How can I protect my assets for a life after COVID-19?

How can I protect my assets for a life after COVID-19?

You may be in the fortunate position to have personal or business assets built up, but now you need to consider how to make best use of them:

Where should I put my cash?

Whilst it is comforting looking at a healthy bank balance interest rates are at an all-time low and will be for some time - so the future for business savings is bleak. Obtaining the best rates is always important but more so now - it may be the last thing on your mind if you are busy fire-fighting, but you may also have the time available to do the review you always had planned depending on how your company is impacted by COVID-19.

Banks usually want you to move all of your business banking at the same time, something you might prefer to avoid in the current climate particulary if you are making a CBILS loan application. However our financial planning partner, Tilney, have a Cash Management system, enabling you to shop around for the best rates in one location; one account can give you access to a number of others, without having to move existing business banking arrangements. e.g. with a sum of say, £250,000 and instant access rates on offer of around 1.4%, you could net yourself an extra £3,500 a year, whilst maximising financial services compensation scheme (FSCS) coverage, currently £85,000 per bank, at a click of a button…

What if....you know?

How would your business cope if you or your business partners were not available for a period of time? How would your family cope without your income? How will your business loans be repaid if you lose a key worker? These are questions we ask our clients regularly, but have become even more relevant in the current pandemic. If you have or can put in place life insurance/critical illness/income protection, you can not only ensure your business continues, but also protect its value for your family’s well-being. We recommend you should have personal Powers of Attorney (POA) in place if decisions have to be taken where one of the business owners is not available for whatever reason, and review your existing articles of association to identify what would happen on the death of one or more of the shareholders - they may not say what you all think they say and the last thing anyone will need is a protracted legal dispute. Similarly it could be an opportune time to update your Will or, in the event that you haven’t got one, put one in place.

What about my pension?

There is no magic money tree - given the extent of Government spending tax reliefs could be hit hard in coming years as they seek recover some tax revenues. If you are able then make use of the pensions tax reliefs whilst you can – with reliefs of up to 60% on personal contributions and potential Corporation Tax relief on employer contributions, it remains a no brainer. Thinking positively low stock market prices make investments far more attractive than they were when the FTSE-100 was at 7,600 points. e.g. if you contribute £10,000 into a pension, due to basic rate tax relief, £12,500 will be added to your pension and, if this makes a 10% return, in the next 12-months, the value would increase to £13,750, representing an effective return of 37.5% on the £10,000 payment.

If you have the business property in your pension, ask your pension provider about rent holidays if you have not already - they could allow a rent-free period or reduction, to ease the burden of ongoing cost.

Review your pension investments and your level of investment risk. Markets are down, which can signal a ‘buying opportunity’. Whilst there are no guarantees, with at least a medium term view, there is a tremendous opportunity for growth. If you are having difficulties maintaining workplace pension commitments, contact The Pensions Regulator, to see if they will grant any flexibility in payments, during this period of uncertainty.

Summary

Whilst you think you may be powerless at present, there are things you can be doing to protect your business and your family. Please get in touch with your usual Haines Watts contact if you would like to discuss any of the matters raised above