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Employer pension contributions

Transfer to Vantage

Great tax savings for both employers and employees

When your company contributes to your pension, both you and the company can save tax. Simply complete our employer contribution form to start or top up a SIPP with an employer contribution.

Make an employer contribution

Investments can go down as well as up so there is always a danger that you could get back less than you invest. Nothing here is personalised advice, if unsure you should seek advice.

What is an employer contribution?

It's a payment made by an employer into an employee's pension. The contribution could be in the form of salary sacrificed by the employee or come direct from the company.

What are the benefits of an employer contribution?

  • Business owners and company directors:
    Contributions to an employees pension can be offset against corporation tax.
  • Sole traders and partnerships:
    Contributions to employees can be offset against the income tax liability.
  • Employers:
    Unlike salary, pension contributions are exempt from National Insurance of 13.8%.
  • Employees:
    Subject to the employer’s approval employees can save tax and National Insurance by sacrificing part of their salary with a pension contribution.

Tax is a complex subject so if you're at all unsure you should seek professional advice. Tax benefits depend on individual circumstances and tax rules can change.

  • By replacing part of your salary with an employer contribution, you can achieve greater tax savings than if you made a personal contribution.

    The difference between personal and employer contributions

    Personal pension contributions

    When a salary is paid to a basic rate taxpayer, it is subject to income tax (20%) and National Insurance (NI) (12%). This means for every £1,000 of salary, a total of £320 is deducted, leaving £680 after all tax has been paid.

    If you added £680 to a pension using a personal contribution, you would receive basic rate tax relief (20%) meaning your contribution would automatically increase to £850. However, you cannot reclaim the National Insurance contribution - see an example in the table below.

    Employee contribution Salary Tax & NI deducted Amount paid into pension Tax relief Total in pension
    Personal £1,000 £320 £680 £170 £850

    Employer pension contributions

    An alternative is to sacrifice some of your salary in return for an employer contribution. An employer contribution is paid into the employee’s pension with no deduction of income tax or National Insurance. Therefore, using the example above, the full £1,000 would be added to the employee's pension, saving tax of £200 and National Insurance of £120 for a basic rate tax payer.

    Additionally, when making an employer contribution the company doesn't pay National Insurance. The company could choose to pass this saving on to the employee's pension. For example, the employer's saving on a £1,000 contribution is £138 (NI). If this was added to the pension, it would take the total employer contribution up to £1,138. The table below illustrates this. Please note tax rules can change and any benefits depend on an individual's circumstances.

    Employer contribution Salary Tax & NI deducted Amount paid into pension Tax relief Total in pension
    Excluding NI Saving £1,000 £0 £1,000 £0 £1,000
    Including NI Saving £1,000 £0 £1,138 £0 £1,138

    Please note, your employer may choose not to offer this option.

    Download our employer contribution form

    Find out more about the Vantage SIPP

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How much can my employer contribute?

Unlike personal contributions, employer contributions aren't limited to what the employee earns. A company could contribute more than the employee's earnings - up to the current annual allowance of £40,000, or up to £160,000 in some circumstances if using carry forward. If the employee has 'adjusted income' over £150,000, contributions might be limited to £10,000 - see our factsheet. If the employee has already accessed a pension, different rules can apply.

This is particularly beneficial for controlling directors who often take a small salary and large dividends to benefit from the tax advantages. As dividends don’t count as ‘relevant UK earnings’ the amount of personal contributions they could make is low. However, with an employer contribution, they can receive contributions greater than their salary, giving them more money in retirement.

NOTE: HM Revenue & Customs (HMRC) could question the contribution if the total salary and benefit package is excessive for the work undertaken. Contact your accountant if in doubt.

How can I make an employer contribution?

If you’re authorised to make payments on behalf of your company, and you’ve registered your company details with us, you can use your company’s debit card to make employer contributions to your HL SIPP online. Unlike a cheque or bank transfer, you won’t have to wait for the cheque to arrive or your money to clear. It will be available to invest right away.

Before applying please make sure you've read and understood the:

SIPP Key Features (including Contribution Checklist)

Terms and Conditions

Important Investment Notes

Simply log in to your account as normal and click the blue ‘Top up’ button. You’ll see the ‘Employer contribution’ tab, where you can enter your company debit card details and make a gross contribution to your SIPP. Before applying, it’s important you understand the risks and features of the HL SIPP.

If you’d like to register your company details with us so you can make contributions online, just call 0117 980 9926. We can set everything up in one phone call.

If you aren’t authorised to make payments on behalf of the company, your employer can pay in by cheque, bank transfer, and/or Direct Debit. Employer contributions are paid gross. This means basic-rate tax relief is not deducted from the contribution. We also accept employee contributions which are paid by the employer and deducted from net pay (after tax and National Insurance). To do this, you’ll need to complete this form.

Make an employer contribution