Three In 10 Business Owners Have No Pension

nuse.

Three in 10 business owners do not have a pension independent of their business, according to Rathbones Group, one of the UK’s leading wealth and asset management firms, warning that millions may be taking unnecessary risks with their future finances.

Rathbones polled 3,092 UK adults, including almost 10% business owners, and also found that 44% do not even hold an ISA of any kind. The vast majority (95%) have money in savings accounts and/or Premium Bonds, suggesting many are prioritising short term cash over long-term planning.

Faye Church, Senior Financial Planning Director at Rathbones, based in Guildford, says:

“We often meet owners of successful businesses who see their company as their retirement plan and prioritise reinvesting back into the business over pension saving. That’s often driven by a desire to grow the business, and the belief that a future sale will ultimately take care of retirement. But relying on a business alone to fund later life is a risky strategy."

“The future is unpredictable. Small businesses can be hit by economic shocks, supply chain disruption, losing customers or a crisis no one sees coming. That makes it hard to know what your business will be worth when you eventually step back – or even whether you’ll be able to sell it at all."

“Without a pension, you could end up with far less to live on than planned, and even a successful sale may still fall short of funding the lifestyle you want in retirement.”

Looking specifically at entrepreneurs, almost a quarter (24%) of respondents said they do not have a pension. More than a third (36%) said they do not have an ISA, although 95% do hold savings and/or Premium Bonds.

Gordon Lawrie, Senior Investment Director and Head of Edinburgh Office at Rathbones says:

“From our dealings with early-stage businesses, there are often many competing financial pressures, from irregular cash flow and reinvesting in the company to paying down borrowing or covering personal expenses,”

“But for limited company owners, contributing to a pension can be one of the most tax efficient ways to extract money from the business and invest for the future.”

Why pensions are still powerful for business owners

Faye Church says:

It’s common for business owners to prioritise tax efficient income today, typically taking a small salary within the personal allowance and the rest as dividends. That approach can create the false impression that pensions aren’t worthwhile, particularly if your salary sits below the income tax threshold. In reality, pensions can be one of the most tax efficient ways for business owners to invest for the future.

Tax relief on personal pension contributions

When you make a personal contribution to a pension, the government automatically adds basic rate tax relief. For every £100 you contribute, HMRC tops it up by £25. Higher and additional rate taxpayers can also claim further tax relief through self-assessment.

Employer contributions from your limited company

Limited company owners can make employer pension contributions directly from the business rather than paying themselves and contributing personally. These payments are made from pre tax profits and do not attract National Insurance. With employer NI set at 15% from 2026/27, this can represent a significant saving compared with taking the same amount as salary.

Reducing your corporation tax bill

Employer pension contributions are treated as an allowable business expense and can be offset against a company’s Corporation Tax bill. Depending on the rate paid, this could reduce Corporation Tax by up to 25%, making pensions one of the most tax efficient ways to extract profits from a business.

Higher limits and more flexibility

Business owners can currently contribute up to £60,000 a year into a pension. The removal of the Lifetime Allowance also means it’s now possible to build a larger pension pot without the risk of additional tax charges. Where a spouse is involved in the business, making pension contributions for them can further improve household tax efficiency.

Why professional advice matters

Pensions can be highly tax efficient for business owners, but the rules are complex and what works best depends on income, profits and long-term goals. Allowances and tax treatments can change, and mistakes can be costly. Regulated financial advice can help ensure pension contributions are structured efficiently and support wider retirement and income plans.

Categories

Jun 4, 2024
2 min read

The Godalming High Street property that houses JD Wetherspoon, Fat Face and Snap Fitness has been bought by Queensbury Investments Ltd through property consultancy Vail Williams, which also manages the building.

A prominent building at the heart of Surrey market town Godalming has been sold off-market for £2.52 million. Property consultancy Vail Williams, acting on behalf of a private client, sourced a purchaser for 48-56 High Street.

Queensbury Investments Ltd is the new owner of the property, which is let to pub chain JD Wetherspoon, operating as the Jack Phillips, which is named after a local man who was the heroic radio officer on the ill-fated Titanic.

Hampshire-based clothing firm Fat Face and 24-hour opening gym Snap Fitness are the other tenants.

The building generates £265,431 per annum in rent, representing a net initial yield of 9.9% for the purchaser.

Vail Williams Senior Surveyor Ben Duly and Associate Ed Martin worked closely with their client in bringing the deal to a successful conclusion.

Ben, based at the firm’s office in Bournemouth, said:

“We were instructed to dispose of the property. After speaking to a number of parties we felt might be interested in the off-market opportunity, a competitive bidding process was held and the property sold to the highest bidder."

“The result was a great deal for both vendor and purchaser. At a time when retail investments can still be reasonably tricky, it demonstrates yet again that investors remain confident in retail bricks and mortar.”

Vail Williams has managed the building for a number of years through Ed, working out of the Southampton office, who is being retained by Queensbury Investments. He said:

“We are delighted to be retained by the purchaser. As property manager, we maintain the common parts, inspect them frequently and deal with issues identified."

“We also deal with the service charge management, which includes budgeting for expenditure and annual service charge reconciliations in accordance with the RICS. Because we have built up a good relationship with the tenants it helps obtain a steer on how their businesses are performing."

“We take a collaborative approach with the client and the tenants to ensure we deliver the best possible service and take overall responsibility for the building.”

Vail Williams’ 31 property asset managers look after almost 400 properties across the UK, with a rent roll of £44 million-plus.

Queensbury Investments Director Ross Kemp said: “

We are grateful to Vail Williams for approaching us regarding this off-market opportunity as they knew we had other assets in the town. It complements our commercial property portfolio in the immediate vicinity.”

Law firm Penningtons Manches Cooper acted for the vendor while TWM Solicitors represented the purchaser.

Vail Williams’ full-service property advice includes commercial agency, investment and development advice, building consultancy, property valuation, planning, lease advisory, property asset management, business rates and occupier consultancy.

n.

nuse.

Three In 10 Business Owners Have No Pension

nuse.

Most Read

Categories

Most Read

Categories

Recent Posts

Become a digital subscriber and support our publication enabling us to continue to share more news, each and every day.