Early planning of your work structure can better provide for your retirement.
There are certain aspects that should be considered when you are planning for work, including the form that the business has (or will take), the structure of your relationship with that business, and the legal status of your working relationship.
If you are running your own business then you will need to consider whether a Sole Trade is the appropriate vehicle for your business, or whether another business type would be better suited (e.g. a company, partnership, LLP etc.).
Where you are working for another business, the simplest way may be to become an employee, but this probably won’t be the most tax efficient relationship for you or for the business. A properly structured self-employed relationship may benefit all parties, however you will need to ensure that the relationship is developed so as to support this basis, and be aware of your responsibilities for taxes, including VAT, if you are self-employed.
Providing your personal services through a company can give you the flexibility of working for various businesses whilst allowing you to enjoy the various benefits offered by incorporation. These structures can have unfortunate tax consequences for the unwary, so professional advice should be sought to ensure that these do not arise.
The average age of the UK population is increasing and leaving your future dependent on the state pension is a huge risk. Once you are working then it is wise to be planning on how you will fund your retirement. Auto-Enrolment is being introduced by the government, requiring most employers to offer most types of employees a workplace pension, in an attempt to force people to consider their retirement planning. You may wish to make additional arrangements to ensure that you can afford to retire.
There are several options available to you, from dedicated personal pension funds which have their own tax relief system, to simply saving some money each month. Even paying a mortgage each month is building an equity fund that can be accessed in future. Some of these are more tax efficient than others.
If you would like more information on planning for work and retirement or structuring your business relationships, please contact Tax Innovations on 01962 856 990 or firstname.lastname@example.org.