FACT FILE:
Corporation Tax
Reduce Corporation Tax. Maintain business cash flow
Of course, business owners can reduce Corporation Tax by simply moving it from the company accounts — you could make additional pension contributions, make charitable donations, or spend profits on training or staff rewards (among other options) — but how can you then address the cashflow concern and avoid tying your funds up with no control over them? This is where TLPI can help.
TLPI specialise in two products — the Small Self-Administered Scheme and the Family Investment Company — which, whether alone or combined, can help significantly reduce your Corporation Tax bill without reducing essential cash-flow.
The SSAS Loanback
One of the unique facilities of the SSAS pension is the SSAS Loanback. this allows you to loan up to 50% of your pension to your trading company, for any valid business purpose. You can set your own interest rate on the loan, as long as it is at least 1% above the high-street base rate. The trick here is to set a higher interest rate, meaning that you payments from the business are increased, further reducing the company balance sheet whilst increasing your pension pot at the same time. In addition, this is the repayment of a business loan and is thus classed as a business expense. The required loan period can be up to five years after which this ‘rinse and repeat’ cycle can be repeated using an increased pot.
Investing in property
This means, for example, your SSAS could purchase your business premises. Your company would then pay rent to your SSAS, which is considered an allowed business expense, therefore benefitting from further tax relief all whilst lowering your year end balance sheet. Meanwhile, your pension pot continues to grow, giving you a bigger pot from which to make further investments. As an additional benefit, you become your own landlord, reducing expenses and paperwork.
Facilitate growth, protect from your estate, maintain accessibility
However, by keeping your assets within the SSAS it ensures they are ring-fences and kept outside your estate, meaning they are safe from Inheritance Tax should the worst happen. By coupling the Small Self-Administered Scheme with the Family Investment Company, you are creating a financial triangle that gives you extreme flexibility over your total financial situation. By elevating your tax plan in this way, funds can be moved between the company, the FIC, and the SSAS, providing the greatest tax savings and the most profitable investments.
Questions? Speak to TLPI
We strongly recommend you book a free consultation with one of our experienced constants, who, in the first instance, will talk through your specific circumstances, aims, and goals and answer any questions you may have. This will allow you to decide whether our tax planning products are right for your situation.
