Pensions: Husband and Wife Owner Managed Businesses

By Rachel Efetha, Chartered Financial Planner with Anstee & Co.

A while ago, I visited two sets of completely unrelated new clients who are both in a very similar position. Both the husbands are tradesmen and both the wives run the office for them under a limited company. Both got in touch as their businesses were ticking along nicely and they felt that they needed to focus on pensions and do not know much about them. Luckily for them, I know lots about pensions!

One couple was in their 40s with two teenage children, and the other was in their 30s with two preschool children. They all had little or no pension provision to date.  They would like to employ someone to run the businesses and do the trade and take a nice dividend in retirement but appreciate the need to have a backup plan in the form of a pension.

The recommendation.

I explained to them that a company contribution is better than a personal one, as although you get tax relief on a personal contribution, you as the director and as the employer, both must pay National Insurance contributions on salary, whereas none is paid on company pension contributions.

I also explained to them that they should try to build up equal pension provision so that they are using up both personal allowances during retirement.  There is no tax efficiency for one spouse having a taxable income and the other not even using their personal allowance. It also helps with death benefit planning for each to have their own pot.

Once we had set a budget for pension planning, we moved on to insurance. Both couples have Critical Illness Cover on their mortgages which is good, but there is a better way of doing things. A Critical Illness policy will cover just that, a bad, life-threatening disease. However, Income Protection will cover anything that prevents you from doing your job, for the tradesmen, this could be a dodgy knee or a bad back, for the office person, this could be stress-related. Of course, the critical illnesses are all covered too if they prevent you from doing your job. This cover is essential when both of your incomes depend on the business being a success.

How Anstee & Co can help you and your business with pensions.

Do you run your own business with your spouse? Could you benefit from a free financial health check?

We are independent financial advisers (IFA’s). This means that the financial advice we offer is unbiased. We look at all the options from the “whole of market”. The initial “getting to know you” meeting is at our expense and without obligation. Our experience covers all aspects of personal financial planning, including pensions, estate planning, savings and investments and personal protection insurance.

We would welcome the opportunity to have a coffee and discuss how we may be able to provide you with the advice you require. Why not contact us today to arrange an appointment?

Alternatively, there is no need to visit an office as all work can be undertaken remotely. This may be by –

• Microsoft Teams
• Facetime

We can also arrange a telephone conference call. The choice is yours. Whatever works best for you.

Additionally, our financial planners live and make use of meeting rooms in –

• Bedford, Bedfordshire
• Market Harborough, Leicestershire
• Northampton, Thrapston and Wellingborough in Northamptonshire

Finally, if you have any thoughts or views about this article, “Husband and Wife Owner Managed Businesses. “, then we would love to hear from you.

The information contained in this article is for information purpose only and does not constitute advice. No action should be taken based on this information alone. Anstee & Co. is authorised and regulated by the Financial Conduct Authority (FCA).