Ensuring Business as Usual: Lucas Fettes
Planning your exit early is essential to secure the right outcome for you, as is working with your professional advisers to explore your options and determine how financially viable these are. These options include, but are not limited to:
- A market sale
- A management buyout
- An employee ownership trust
Striking the right balance
It is important to consider a balance between your future and that of the business and its many stakeholders. If your next step is retirement, forward planning can help provide additional financial freedom in the future.
Making pension contributions via your company is perhaps the simplest way to extract surplus cash from your business efficiently. Where things become difficult for high earning business owners is:
- Understanding your yearly contribution limits eligible for tax relief
- Planning around the lifetime limit on pension savings
- Maintaining discipline over the years in relation to funding your future
Suitable financial advice and holistic planning can help to address these issues. Beyond pension contributions and drawing profit optimally across salary and dividends, you might achieve further profit extraction via specialist investments that offer additional income tax relief. However, financial advice is advisable given the high-risk nature of these investments.
Put your plan together early
Planning for your retirement ahead of time ensures that you know how your exit strategy supports your transition from working life. Like a business plan, a suitable retirement plan gives you the best chance of success.
A good retirement plan should cover:
- Your financial needs and aspirations, including timescales for each
- A breakdown of your essential and discretionary spending needs to help evaluate your position
- A retirement cash flow forecast, including all sources of current and future income and assets
- Ongoing tax planning to maximise your wealth and ensure optimal tax efficiency
- Periodic reviews to help you remain on track and/or address any potential issues
The benefit of planning your retirement early is that it gives you a target to aim for and defines the level of income and wealth required to succeed. This, along with the support of all your professional advisers from the outset, better equips you for the future.
Please do get in touch with us for further information.
This article constitutes a financial promotion. The way in which tax charges (or tax relief, as appropriate) are applied depends on individual circumstances and may be subject to future change. The value of investments can fall as well as rise, and you may not get back the amount you originally invested. Lucas Fettes Financial Planning® is a registered trading name of Lucas Fettes & Partners (Financial Services) Limited and is authorised and regulated by the Financial Conduct Authority.
Nathan Munt is a Chartered Financial Planner at Lucas Fettes Financial Planning, a multi-award-winning chartered firm of independent financial planners.
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