Smash hit

Company directors

Executive pension plans (EPPs), aimed at directors, and small self-administered schemes (SSASs), used primarily by business owners, benefit from generous perks that will be lost after A-Day.

Under the current rules, the whole value of an EPP can be taken as tax-free cash as long as the value of the fund is less than 3/80ths of final pay, multiplied by the number of years worked.

Tom McPhail at Hargreaves Lansdown, an adviser, said: “If you have 20 years of service and earn £100,000 in the year before retirement, you can take £75,000 tax-free provided you have sufficient funds in your EPP. The tax-free cash entitlement can be preserved under the new regime as long as you act before A-Day.”

EPPs also benefit from generous contribution rules which could enable you to boost your fund and maximise your tax-free cash before A-Day.

Suppose you started a company in 1986, but have not made any contributions. By setting up an EPP now, your company could make contributions for each year back to 1986.

Business owners who are saving into an SSAS may also want to act now. The schemes are popular with small businesses because they can be used to invest in the assets of the firm. After A-Day there will be tighter restrictions.

At present, up to 50% of the assets of the pension fund can be invested in the firm via loans or shares. From A-Day only 5% can be used to buy shares.

Half of the assets can still be used for a loan, but the maximum term will be five years and it will have to be secured.

Property investors

A self-invested personal pension (Sipp) or SSAS can already invest in commercial property. This is popular with business owners and members of partnerships such as doctors, accountants and lawyers. They often use Sipps to buy their premises so that the rent is paid into their pension rather than to a landlord. The rent also attracts tax relief when it goes into the fund.

After April 6, the borrowing rules for property become less generous so you may want to buy now. At present, a Sipp can borrow 75% of the value of a property. So if you wanted to buy premises worth £400,000, you would need a £100,000 deposit in your pension and the trustees could borrow the rest.

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