Pensions
Now that IR35* is in place, pensions are one of the few effective tax breaks open to contractors. They allow you to invest money directly from your company bank account into your pension.

This allows you to avoid paying the income tax and the national insurance you would have paid if you had to contribute from your personal salary. In addition you can reduce your employers NI contributions.

*The Intermediaries legislation, now commonly referred to as 'IR35', was introduced on 6th April 2000. The aim of the legislation is to eliminate the avoidance of tax and National Insurance Contributions (NICs) through the use of intermediaries, such as service companies or partnerships, in circumstances where an individual worker would otherwise; For tax purposes, be regarded as an employee of the client and for NICs purposes, be regarded as employed in employed earner's employment by the client.