Pensions come into their own

If you’re a business owner who’s ignored pension provision until now, the new regime should make you sit up and take notice.

In the past, it’s been hard to persuade some small business owners to take pensions particularly seriously. Many may have had other investments and will have been relying on them to produce a suitable income in retirement. The restrictions in the pension rules and what you were able to draw down was certainly a psychological obstacle for a number of people.

Since the change in the regulations earlier in 2015, clients have definitely been taking more notice and have been actively reviewing their options. Some have decided to increase their company pension contributions, restrict their personal income and take tax-free cash straight away. As it’s possible to go back three years in your calculations, contributions per individual can be maximised.

When you put in additional pension contributions and draw tax-free cash, it may be possible to preserve your personal allowance for the current year. What’s more, by reducing your income, you may find yourself going down the marginal tax bands.

The company gets relief on the contributions and individuals are entitled to draw up to 25% of the fund as a tax-free lump sum. (If you draw any income, you restrict the amount you can pay into pensions in the future.)

Another point worth making is that the pension fund can be quite a useful and low-cost life assurance vehicle. That’s because if you die under the age of 75, the proposals are that the full fund will go tax free to any nominated beneficiary. 

In some instances, it may be possible for a pension scheme to purchase a commercial property from the individuals that currently own it, effectively releasing equity into their own names. As well as helping with cash planning, this strategy can also reduce exposure to inheritance tax.

So now, with the new regime in place, there are plenty of interesting talking points. Pensions are a more important part of the equation than ever because of the increased freedoms. 

With changes to dividend rules coming into effect in April 2016, we expect to be having even more conversations with clients who are looking at this issue in a new light.

How mums can give birth to new businesses

It’s definitely possible to achieve business success while raising a family.

It’s easy to think that being a mother and owning a start-up business are incompatible. Anecdotal evidence, however, suggests that the phenomenon is becoming more and more common.

Our advice is that if you have a good idea and the confidence to pursue it, you should follow your instinct. Don’t automatically assume that having a young family is going to stop you.

Of course, there’s a need for discipline if you’re going to balance work with family life. If you’re not organised and efficient in the way you work, then you won’t be able to achieve a sense of equilibrium. But it’s usually a matter of working smarter rather than working longer.

Are you generally flexible and adaptable? If so, you’ll be able to deal with the unexpected, which is an inevitable part of running a successful business. Looking after kids may demand many of the same skills, in fact! 

It’s important that you set the terms. You need to work in a way that suits you and shouldn’t think that what someone else has done is necessarily a good model. This is a personal balancing act.

Finding a good accountant and taking their advice is a critical first step. They will advise you on how to get started, the different structures you might consider and the way in which you’re going to remunerate yourself. They’ll also have plenty of advice on potential pitfalls. 

At a practical level, your professional adviser can take charge of admin such as book keeping, payroll, VAT and tax. All responsibilities which can often become a troublesome burden for a fledgling entrepreneur.

So don’t let being a mum stifle your business ambitions or creativity. There’s plenty of help out there and you can make it work.