Entrepreneurs

This is a French word because the traditionally conservative approach to business in Britain tended to shun success so we never invented a word for it.

My own definition of entrepreneur would include someone who looks beyond the narrow confines of the current situation and can see a wider picture. You wouldn’t expect to find an entrepreneurial solution within the ‘boring’ pensions world but you couldn’t be more wrong.

This is an area I have specialised in since 1979 and over that time have seen the most successful business people I know build up pension funds that are larger than their business. After all if you are saving 50% on the input, paying no tax on the gains or income received and have an asset which can help the business you can see the potential.

The government have also recognised the potential which is why in April 2006 they restricted new pension fund build up to £1.5m per individual (this rose to £1.8m by 2010 but is going to be reduced to £1.5m again for a few years). There is also a limit of £50k per person allowed as the maximum pension contribution in any one year from April 2011.

Commercial property occupied by the business is the most common asset held by a Self Invested Pension Scheme. This suits both the directors of limited companies and professional partnerships equally well. The pension fund can borrow money to help with the purchase and funds can be gathered from all those old policies and pension funds that are not doing anything more exciting. The business pays rental to the pension fund, for which business expense relief is available, and the pension fund receives the rent tax-free. What is of particular interest is that this is a way of buying premises out of business income instead of capital expenditure. Several directors/partners can join together to make this work but apart from family members I would not recommend employees are involved.

In theory anyone can arrange this for you but if you ask them when they set up their first scheme or how many they have set up or run over the years you may find they have limited experience.

For a discussion without obligation to see if your own ideas of how this might work for you are feasible just ring Steve on 01275 844 844.