Running a profitable business is hard work, so it’s understandable if you’re more focussed on the day to day running of your business than planning for your retirement. But with tax year end fast approaching, it’s an ideal time for you to take a step back from the day job and think about pension saving as part of your wider financial planning.
You might see your company as your retirement nest egg, but not every person will be able to depend on this; things may not work out as planned. Saving into a private pension alongside your business should prove a less risky strategy!
Here are three things to consider when considering making pension contributions through your company:
1. Reducing tax on profits
Your limited company can contribute pre-taxed business income to your pension. Because employer contributions typically count as an allowable business expense, your company could receive tax relief and save 19% in corporation tax.
2. Certainty in later life
Instead of relying on the notion that “my business is my pension”, why not provide yourself with a more stable retirement income by building a robust pension pot and choosing a variety of investments that diversify the investment risk? After all, can anyone accurately forecast where their company will be in 10, 20 or 30 years, and whether it has a commercial value and a willing purchaser?
3. Leaving a legacy
Modern pensions can offer a tax efficient inheritance for loved ones with simple access. Could this be said of a company, even if your spouse, partner or children did want to take on the running of your business?
Why not watch our video to learn more?
A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.
If you have any questions around this topic, please feel free to get in touch with us directly on 01789 263888 or email firstname.lastname@example.org.