Pension Advice for Business Owners
Posted on 28th October 2020 at 09:00
If you own a business, there are an awful lot of things to keep on top of in order to stay in control and turn a profit. As a result, organising your pension may have been on your to-do list for quite a while and you never seem to get round to it, which simply doesn’t have to be the case.
The team here at TreyBridge Accountants can help you to set up your own pension quickly, easily and with zero stress, which comes with multiple benefits.
Who can take out a pension?
All types of business owners can have their own pension, including sole traders, directors of limited companies and those who are involved in a partnership. In other words, no matter what you do and how you work, there’s a pension designed around your individual circumstances and goals.
What are the different types of pension?
This is where it can get a bit tricky, as there’s a variety of pensions to choose from:
Standard Personal Pension
Stakeholder Pension Scheme
Self-Invested Personal Pension (SIPP)
National Employment Savings Trust (NEST)
Small Self-Administered Scheme (SSAS)
Sharia-compliant Pension, which works under Sharia law and prevents the investing of funds into companies that produce alcohol
Each of these comes with its own pros and cons, and the best way to choose which will best suit your objectives is to give us a call on 01482 223575 for some free advice. We also have a useful document explaining how tax relief works on pension contributions - if you'd like this for free, please email firstname.lastname@example.org
Meanwhile, all of these pensions come with common benefits:
In the case of limited companies, employer contributions (including those into your own pension) are considered a business expense and offset against your corporation tax.
Sole traders and partners also receive tax relief from their pension contributions, making them financially efficient.
All personal pension contributions are exempt from Income Tax charges.
From the age of 55 you can withdraw up to 25% of your existing pension pot as a tax-free lump sum. The remaining 75% can also be taken out whenever you wish and in any quantity, although this will be liable to Income Tax.
You can choose which type(s) of pension(s) you take out, which can range from a simple savings account to a portfolio of well-informed investments.
When it eventually comes to selling your business, you can take advantage of pension allowances and reduce the amount of Capital Gains Tax that will apply.
The main point to take away is that having a pension isn’t just a wise move, it’s a crucial one. Each year that goes by without a pension in place is a tax-efficient opportunity wasted, so don’t put it off any longer than you need to. The sooner you start saving properly, the faster your nest egg will grow.
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