Raise Business Capital from Pension Funds - Expansion - Capital Raising - Self Investment - Sell Shares
Your Pension Fund can Buy Shares in your Company ....
Under Pension Simplification Rules, Pension schemes can invest in 'own' company shares to raise business capital. Give your business a capital injection by selling company shares to your pension fund.
1. Company Pensions "Self Investment" Rules: 5-20% Max
Before Pension Simplification i.e before 6 April 2006, the old rules allowed for 25% of the pension funds value in your own company's shares. There are transitional rules that allow the continuation of the 25% holding. If a pension fund looks to purchase more shares, the new rules above will apply.
2. Personal Pensions "Self Investment" Rules: 100% Investment Opportunity but be very careful
Using your personal pension fund to buy shares in a company that you own ...
This means you may use the whole of your pension fund to raise business capital and buy shares in a private limited company.
The use of Self Invested Pensions owning private company shares becomes even more complex if the company then owns £6,000 or more in taxable property such as residential property or a company car that could be used by you. If this was the position, the SIPP would then own indirect taxable property resulting in huge HMRC sanction charges of up to 55%.
Our view is to only use a SIPP to buy private company shares as a last resort or if you have small pension funds that can be put to better use.
3. Use Pension Fund Withdrawal facility known as Unsecured Pension to release Tax Free Cash
If you are over the age of 55, you are allowed to withdraw some or all of the tax free cash entitlement of your pension fund. Read more about releasing Tax Free Cash.
Contact us now if you have a pension fund that you may consider converting or would like to set up a new pension scheme that would be able to buy shares in your company.