Business owners should consider all options when planning for retirement

We are urging business owners to investigate all of the potential investment options available to them when planning for their retirement.

Life expectancy is on the rise and healthcare is becoming more and more advanced, meaning that many people are now living for 20 to 30 years after they retire.

Tracey Wickens, a Partner at the firm, says that business owners face particular challenges when it comes to retirement and that, wherever possible, they should begin planning at an early stage.

“Being a business owner can be a big advantage when it comes to retirement, with the potential to receive an income after you have stopped work or to live from the proceeds of a sale. However, with these potential advantages come a range of complex considerations,” said Tracey.

She said that many years before they plan to retire, business owners should think about whether they would like their business to continue as a going concern, whether they wish to continue receiving an income from it and whether they want to keep it in their family.

“Anyone planning on selling a business should first ensure that its finances are optimised to help secure the best possible selling price. This could take several years to achieve.

“They also need to think about whether they will dispose of the business by way of a sale of shares or assets and the tax implications of their decision,” added Tracey.

One of the most significant taxes to consider is Capital Gains Tax, which is currently levied at 20 per cent for higher rate taxpayers. The exception to this is where gains are eligible for Entrepreneurs’ Relief.

Tracey said: “Entrepreneurs’ Relief is a great way to maximise income from the sale of a business, halving the tax rate from 20 per cent to 10 per cent, where a business owner holds at least five per cent of the shares.

“Until recently, these shares had to have been owned for one year or more in order to qualify for Entrepreneurs’ Relief. However, the Chancellor announced at his recent Budget that this period would be extended to two years.

“This means that it may be beneficial for people who hold near to five per cent of shares in a business to ensure they acquire enough shares at an early stage to qualify for Entrepreneurs’ Relief when they sell up.

“Considerations such as this mean it is worthwhile seeking professional advice at an early stage.”

She said that pensions are another important aspect of retirement planning – and often the first port of call for many savers

“Equally important is structuring your investments in a tax-efficient way and ensuring that the contributions you pay towards your pensions benefit from tax relief where appropriate,” she added.

“On top of this, it is always wise to consider alternative investment options such as buy-to-let property, which is not without its challenges but can still prove to be very profitable if the right advice is sought.”

“Preparing for retirement can often look like a minefield at first glance, but with the right advice, it is easy to plan ahead for a comfortable and tax-efficient future,” she said.