Financial Strategies for Contractors: Protect Income, Reduce Tax & Build Wealth
There’s plenty of opportunity for skilled professionals to work as independent contractors with national and multinational firms. The rewards are clear—higher earning potential, career freedom, and flexibility.
But there’s a catch: contractors typically receive no employee benefits. That means no life insurance, income protection, or pension—just a day rate.
That’s where Financial Health comes in. We specialise in helping contractors across Ireland protect their income, reduce taxes, and build long-term wealth—especially if you're operating through a Limited Company or Umbrella Company.
Understand what you had as an employee
Life Insurance (Death in Service):
Typically provided as a lump sum payment of 3–4 times your annual salary, payable to your next of kin if you were to pass away while employed.
Sick Pay and Income Protection:
Many employers provide contractual sick leave, covering your salary for a set period if you cannot work due to illness or injury. After this period, an income protection policy arranged by your employer may continue to pay a portion of your salary until you return to work or reach retirement age.
Pension Plans:
Employers often set up group pension schemes where both you and your employer make contributions. These contributions are usually a percentage of your gross annual salary (for example, 3% each), helping you build long-term retirement savings.
Let’s Replace what we need
Private Life Insurance
Unlike employer-provided cover, a private life insurance policy gives you greater flexibility and control:
Choose the Level of Cover: You can insure for the amount you feel is necessary to protect your loved ones, often much higher than the 3–4 times salary typically offered by employers.
Include Your Partner: You have the option to insure your partner, which is not possible under most employer schemes.
Flexibility in Duration: You decide how long the policy runs—whether it’s just for the length of a contract or on an indefinite basis.
Consistency Across Jobs: If you change employers frequently, having your own policy ensures you remain protected regardless of your employment situation
Executive Income Protection
If you’re a contractor using your own limited company or a Director’s Umbrella, Executive Income Protection is one of the smartest ways to protect your income while reducing your tax bill.
Company-Paid Premiums: Your company, not you personally, pays the premiums.
High Cover Levels: Insure up to 75% of your income.
Tax Deductible: Treated as a legitimate business expense, reducing your company’s corporation tax.
Long-Term Security: Cover can continue until you return to work or reach retirement.
Example: If the annual premium is €1,000, the effective cost after tax relief could be as low as €480.
This ensures both you and your company benefit financially.
Private Pension Contributions
Making pension contributions through your company is one of the most powerful tax planning tools available to Irish contractors.
You have access to all providers on the Irish market, not restricted you to the Employers choice.
Flexibility to invest in the funds you want
Choice of a PRSA or Master Trust structures.
Why it works:
When you invest in your pension, the money is not taxed. it’s fully exempt from taxation, meaning you keep 100% of what you earn.
No Benefit in Kind (BIK) + you do not pay income tax, USC, or PRSI
Treated as a fully deductible company expense
Contribution limits are significantly higher (up to 100% of your salary)
Take Control of Your Contractor Finances
If you're contracting through a company in Ireland, you can access highly efficient financial planning strategies to:
Step 1: Reduce your tax bill
Step 2: Protect your income
Step 3: Build long-term financial security
These are not loopholes, but legitimate, revenue-compliant strategies designed to put contractors in control of their financial future.