In a constantly shifting legal landscape, Withy King highlights a few of the latest developments which may impact directors in their business and private lives.
Using your pension to buy your own premises
With the Budget changes to pensions and an improving property market, there may be no better time than the present to use your pension to purchase your business premises.
There are many benefits to using a pension fund (SIPP or SSAS) for such a purchase including: the ability to secure bank borrowing; tax relief on pension contributions; no Capital Gains Tax; the property is outside your estate for Inheritance Tax and protected from business creditors.
However, your IFA will need to consider which investments suit your risk profile; property values do fluctuate and it is considered to be an ‘illiquid’ investment; you will need to get advice from an IFA and solicitor who are experienced in pension fund transactions.
For advice on this or any commercial property issue, contact Peter Foskett at firstname.lastname@example.org
Thinking of buying or selling a business?
When early stage discussions get underway relating to the potential sale of your business, it’s worth taking two important legal steps. Firstly, get an effective non-disclosure agreement in place to protect your interests. Secondly, set the terms of reference for the due diligence exercise to avoid inadvertently acquiring liability for any pre-contract mis-statement.
Whether you are buying or selling, if the deal progresses, ask your solicitor to help negotiate any heads of terms. Your accountant will manage the financial aspects but it’s always worth getting a legal perspective too.
For corporate law advice, please contact Rishi Ladwa at email@example.com
Directors’ duties revisited
The High Court has recently given some helpful guidance on directors’ statutory and fiduciary duties, as follows: The duty to promote the success of the company for the benefit of its members includes listening to and taking into account the views of other directors; there is no automatic breach of the duty to exercise independent judgment where a director has trusted the judgment of a fellow director whose integrity, skill and competence they had no reason to suspect; in carrying out their duty to exercise reasonable care, skill and diligence, directors are entitled to rely on the opinion of a fellow director with skills and experience in a specific field.
For advice on disputes with fellow directors, suppliers or customers, please contact Philip Banks-Welsh at firstname.lastname@example.org
Business assets may be exempt from IHT
Although Inheritance Tax (IHT) at 40% is payable on death if the value of your estate exceeds £325,000 (or in some circumstances £650,000), “business assets” including shares, buildings and other assets used in unquoted trading businesses owned for at least two years are, in principle, excluded from this calculation. However, the existence of large cash holdings in the business may lead HMRC to regard it as an investment rather than a trading vehicle and deny relief.
One result of the financial crisis has been for businesses to retain large cash buffers in case of further trading downturns. This may impact on business owners’ IHT planning although recent confirmation from HMRC that it is aware of this trend will be welcomed by many.
For advice on IHT or any aspect of estate planning, please contact Samantha O’Sullivan at email@example.com
More pension options for divorcing couples
Pensions in divorce cases may be treated more flexibly than under the current regime of pension sharing, attachment orders and off-setting arrangements, in the wake of the Budget.
The Chancellor took the pensions industry by surprise with his radical proposal to enable an individual to take an unlimited amount of income from their defined contribution pension scheme. One-quarter of a pension fund will be available tax free and the balance taxed at the individual’s marginal tax rate.
Some commentators have been alarmed at the potential for people to “squander” their pension pots while others take the view that people who have saved carefully can and should be trusted to use their pensions without necessarily having to buy an annuity.
For advice on structuring divorce settlements involving pensions or any other family matter, please contact Trina Gibson at firstname.lastname@example.org
To find out more about how Withy King can support you in your business or personal life, visit www.withyking.co.uk