Going self employed- questions?

Roger175

I have been in the position most of my working life of being either the director of a limited company or self employed. In both instances, I opted to make my own pension provision and simply made a lump sum payment once a year into my SIPP. The value of this being determined by what was necessary to avoid paying any higher rate tax. This ranged from anything between a few thousand to a few tens of thousand depending on how successful the year had been, but I've never paid a penny in higher rate tax as a result of the pension contributions and for me, it was the secret to being able to take early retirement.

I have a feeling it would have been more efficient for the company to have made the payments when I was a director, but for various reasons this didn't happen.  

On a broader level, you need to be quite disciplined when you go self employed. Make sure you set aside money to pay the tax, keep meticulous records, fill in your tax return early in the tax year whilst everything is still fresh in your mind etc. Also, bear in mind you will need various insurances, I'm not sure if you will need Professional Indemnity Insurance (I did) and it's quite expensive and I am now in the position, having retired of having to pay for run-off cover for the next 6 years.

Incidentally, when I came out of the director role and worked my last few years as a self employed sole trader, the decision not to set up another ltd company was made purely to avoid the IR35 issue, since I did about 85% of my work for one client.