It's nearly the end of the financial year. You are over the moon! You've made £60,000 more than last year...
You have it all planned, you’ll save most of it for driving your business forward, you’ll have a holiday and then it hits you, like a punch in the stomach – a big chunk of it will go to pay the taxman. You scale back the future plans, you say a prayer for what you have and you look at Spain again for the family holiday…but you do have options!
Most people realise that if you pay some of your profits into a pension you don’t pay tax on that money now, but paying it into a pension isn’t always an option unless you wont need to see that money again for a lot of years, but there is a solution which avoids tax and allows for future investment…its time to get ‘SSASY’.
A Small Self Administered [pension] Scheme (SSAS) could be the solution you were looking for. They cost more to set up than your standard everyday pension, but they give you an option to avoid paying some of the tax from your business, invest in its future and provide some future tax free income for you.
How does it work…well we haven’t got the space here, but suffice to say its set up WITH the approval of HMRC, any money you put in can be used to invest for the benefit of your business, maybe buying new premises (we do a lot of these) or even, and this is unique, by allowing your business to borrow from your pension fund, it can be used as a pot to put money in, ready to invest back in your business in the future, and, like any loan, you pay interest on the borrowing, it builds your pension pot whilst developing your business.
For most of our clients it gives them a great way to buy their business premises and pay rent direct from the company into their own pension pot rather than to their Landlord’s. The rental income received can then be used as a source of funding for the business in the future. In the words of one of my clients who I explained this to…’that’s brilliant!’
Who thought pensions could be SSASY? If you need to know more please give us a shout and we can point you in the right direction and help you purchase your businesses next premises with it.
Phil Dean is Head of Commercial Property at Samuel Phillips, contact him via www.samuelphillips.co.uk Floor 5, 18-24 Grey Street, Newcastle upon Tyne, NE1 6AE. T: 0191 232 8451