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Directors & shareholder benefits

Protect your business, reward their efforts

Directors are key to growing a business. So if something serious happens to your senior people, it can have a huge impact on your operation.

This is where directors benefits come in. Just as the name suggests, they’re used mostly to protect the directors and shareholders of a business. Needless to say it makes sense to protect yourself against the disruption should your directors fall ill or suffer a serious life event. Not to mention reward them for the work they do. You’ll also want to be as tax efficient as possible when it comes to putting these benefits in place.

Fortunately, we’re on hand to help. We’ll take an in-depth look at the level of protection you need. We’ll then guide you through the entire process – all while reducing the tax you need to pay. In the meantime, here are two great benefits options you may want to look at.

Shareholder Pensions & Capital

Quite often, shareholders or directors may prefer to set up their own pension plan exclusive to them. For instance, their terms of employment may be a fixed number of years. Their tax position may be more complicated. Or they may prefer to look after their own pension scheme because their circumstances are different to your other employees.

At some stage, they may choose to leverage their pension to raise funds for the business. For example, it’s often a more tax and cost-efficient way of buying a new commercial property. If you’re looking into the type of pension schemes you can offer your directors, here are the options on offer:

A Small Self-Administered Scheme (SSAS)

This is a type of occupational pension scheme established for business directors. It’s set up under trust by the sponsoring employer for the benefit of the scheme members. Put simply, each member has a share in the fund.

How much of a share they can claim depends on the contributions and transfers paid in by, or on behalf of, a member. It also depends on their share of any investment growth and any relevant payments made from the fund for them. How much a member then receives will come down to the value of their share at the time they decide to cash out.

A Small Self-Administered Scheme can also be used as a loan to the sponsoring employer, or used to buy commercial property. Needless to say, it can inject valuable cashflow into your business. Plus, it provides a regular tax-free income. Hold property within an SSAS and you can claim tax relief on any contributions to complete the purchase.

Of course, this kind of pension isn’t for all investors. So why not check if it’s right for you and your directors first? Our independent advisers are only too happy to answer any questions you might have. We can review your situation and even search the whole of the market for you, should you decide it’s for you.

A Group Self Invested Personal Pension (SIPP)

Another option to add to your benefits package, the SIPP pools together all the pension assets of its members so they can be invested as part of a single fund. Each member has their own account within the group SIPP which is individually registered with HMRC. Their initial share of the fund, their investment returns and any costs involved will then all be based on how much they pay in.

Members can make further contributions, transfer payments and take funds out as a tax-free lump sum or pension when they withdraw their benefits. Their share of the fund is simply recalculated each time.

People usually choose this scheme because pooling together assets gives them certain advantages. If this isn’t relevant to your business, then you’re probably better off looking at alternatives. With a team of financial advisers standing by, we can help you navigate the sea of options and find you the best fit.

Protection and perks, all in one package

If you’d like to put a plan in place for your directors, our expertise covers the whole range of options. We can help you put a strong package in place. One that not only protects your directors and your business, but forms an attractive incentive for your senior people, too.