When selling up isn’t enough

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“My business is my pension” is the answer that I hear almost every time I ask a business owner about their retirement planning.

By Kevin McKenna, associate partner, St James's Place Wealth Management.

However, this entrepreneurial thinking and lack of planning can have serious consequences in the future. When things are good “I will sell my business” is a great strategy. However, there are risks and uncertainty with this strategy; there must be a more balanced way to manage this risk and help prepare for your financial future.

Questions to consider:

What if you cannot find a buyer when YOU want to sell? You don’t realise the price that you want? What are the other options? Complimenting this strategy by redirecting remuneration or profits from the business into a pension as part of your retirement planning is a viable solution. The tax advantages generally surprise business owners:

Advantages

Contributions are a tax-deductible Your pension is not subject to Inheritance Tax or Capital Gains Tax Tax efficient way to extract profit out of the business Benefits from tax relief on the contributions

Disadvantages

Funds are tied up until retirement Future investment returns are not guaranteed Contributions over the lifetime allowance will be taxed There is a limit to what can be invested this way Take some time and consider your options for taking even more control for your retirement. For more information, please contact me on kevin.mckenna@sjpp.co.uk

The value of an investment with St. James’s Place will be directly linked to the performance of funds selected and may fall as well as rise. You may get back less than the amount you invested.

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances. The Partner represents only St. James's Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the Group's wealth management products and services, more details of which are set out on the Group's website at www.sjp.co.uk/products. The title 'Partner' is the marketing term used to describe St. James's Place representatives.