Use your pension to grow your business

The days where you just pay money into a pension run by an insurance company who won‚Äôt really let you do anything with it are thankfully¬†gone.¬† Pensions have actually got sexy ‚Äď and¬†should now be seen as a¬†very¬†useful tool for business owners to make the¬†most of¬†for a number of reasons.

  • Pay less tax:¬† This reason is fairly obvious but pensions are still the most tax efficient way to extract profits from a company.¬† The new pension rules mean that your pension fund is also far more flexible and accessible than it was before so pensions really are a great tool to use in corporate tax planning
  • Purchase a property:¬† You can use your pension fund to purchase a property for your business.¬† You can still get a mortgage if you need one too and what‚Äôs even better is your business will rent the property from your pension which is another really tax efficient way to extract profits from your business.¬† You can also pool the pension funds of a group of directors who may wish to own a property jointly.
  • Lend money to your business:¬† In the days of much tighter credit facilities, using your pension fund to lend money to your business can be a valuable source of finance to many small businesses.¬† There are rules around this and it is not right for everyone but this can be a great way to leverage your pension fund in the right circumstances.

Many business owner will ignore their accumulated pension funds once they start their business in the belief that a future sale or ongoing income from the business will be the solution to their retirement income needs.

However often the best strategy will be to utilise your pension fund either through profit extraction or purchasing a property to not only help the business grow now but also to reduce the risk of over-reliance on a potential future business sale.

We are experts in helping business owners with retirement planning strategies and making the most of their accumulated pension assets.  Get in touch if you would like to know more about how we can do this.

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