Looking forward to a relaxing retirement (just not quite yet)
October is tax time around here. I seem to have acquired several small Ltd Companies, part of an LLP as well as self employed, payroll, pensions and land & property pages, as well as the FHL (furnished holiday let) parts of my own tax return. Can you beat my record number of tax pages?
Make it simple, stupid!
This complex spaghetti is a necessary evil to separate the various businesses and joint ventures that I am involved in, and the result of early mistakes in not separating my affairs. Fortunately I have great help with these various bits of accounting.
To try and simplify my affairs is one of my aims, to move from 'small business owner' and 'landlord' to 'investor'. Trusting others to run things for you takes time, optimism and effort, I have to put aside my lively 'executive function' (some might say bossy) tendencies and let go. Another opportunity to do this arose with breaking my ankle this month (while unloading rubbish at the tip, rather than skiing or skydiving).
I usually visit each of the holiday lets a couple of times a week to double-check standards, do small repairs and check inventory. I have been unable to do this and, once again, my team has stepped up to the challenge. My renovations continue, the holiday let business carries on and I am reminded yet again that I am not indispensable. Perhaps someone is sending me a message that I can step out. I have been using the down-time to explore hands-free (stock market etc.) investments and may even try to stop creating new jobs for myself at every turn. For now, every move that I make towards this aim seems to create another layer of complication but the goal is within sight. I am following several strategies within my overall exit strategy and will share a few ideas (that do not constitute advice, just a regular landlord trying to exit eventually!):
- 1.If you are approaching retirement but have neglected your pension (perhaps, like me, you were never going to grow old, or were busy investing in property), don't. Setting up payroll is not that hard. Not only do you get to save corporation tax (if you are Ltd.) but also personal tax on contributions. Although the minimum age for drawdown is 55 (rising to 57 in 2028), using a SIPP or SASS pension (with correct advice) allows earlier use, within the wrapper, and is incredibly beneficial.
- 2.Do your due diligence on non-property investments, this is really, really dull but take the time to learn your stuff, just as you did when you started in property. Expect mistakes and take good independent advice. When the increases in your 'pot' start to show and you haven't had to strip woodchip/clean up/paint and renovate you will be glad.
- 3.Decide for yourself your risk profile and whether having everything in property is really for the best, do you include your residence in your portfolio valuation? Could you manage with less 'unproductive' bricks and mortar in order to create more productive investments? Perhaps, but then again….
- 4.Tax on exit is a major consideration; we focus on building our portfolios but rarely on dismantling them. Consider that an exit in an emergency (such as ill-health, family change or a business breakdown) will cost you dear as tax planning for exit can take several years to make the necessary structural changes to make it work to best advantage.
- 5.Think about what you will do with the time that you have created for yourself….my property business started as my hobby and has grown to consume many hours a week, I have attended to it almost daily since the age of 22, can I fill the hours? You bet I can!