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Managing Your Wealth - Questions for Family Business Professionals

The specialist wealth managers at Brooks Macdonald understand the priorities of successful family business people. The team have been helping to manage their financial affairs pre and post exit ever since Brooks Macdonald was formed in 1991.

Brooks Macdonald can look after your personal financial plans while you look after your business plans – especially if you’re thinking about moving on from your business. But what questions do you need to ask yourself first? In this article, let's take a look at some of the important questions that need to be considered.

Do I Manage My Personal Finances As Well As I Manage My Business?

As a business owner, you’ll have a keen eye for cash flow, profit and loss, due diligence and a five-year plan. Take the same care you’d take with your business in developing the potential of your personal assets. And, even more importantly, in who you hire to help you.

Businesspeople can be known for letting their business take over their lives. Try to keep your business assets and accounts separate from your personal affairs. It will save you and your team time unpicking the overlaps.

Have I Taken All The Tax-Saving Opportunities On Offer?

There are lots of ways to shield your hard-earned wealth from the tax people, and the government encourages them.

  • Pensions: these can be an effective way for you, your employees and your business to reduce income tax, National Insurance, capital gains tax, corporation tax and inheritance payments.

  • Individual Savings Accounts (ISAs): you can save £20,000 in an ISA each year, and you won’t have to pay any tax on interest or returns earned. If you have a wife, husband or civil partner, check they have used their allowance too.

  • Capital Gains Tax (CGT): there’s more to reducing CGT than diligently recording every business expense. If you’re thinking of selling business assets that have gained in value, consider selling something that hasn’t, to offset the gain. Keep in mind the annual tax-free allowance. And supporting a good cause by donating to charity is free from CGT, up to a certain limit.

How Can I Take Capital Out Of My Business?

If you run your business as a limited company, there are several ways you can take money out for your personal use. We’ve already mentioned making pensions contributions. Others include paying yourself a salary or taking dividends. We can help you weigh up the options.

If you take a salary, you’ll have the benefit of regular money, but you’ll have to pay income tax and National Insurance. Think about your salary in relation to annual income tax thresholds.

If you have any profit left after paying end-of-year corporation tax, you could pay yourself a dividend. You’ll have to pay any shareholders a dividend too. Your first £1,000 is tax free, but after that tax is charged according to rising thresholds.

Another way to take money from your company is to sell it. You’ll need to pay CGT on any profits, and corporation tax if you’re selling a limited company. You may qualify for Business Asset Disposal Relief.

How Do I Go About Stepping Away From My Business?

Think about why you want to step away and when would be the right time for you. Maybe you’ve been surprised by an unexpected approach to purchase. Have a chat with your financial adviser about the factors and timelines to keep in mind.

Consider who you’d like to take over the business and when would be the right time for them. Do you, or they, require more preparation? Do you mind what their vision for the future of the business is? Ask the challenging questions and make plans to fill in any gaps.

Take time to prepare yourself mentally to let go. Consider what you’d like to do next. You may have been too busy striving and thriving to think about it before.

What If I Want To Sell My Business?

This is a moment to bring in the professionals. Allowing plenty of time for expert planning can smooth the process and help reduce your tax bill. Check that your financial systems, contracts and published materials are all in order.

Consider if you want to have further involvement and whether you’re prepared to work for others. Letting go can be emotional, so draw on your support networks.

We have cash flow modelling software that can help you explore your financial future post-sale and make important decisions before the sale completes. You can forecast future income and capital needs, and help confirm if you think now is the right time to sell and at what price.

As you prepare to sell, you may want to give your pension a boost. This can be useful for your retirement plans and as a business exit strategy. Company directors can make employer contributions of up to £60,000 a year or 100% of your earnings (whichever is less). You can carry forward to the next year, taking your contribution up to £180,000.

Working for your business may have come with benefits like life, illness and accident insurance, income protection and private medical insurance. You may want to investigate replacing some of these with your own policies.

People selling a business have often rather understandably focused on the health of the business, the transaction, and the transition to new ownership itself. Give some thought to the proceeds too. If you haven’t already engaged professional investment managers to invest your money for you, now might be the time to consider it. Delegating responsibility and appointing professionals can be a beneficial decision for many reasons.

How Do I Make A Smooth Transition To Retirement?

After years focusing on accumulating money, you may decide it’s time to change gears to decumulation. Review your income and expenditure and have a long think about the kind of retirement lifestyle you’d like. What have you always wanted to do?

Cash flow planning can also be a great tool at this stage, to test out different financial scenarios and ensure your money lasts the course. It can show if you’re on track to achieve your lifestyle and retirement goals, how much money you need, and if you need to work for longer.

Our retirement guide has plenty of ideas to help improve your retirement.

How Do I Pass My Wealth On Efficiently?

Passing on wealth can be a sensitive subject. Think about who you’d like to pass your wealth to . For some, it may be a partner and children. But for others there might be ex-spouses, stepchildren and family living overseas with different tax regulations to consider. There could be issues about what happens depending on who passes away first. You may want to support important causes, or other loved ones.

If you pass away without a will, your assets could be distributed in a way you wouldn’t want, so make sure your will is up to date. This is particularly important if you’re not married, or civilly partnered, to your partner. A will can also help make the transition of wealth much quicker and easier.

Explore tax-efficient ways to transfer wealth. You may like to ask for professional advice on inheritance tax , trusts or business relief. After you’ve sold your business, you have a three-year window to reinvest the proceeds in an appropriate business relief scheme, which then benefits from immediate inheritance tax relief. It’s usually possible to pass on pensions without paying inheritance tax.

You may like to watch our webinar about passing on your wealth.

Am I Getting The Right Advice For Where I’m At?

As your life and business progress, you may want to upgrade your advisers. Maybe your business and earnings are ramping up. Or maybe you’ve sold your business and have a large lump sum to manage.

Whatever stage you’re at – finding success, accumulating wealth, preparing to retire, or retired, make sure you have an adviser who understands your needs. Choose someone you trust, to be sure they’re acting in your best interests.

If you’re a business professional looking for help from a financial professional, get in touch for a free, impartial conversation by emailing the team at Brooks Macdonald on or visit their website here

Important information - Investors should be aware that the price of investments and the income from them can go down as well as up and that neither is guaranteed. Investors may not get back the amount invested. Past performance is not a reliable indicator of future results. Changes in rates of exchange may have an adverse effect on the value, price or income of an investment. Tax treatment depends on individual circumstances and may be subject to change in the future, so you should seek independent tax advice, as to your own position. The information in this article does not constitute advice or a recommendation and you should not make any investment decisions on the basis of it.

Brooks Macdonald is a trading name of Brooks Macdonald Group plc used by various companies in the Brooks Macdonald group of companies. Brooks Macdonald Group plc is registered in England No 04402058. Registered office: 21 Lombard Street, London EC3V 9AH.

Brooks Macdonald Asset Management Limited is authorised and regulated by the Financial Conduct Authority. Registered in England No 03417519. Registered office: 21 Lombard Street, London EC3V 9AH.

Brooks Macdonald International is a trading name of Brooks Macdonald Asset Management (International) Limited. Brooks Macdonald Asset Management (International) Limited is licensed and regulated by the Jersey Financial Services Commission. Its Guernsey branch is licensed and regulated by the Guernsey Financial Services Commission and its Isle of Man branch is licensed and regulated by the Isle of Man Financial Services Authority. In respect of services provided in the Republic of South Africa, Brooks Macdonald Asset Management (International) Limited is an authorised Financial Services Provider regulated by the South African Financial Sector Conduct Authority. Registered in Jersey No 143275. Registered office: 5 Anley Street, St Helier, Jersey JE2 3QE.

More information about the Brooks Macdonald Group can be found at

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