Salary and self employed retirement planning

judi24

My situation is a little complicated - well very complicated for me as i really don't have a clue about pensions and self employed tax rules etc so please bear with me!
I have a substantive full time post in the NHS - my annual salary is around 65 k - I pay 13% into the NHS pension and my employer paid 14% i think - I have been in the NHS England pension since 1999 (21 years) i have tiny amount in NHS Scotland pension which I can't transfer - was paying into this for 2 years or so
I also do some additional part time self employed work - teaching etc which I currently pay tax on as a sole trader - this amounted to 12k last year and will most likely be around 20k this year.
I am 51 and would like to retire from my NHS job as early as possible and carry on with my self employed work - i appreciate i can't take my NHS pension until I'm 55
I can afford to comfortably live on my NHS salary and I would like to know how to maximise my income at retirement with my self employed income
I also have a mortgage of 130k over a further 16 years on a property worth 290k 
So my questions are:
Should I open a private pension and pay my self employed income into that - either as sole trader or set up a limited company - does it make any difference? 
Or should I just pay more off my mortgage so that I have greater equity at 55 - I would be able to sell and downsize at any point after 2022 when my youngest leaves school
I do not currently have any savings as I have been in all of my adult life and finally got my act together and paid it all off and have a reasonable income - but i want to use my additional income now that i am not servicing debt wisely and I don't know where to start!
Any advice would be gratefully received 

Brynsam

If you have no savings, then building up a nest egg for the proverbial rainy day might perhaps be a priority - the aftermath of COVID19 (not to mention the 'during') may have unexpected and unwelcome financial consequences for many, so possibly planning for that would be no bad starting point.

Have a read of the differences (particularly in tax) for self employment/operating through a limited company: https://www.gov.uk/browse/business. Paying pension contributions through a limited company can legitimately avoid NI (and you'll have a full contribution history through your NHS work).

Paying off your mortgage always feels attractive, but it rather depends on how good a mortgage deal you have. Without knowing that, it's impossible to comment.

judi24

Thanks for your comment - my plan is to keep saving the extra from my self employed work until the end of the year - I think that will be around another 8 k and save that then look to use it after Jan 2021 to either invest in a private pension or pay off mortgage. My mortgage rate  is 2.5% fixed until October 2021. My main concern is whether paying into a private pension for a few years is worth it compared to reducing my mortgage and whether using a limited company would bring me any benefits in relation to tax. I have actually been very lucky through covid (or unlucky depending on your view) that people want to pay me to do lots of work i am in a very front line role!  - and I cant see that see that changing - i have also loved having a simpler life (work, swim and sleep mostly!) and have no plans to make it more complicated again! 

Albermarle

The question about paying off a mortgage quickly or investing money instead comes up time and time again on this forum. 
Probably worth spending an hour scrolling through a few pages of threads to find some similar questions and answers.
To summarise 'it depends ' and is largely down to your own personal circumstances and preferences .
Be clear that if you start to contribute to a personal pension , you will get some tax relief and  the money will be invested within the pension in funds related to the financial markets , which can go down as well as up . The longer you stay invested the more likely to get a positive result , so if you were thinking of maybe taking money from a personal pension within just a few years , the maybe not the best idea.
Personally I do not think £8K is enough for cash savings either .
using a limited company would bring me any benefits in relation to tax. I
Have you read the link that Brynsam posted ?
 I would be able to sell and downsize
I have no personal experience of this , but I have seen comments that it is not as easy as it sounds . I think when you start looking at smaller cheaper properties , you may not like what you see and/ or instead move to a nicer area . In which case less equity is released than first planned.