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Mrs P - setting up a new business

Background

Mrs P was 54, married with three grown up children. She was working as a classroom assistant but was thinking of resigning and setting up her own business. As she didn’t want to take out a loan from the bank, she was looking at renting some premises she could trade from.

In terms of pensions, she had two defined benefits (DB) pension schemes, one from her time at a bank where she used to work and one from the Local Authority. She also had £80,000 in cash in the bank.

The challenge

Mrs P’s main concern was how she could raise the funds for her new business premises without getting into debt. We crunched the numbers and produced a report recommending that she transfer her DB schemes to a Self Invested Personal Pension (SIPP). We explained that she could then use the SIPP to buy the commercial property and her new business would rent it off the SIPP, paying it rent. This rental income would be tax deductible from a corporation tax point of view.

The solution

Mrs P went ahead, found a property which she bought for £180,000 using the SIPP funds so she still had her £80,000 in the bank and didn’t have to borrow anything at all.

She now has a SIPP receiving rent of £15,000 pa and the SIPP also benefits from the capital growth on the building. At the same time, Mrs P is trading successfully from the building with no lost profit going in rent to someone else. The income from the rent is building cash value in the SIPP for Mrs P’s retirement at some point in the future - a win-win situation...

Mrs P was delighted that due to our knowledge of DB schemes and awareness of the SIPP property purchase regulations, she was able to fulfil her dream of being self-employed in the most cost-effective manner.

VouchedFor Asked: 'How did your advisor help you?'

November 2018

"Simon took on board my situation and delivered exactly what I expected."

November 2018

"Initially Simon RIchards provided me with easily comprehensible information on my options for investment while making it clear that the choices were mine. He also explained the costs of the service which I feel are very fair and for me totally of value. With great patience he sorted out the chaos that was my starting point with him. The ongoing support and information provision has been excellent."

November 2018

"Gave me advice, helped me understand in plain English , was very helpful, very professional and calm."

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Get in touch

Bailey Richards Wealth Management Ltd
9 Riverside Studios, Amethyst Road, Newcastle, NE4 7YL

Telephone: 0191 716 0009
Fax: 0191 716 0034
Email: office@baileyrichards.co.uk

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Bailey Richards Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority. Registration number 583487. Click here to review our registration.

Registered in England & Wales, Registered No: 08058075, registered address:
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The guidance contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK

 

* Please be aware that by clicking the above button you are now leaving a regulated site. Bailey Richards Wealth Management are not responsible for the content on VouchedFor.