For three weeks from last week, I’d like to write about how company directors can get more financial security and can benefit from company profits in a tax efficient way.
Last week I wrote about financial security and this week I’ll talk about benefiting from company profits.
I’ve had many conversations over the years with company directors and business owners, and most would like to or would intend to sell the business at retirement to generate a cash lump sum.
One of the most tax efficient ways to generate a cash lump sum from business is through a pension.
As a company director, if you have 20 years’ service in the in the company, you can take 1.5 times your final salary as a tax free lump sum from the pension (that’s limited to €200,000).
But it’s a substantial cash lump sum that you can generate from the business, and that can be in conjunction with the sale of a business so you can have the two.
In some instances a business isn’t sellable, and that’s usually because the Co. director or business owner is the business through their contacts, their capabilities, the relationships or whatever might be.
So in that instance, it might be that the pension is the only way to generate the cash lump sum from the business.