As part of the freelance work i do, i charge a pre-agreed pension contribution from the client. I include this cost on the invoice that i send to the client. This fee is then paid directly into a pension scheme. How do i categorise this correctly on the invoice so that it does not count as a sale for accounting purposes?
You probably need to consult your accountant or a financial adviser on this one - I don’t think you can account for this the way you’re suggesting. The money that the client pays to you is business income.
If you’re a limited company you might be able to treat the pension contributions as a business expense to net it off but I’m pretty sure you can’t do that if you’re self employed - the money you pay from the business bank account into a personal pension scheme would be treated as drawings, not as a deductible business expense, so the money your client paid you counts towards the taxable profit of your business.
But then you as an individual get tax relief on your contributions when they reach the pension pot so I guess it has more or less the same effect overall - like I say, you ought to talk to a professional to be sure.