MEET MARK AND JANE
Directors Mark and Jane run a successful business but were conscious that they hadn’t contributed sufficiently for retirement in the most tax-efficient way.
Mark and Jane, aged 53 and 49 respectively, are the Directors of their Limited Company which has been trading successfully for several years.
The company is profitable, and the directors anticipate that the business will continue to expand over the coming years. Within the next 10 years, Mark and Jane wish to leave the business and retire.
Godiva Wealth Management specialises in providing a professional, high quality, bespoke advice service to both private and corporate clients
WHAT DID MARK AND JANE NEED HELP WITH?
Mark and Jane have several objectives as follows:
• They are worried that their provision for retirement is less than it should be.
• Understandably, they are keen to channel surplus business profits into a pension for themselves.
• The individuals wish to make their contributions as efficient as possible for tax purposes.
HOW DID WE HELP?
We created a budget planner and cashflow model which showed the income level and capital Mark and Jane required to achieve their retirement objectives. The couple’s attitude to investment risk, investment experience and capacity for loss; were all considered in our calculated approach to the situation. We thoroughly analysed these variables to ensure our recommendations were suitable.
We concluded that they should take the following actions:
• Contribute towards a personal pension to enable the company to make contributions for both directors.
• Having consulted with the company accountant, Mark and Jane should decide to make employer pension contributions totalling £179,600.
• Monthly contributions of £1000 each to boost their retirement fund over the next 10 or so years.
• The combined contributions into their personal pensions reduced their corporation tax liability by £34,124.
• The contributions are now an asset of Mark and Janes pension fund, so it is ring-fenced from the business.
• The regular employer contributions plus any future growth of the Investments are free of income and capital gains whilst in accumulation.