Alternative Tax Efficient Pension Plans
This involves operating your business through a company which builds up retained profits over time.
This creates a personal saving investment vehicle in a tax efficient manner and avoids the restrictions on pension funding.
Reduced level of taxation from 55% to 20% for profits left in the business.
Possibility of using this investment structure to pay off personal bank loans in a tax efficient manner.
It could be particularly useful for medical practitioners who can now incorporate their practice.
|Structure For Creating Alternative Pension Fund||Other Benefits|
|(e.g. when pension cap exceeded)|
|1) Business carried on via limited company||1. On death, spouse can take out accumulated funds tax free|
|2) Business has good profits||2. On retirement can take out the accumulated funds under capital gains tax rules|
|3) Can save gross 200k per annum||3. Control over tax payments for sale of business at a later date|
|Company carries on the business|
|*Annual profits||€ 200,000|
|Pays Corporation tax||€ 40,000|
|After tax||€ 160,000|
|Annual savings||€ 160,000|
|After 6.25 years||€ 1,000,000|
|Plus investment return after tax say||€ 20,000|
|Retained profits after 6.25 years||€ 1,020,000|
|*After all costs including directors salaries|