Executive Pension Plan

Pensions are a great way of rewarding valuable senior staff as well as business owners.

For a staff member, an executive pension plan is good reason for staying with an employer and makes them feel valued. It is a tax efficient way for the employer to provide staff with an employment package. Executive pension plan contributions are allowable against Corporation Tax and carry no National Insurance charge, unlike salary.

For the business owner they are even more important and valuable. Considerable contributions can be made, reducing Corporation Tax and providing the business owner with a fund that grows tax free and is outside their estate for Inheritance Tax purposes.

Surplus cash in a business can be tax efficiently removed, allowing the business to retain eligibility for Business Relief and Entrepreneur’s Relief, which may otherwise be jeopardised.

A pension fund is also ring-fenced from potential creditors should trading conditions become unbearable.

It is also possible to borrow from certain types of schemes and so they can be an alternative to a bank.

Some businesses buy their premises through their executive pension plan schemes.

Any good businessperson should be aware of what a pension scheme can do for them and what a powerful financial tool it can be.