For example, have you considered your future and how you will fund your income needs in retirement? Are you paying enough into your pension to cover this? If you are planning that your business will pay for your retirement, have you considered the risks involved?
And what about the company? Do you have large amounts of cash in company accounts which aren’t doing anything at the moment? You may not want to withdraw this as salary or dividends but there could be opportunities for investing it until you need it.
So, what are your options?
Pension contributions are a great way of preparing for your future with contributions attracting tax relief whether paid personally or from a company. Personal contributions benefit from income tax relief at your marginal rate and depending on the scheme, this can all be applied through payroll or basic rate can be claimed back within a pension. If you pay higher or additional rate tax you may need to complete a tax return to claim the extra tax relief.
Paying contributions from a company means you save corporation tax and potentially national insurance that would be applied to salary payments. This can be a more tax-efficient way to contribute but you should seek advice first. In addition, if you pay yourself a low salary and top up with dividends, this limits the amount you contribute personally into a pension. Company contributions on the other hand can use the full £40,000 pension annual allowance.
Another option you may like to consider is involving your spouse/partner in the company. This could allow you to pay salary, dividends or make pension contributions for them which, depending on your circumstances can be a tax-efficient way of withdrawing money from the company.
If you have spare cash in company accounts and you want this to do more than just sit there, it is possible to invest the money on behalf of the company. An important consideration if doing this is that you will want to be able to access the money if you need it, you need to manage the investment risk as it may be a shorter term investment and you need to consider how the growth is taxed and recorded on your annual accounts. We can discuss the options and suggest suitable investments that will meet these needs. As with other investments, this should be part of a longer term strategy but it can be beneficial in the right situation.
Why choose us?
bdhSterling has a long track record in Financial advice with decades of experience. Our advisors are qualified by the Chartered Insurance Institute and are driven by client satisfaction. We operate independently, which means having the whole market to choose from to ensure the best choice. bdhSterling take no fees from others so is not influenced by financial incentives. Our day in, day out dealing with various investment providers means our knowledge is constantly up to date. We operate standard portfolios that are well researched and designed to maximise returns for the least risk. bdhSterling are pension transfer specialists and are often used by other Financial advisors to support their advice.
For a free initial consultation, contact us on infouk@bdhsterling.com or call 01372 724 249
