Forget retiring, we’ve got a start-up to run

We couldn’t have put it better ourselves.

This was the headline in The Sunday Times (20th May, 2019), which featured Colin and Lisa King and their companies Jigthings and Education Quizzes.

The article focused on how the entrepreneurial Kings took advantage of Pension-led funding to invest in their businesses.

To read the article click here

Click here to read more about their Pension-led funding journey.

Pension freedom withdrawals now at 25.6bn: We ask “Is this always the most appropriate course of action for SME owners?”

Savers have accessed £25.6 billion from their pots since the launch of pension freedoms, it has been revealed.
The latest figures from HMRC show 539,000 people withdrew a total of £8.2 billion in the latest financial year.

What is not in doubt is the appetite for people to take advantage of the freedoms, launched in 2015, shows no sign of diminishing, although as Pension-led funding Chairman Adam Tavener pointed out, the “stampede” to dip into pots or a rush to buy a Lamborghini never materialised.
Adam said: “Whilst £25 billion plus is a huge amount of money it should be seen in the context of the value of private pensions in the UK as a whole, which now exceeds £2.5 trillion.
“A few points arise from this. The first, and most obvious one, is that the much feared stampede of individuals withdrawing their entire pension pots to fund unwise purchases just hasn’t happened, thus, notwithstanding Steve Webb’s comments when he was pensions minister, there must be quite a few disappointed Lamborghini salesmen out there.
“On a more serious note what does concern us is the continuing lack of awareness in the SME owning community, who undoubtedly make up a fair chunk of this overall population. If their aim in taking withdrawals under pension freedoms is to provide extra funding for their businesses, undoubtedly the case in many instances, failing to seek advice on the other options open to them, such as Pension-led funding, can lead to a significant erosion of benefits at a later date.
“Clearly the total number of withdrawals under the ‘Freedom’ rules will increase steadily as more individuals hit the age 55 hurdle but the reducing transaction values speak of an orderly process overall.
“As I mentioned earlier, there is much work to do around how SME owners engage with these rules, as a priority in reality, but that aside this would seem to have been a popular and successful initiative.”
Clifton Asset Management recently conducted research on an alternative to accessing pension pots using pension freedoms, our conclusion being that there is a £250 billion pot of money waiting to be invested in the UK’s two million small businesses with owners over the age of 50.
For more details regarding our analysis and how we can help unlock these funds please click here
Source date HMRC release

Keith drinks to Queen’s Award

Selling ice to the Inuits, oil to the Saudis – why not tea to the Chinese?

Keith Garden and his company have done just that with huge success and their achievement has been given the Royal stamp of approval, for the second time.

Only Natural Products has just been awarded a Queen’s Award for Enterprise: International Trade 2019 after exporting organic tea to Hong Kong and working with Soil Association of China.

Over the last three years Only Natural Products has become a remarkable success story, increasing exports by 77%, an impressive performance as overseas business accounts for 72% of the company’s overall sales.

This followed the sweet taste of success of a Queen’s Award for Enterprise in 2016.

Pension-led funding chairman Adam Tavener said: “It’s fantastic to see that, yet again, Pension-led funding has played it’s part in helping an entrepreneur deliver his vision and, better still, achieve the recognition he so richly deserves.

“Being prepared to back yourself is a critical measure of the likely success of an aspiring business owner.”

Only Natural Products are exporting across the globe to Europe, Scandinavia, South America, Asia and are now the leading organic tea brand in Australia.

Keith started Only Natural Products back in 2008 after a career in sales and marketing. He launched brands Dr Stuarts, a range of herbal infusions called Higher Living and a South African organic, single-estate rooibos tea called Kromland Farm.

We first met Keith when he needed £150,000 to fund a management buyout and the banks were not lending. “I was scratching my head. There was a sum of money in the pension that was sitting there and not performing very well,” he said.

PLF helped Keith’s pension purchase the company Intellectual Property and a loan was made to Only Natural Products. Keith has since returned several times to his pension to fund his growing export-led business based in Gloucester.

There are more than 5.7 million SMEs in the UK and with only 201 companies given a Queen’s Award this year, Only Natural Products are part of a very select group.

To find out more about Only Natural Products please click here

Your slice of the £250 billion waiting to be invested in small businesses

A £250 billion pot of money is waiting to be invested in the UK’s two million small businesses with owners over the age of 50, it has been revealed.

On the fourth anniversary of pension freedoms, analysis by Clifton Asset Management showed ‘Olderpreneurs’ had already used the freedoms to access almost £1.5 billion from their personal pension pots to fund new ventures.

The analysis of recent ONS data also found that while 30 per cent of older business owners had no personal pension wealth, the remaining 1.5 million (70 per cent) collectively had access to more than £250 billion from their pension pots to invest in a small business.

Olderpreneurs have set up more businesses than any other age group in the last decade, with the latest statistics showing a 700,000 increase from 1.47 million in September 2008 to just short 2.2 million by the end of 2018.

Clifton said it may well be the right strategic decision for the over 55s to access their tax-free allowance from their pension using the freedoms.

But an older business owner seeking a larger investment into their business from their pension should take professional advice and consider Pension-led funding. More than 2,500 SMEs have used Pension-led funding to invest in their business.

Seeking advice is key after recent research found that £3.2 billion had been accessed in lump sums from pension pots by the over 55s without financial advice since the freedoms were introduced in 2015.

Chairman and founder of Clifton Asset Management and Pension-led funding, Adam Tavener, said: “Study after study has shown that Olderpreneurs run more successful businesses, generate greater profits and create more jobs than their younger counterparts.

“But many have done this with one arm tied behind their backs because of a difficulty to fund growth due to strict lending criteria penalising older business owners or they have the majority of their wealth tied up in property.

“There is a real opportunity here to invest pension wealth in successful businesses with more than £250 billion sitting in the pots of businesses owners aged over 50.

“Done properly, Pension-led funding provides older entrepreneurs with significant amounts of growth capital by strategically redeploying their pension savings. The benefits of this approach to the UK economy are evident.”

Research by the older people’s charity Age UK found that 70 per cent of businesses started by people in their 50s survive for a least five years compared to only 28 per cent for those started by younger people

Are you ready for Making Tax Digital?

The deadline is looming for changes to how small businesses will be required to file VAT returns.

From April 1, VAT-registered businesses with a turnover exceeding £85,000 will be required to file VAT returns digitally.

The current HMRC portal which many use will no longer exist, to be replaced by the requirement to send VAT returns to HMRC using MTD-compatible software.

Businesses will also be required to keep digital VAT records.

Are you ready for Making Tax Digital?

  • HMRC says Making Tax Digital (MTD) will be mandatory to businesses registered for VAT and with a turnover of currently £85,000 from April 1, 2019.
  • Even if your taxable turnover drops below the VAT registration threshold you are still required to continue to keep digital records and send your returns using the new software.
  • Businesses with a taxable turnover below the VAT threshold can sign up for MTD for VAT if they wish but the requirement to comply with MTD doesn’t apply if you de-register from VAT or you are exempt from MTD for VAT.
  • Trusts, not for profit organisations, VAT divisions, VAT groups and traders based overseas have until October 1, 2019 to start keeping digital VAT records and use MTD-compatible software to send in their VAT returns.
  • Bridging software, a tool to extract information from a spreadsheet or in-house record keeping system, may be needed to make spreadsheets MTD-compatible. There is no requirement to keep additional records, just record them digitally.

What information does a business need to keep digitally?

Digital records need to include:

  • The time of supply
  • The value of the supply
  • The rate of VAT charge
  • Information about your business including name, address, VAT registration number

Businesses have until March 31, 2020 to ensure they have digital links between software products.

MTD is here to stay as the Government strives for greater transparency in the tax system to improve tax collection and detecting tax evasion.

Get help now if you are unsure if your systems are MTD compliant.