Extracting business profits

Joe's story

Joe Robertson came to us following the retirement of his previous “pension guy”.  He had worked for a large national engineering company for several years but had recently broken ties to establish his own specialist firm, along with a colleague.

The new business became successful and profitable very quickly and, with Joe’s move from a fixed salary to owning a business with variable profits, our planning reviews turned to discussing the options for efficiently and appropriately dealing with Joe’s share.

Working in close collaboration with Joe’s accountant, it was agreed that the business would contribute to Joe’s pension.  There were various limits to be aware of and some detailed checks were required – liaising with Joe’s previous employer as well as his personal pension scheme – to ensure there were no unintended consequences.

Case Studies

The outcome

It transpired that a considerable amount was able to be added to Joe’s savings over a couple of years, legitimately reducing the company’s tax liabilities and opening up considerable flexibility for Joe’s retirement.

As part of our ongoing work with Joe, we also carried out some lifetime cashflow planning.  As a result of our various projections, Joe realised that he was able to bring forward his ambition of moving to part time work and spending more time with his grandchildren and on the golf course.  The business has brought in a technical manager to take on a lot of the workload, allowing Joe to take more of a back seat.

Joe’s retirement plans have now begun to come to fruition, and he is taking advantage of flexible top-up income from his pension, when he needs it, on top of his part-time earnings.

A pension is a long-term investment and the value is not guaranteed. Any advice or considerations are personal to each individual’s circumstances.  The value of investments may go down as well as up and you may get back less than you invest.  The Financial Conduct Authority does not regulate some aspects of Cashflow, Trust, Tax and Estate Planning.