How Do I Plan My Pension as a Business Owner?

We don’t often think about pensions until later in life, but if you are a business owner, then you should prioritise it. Owning a Limited Company does not mean that you cannot have a pension; you just have to think about it and plan it, rather than simply expect it.

Pension planning is crucial if you want to retire in comfort and peace; the sooner you start doing it, the more you will have available in later life. There’s no time like now!

Make Investments

People tend to hear the word ‘investment’ and panic about it, but you don’t need a big lump sum to make an investment. Stocks, shares, and ISAs are all brilliant ways of investing and setting you up for retirement. The best part? It’s a tax-free income.

Private Pensions

Taking out a personal pension can be very beneficial in the long-term, and the short term investment isn’t something that most of us would miss having. Workplace pensions are great, but having something in addition to this will truly benefit you in the long-run.

Limited Company Pensions

A Limited Company pension is a great way to extract funds from a business, and it is also beneficial to company accounts. Company pension payments are company expenses, and can, therefore, reduce Corporation Tax. In order to qualify for the deduction, you need to pay the pension contributions before the end of your business’s financial year.

Using Pre-Tax Profits

As a business owner, you may be able to contribute up to £40k to your pension by using pre-tax profits from your company. You can also use the ‘carry forward’ rule to use up unused claims for the previous three years.

Let’s say a 25-year-old wanted to retire on a two-thirds pension at the age of 65; they should be stockpiling 15% of their salary every year. It pays to know these figures.

We always advise to seek help from a professional and qualified accountant, so if you need assistance, please get in touch. You have every right to a pension as a business owner, and we can help you in doing so along the way. We can provide you with bespoke tax planning to help you and your business. If it’s a new business, then please take a look at our free ebook; it’s designed with you in mind and is there to kickstart your company.