The key point first: the £60,000 annual allowance is yours as the individual, not the company's. It covers all pension contributions made in the tax year for you - employer contributions and your own personal contributions added together, across all your pension schemes. GOV.UK confirms the £60,000 figure for this tax year. So if your company pays £40,000 as an employer contribution and you add £5,000 personally, you've used £45,000 of your £60,000 - the company doesn't have its own separate allowance.
Now the salary-dividend interaction, which is where your mix makes employer contributions the attractive option. Pension tax relief rules say you only get relief on personal contributions up to 100% of your relevant UK earnings - and dividends don't count as earnings. On a low salary, a personal contribution above your salary level would get no relief on the excess. Employer contributions bypass that entirely: the company pays directly, with no earnings cap on your side (the only limits are the £60,000 annual allowance and the wholly-and-exclusively test for the company).
And the company gets a corporation tax deduction for employer contributions, with no employer NICs and no benefit-in-kind charge for you. That's the double win that makes the company route the standard choice for directors on a salary-dividend mix: corporation tax relief inside the company plus the full contribution landing in your pension.
Two things to watch. First, the tapered annual allowance: if your threshold income is over £200,000 and your adjusted income over £260,000, the £60,000 can be reduced. On a salary-dividend mix, dividends count towards adjusted income, so higher-income directors should check this before making large contributions. Second, carry forward: if you used less than £60,000 in any of the previous three tax years, you can bring the unused amount forward - useful if the company wants to pay a larger one-off contribution this year.
If instead you contributed personally, the provider would add basic-rate 20% relief automatically and you'd claim any higher-rate relief through Self Assessment - but given your low salary, the employer route is almost always better.
