Can a pension payment turn a profit into a loss?

Pension contributions are an effective way to mitigate tax bills and plan for your retirement. Here we answer the question ‘Can a pension payment turn a profit into a loss?’ Read on to find out more.

Personal or company contributions

Making pension contributions are a good way to mitigate tax bills and arrange for retirement. As a general rule, it is more tax efficient for pension contributions to be made via your limited company rather than making these personally.

Corporation tax relief timing

A company is only entitled to corporation tax relief on pension contributions in the period in which the contributions are paid and not when accrued for accounting purposes.


If making a pension contribution in the year creates or increases a loss, tax relief is still available. This is achieved via carrying back the loss against last year’s tax bill or carrying forward to be offset against profits in the next year.


If employer contributions plus any you pay personally exceed the annual allowance, you’ll be liable to a tax charge.

If you want a detailed analysis of whether or not you should make pension contributions via your company or personally then please get in touch with us.

AJN Accountants are specialists in helping contractors, freelancers and small businesses to save tax and time.

Please contact us for more information:

T: 020 3866 8951

Follow AJN Accountants on Twitter for regular updates.