tax saving. Or if investing from their salary into a personal pension, contractors will still benefit from the 20%, 40% or 45% tax relief that permanent employees receive for their company stakeholder pension schemes.