Join me, Liam Ryan, on The Dealmaker Podcast, as I sit down with Mark Stokes for a deep dive into tax efficiency strategies for business owners. In this enlightening episode, we explore how to strategically reduce your personal tax burden by transferring everyday business expenses into a limited company. Mark, with his extensive background in commercial property investments, shares key insights into building multi-generational wealth and leveraging tax breaks effectively.
We’ll also delve into the advantages of different pension schemes, focusing particularly on the Small Self-Administered Scheme (SASS), which allows investments in commercial property among other assets, offering substantial tax breaks and inheritance tax benefits. The discussion is timely, considering recent government changes that have made pension lifetime allowances uncapped, presenting new opportunities for investors.
This episode is packed with expert advice for turning your company into a tax-efficient powerhouse, ensuring that every listener can take away practical tips to implement immediately. Whether you’re an established business owner or just starting out, understanding these tax strategies could significantly enhance your financial landscape. Join us as we unpack these complex topics with clarity and actionable advice.
KEY TAKEAWAYS
- Becoming a company owner in the UK can provide significant tax efficiency opportunities, such as being able to expense various business-related costs through the company.
- Small Self-Administered Schemes (SASS) are a unique type of pension that offer business owners more control and investment flexibility compared to traditional pension schemes. This includes the ability to invest in commercial property and loan money to the sponsoring company.
- Recent changes to the lifetime allowance for SASS pensions have made them even more attractive, as the allowance is now uncapped, allowing for greater tax-efficient wealth accumulation.
- Combining tax-efficient strategies like SASS pensions with commercial conversion opportunities can provide business owners with the potential for double-digit returns and the ability to build multi-generational wealth.
FULL TRANSCRIPT
In this session, I am with Mr. Mark Stokes, and we are going to do a deep dive on all things tax efficiency, and we’re really going to share with you some golden nuggets on what you can do to earn more money and pay less tax. This is going to be an absolute game changer. Disclaimer, we are not tax advisors, so you must take your own tax advice. We are just sharing our experience to give you some inspiration and motivation for you to make changes. So Mark, we’re back in the studio again for part two. Man, let’s just get straight into this so people become a commercial conversion specialist, property investor. They do their first deal, they make 300 grand. They do their second deal. Make half a million quid. They do their third deal, they’re up at another half a million quid all of a sudden as a commercial conversion specialist, following your seven step commercial conversion blueprint, which has been tried and tested and guaranteed for over 30 years now, your entire life’s work, you’re then in a position relatively quickly, 123, years from now, Where you’ve got, let’s just call it a million pounds worth for profit. What the hell do you do? So talk us through that, and maybe talk us through what was tax like for you before as an employee versus what tax is like today?
Yeah, when, when I left corporate life back in 2015 what was very clear to me was I needed to convert myself, and in a number of ways, I need to take control of my time and take control of my tax transformation. I had spent 25 years as a high income. I was always earning six figures or more multiple six figures. And for anybody who’s earning that, they’ll recognize that they’re paying 80 100 120,000 in tax every single year.
What was it like getting your pay slip every month? And literally, what you know, 50% plus is gone, yeah,
but to be honest, it wasn’t that. It didn’t feel that bad because I didn’t know any different, right? What felt bad was back in 2015 when I realized it was another way, and then I added up 25 years of tax that I’d paid, that’s a quarter of a century. Wow, yeah, you’re talking about millions of pounds of tax. Now, don’t get me wrong, paying tax is a good thing for society. But why would you pay tax? Nobody says you have to leave a tip, right? So why not engage with a great accountant and work out how to become most tax efficient? So I knew this start with the end. In mind was super crucial. There is no point in earning a million pounds of profit if you’re going to give half a million of it to the taxman unnecessarily. So part of that commercial conversion to me was part of the personal mindset that I am providing a huge amount of goodwill, a huge amount of product services to society and HMRC give me a lot of tax breaks for doing it. What are those tax breaks? How do I structure it right? And by being a company owner, I can transform everything, and that’s from multi generational wealth. I said in the first episode of this series with four children, I wanted to create that multi generational legacy. Well, I can now do that, because I can lock in the wealth creation with shareholding, shareholding for my family. And that was my first transformation here, that when I was in corporate life, it was always, how can mark earn more as the breadwinner in the family? Now I’m thinking, Yes, how can we. Work more collectively so that the household creates more.
It’s not just about you being tax efficient. It’s about the family and the household being tax efficient. Absolutely, because the reality is, they say something like 40 to 70% of every single pound that people earn in the UK will go on some form of a tax, corporation tax, income tax, National Insurance, inheritance tax, and these taxes are going up and up and up all of the time. And one of the ways in which I know in which you can become really tax efficient is by becoming a company owner in the UK, and actually having a limited company is an incredible thing to do. And then there’s all these other things, like pension type products, and we’ll talk about that in the next few minutes as as a business owner in the UK. And again, we’re not giving tax advice here, but as a business owner, what are a number of the different expenses that you could be running through your limited company. For example, Mark, yeah, I think most, most people of individuals, have pared down their cost or in a cost of living crisis, they pared down as far as they can. But what they haven’t necessarily explored is how they transfer some of those costs into their company. And there are legitimate ways of doing this. HMRC and your accountant will help you do this, where you can expense all of your your meeting costs, for instance, working from home, the cost of your phone, the cost of premises, cost of travel, the cost of investment. We’re both number one best selling authors. So anything I read my research is all a legitimate business expense. So all of these elements here, the most precious money that I have is my after tax money, because it’s already been taxed once. So I’m protecting that that is sacrosanct. And so the business strategy, the business structuring and focus is all around that, and that is so relevant to creating long term compounding and wealth creation, as we know, from a property perspective, we are going to be not only having a holding company structure, which is where our marketing, our brand is. But we also have a special purpose vehicle. So this is a special purpose vehicle set up for one use, and that is to acquire, convert and then sell the individual units. And again, the government gives us very significant tax breaks to enable us to earn great profits, but also then use those profits to recycle back into our own wealth. After all, we are taking the risk. We are the catalyst of wealth creation as developers, and we use our holding company structures to make sure that we get the appropriate level of remuneration we use our pension structures. Yeah, let’s talk about pensions. So there’s a lot of different types of pensions out there. If you can give us some information on the different types of pensions that most people are aware of, the ups and downs of some of those, and then what is a type of pension that business owners in the UK can do? And why would you say that is probably one of the best types of pensions for us to be using?
Yeah, so there are mainly two different types of defined contribution and defined benefit schemes that most people have been involved in over their working life. Maybe they know they’re contributing. It just disappears out the pay pack at the end of each each month. I had a very bitter experience when I left corporate life. My business partner, who left corporate life with me all the hopes and aspirations of doing the best for his family, he sadly passed away at the age of 54 and his his widower, she secured 50% of his profit. So the question, you know, as devastating as the loss was, you know, she’s now lost 50% of the pension. So a question that I think most people should ask, but most people don’t, is, what happens if I die to my pension? And the reality is, if your partner passes away, or you or your partner passes away, the other will only receive 50% if, God forbid, you both pass away, then you’ll get nothing, and the fund managers will get the rest. I mean, that’s the gritty reality of it. So back to the transformation and the commercial conversion of me. I had to change that commerciality. My pension was the largest bank account I had after 25 years in corporate life. I was 44 when i. Retired from that life, and I needed to really test the boundaries. So how can I take control of my pension at 44 the 25% tax free drawdown did not exist back in 2015 and so I made that decision to explore different options, and I explored things like a SIP trusts. But I found something very intriguing, and this was a SAS, a small self administered scheme. And having employed ifas for 25 years, I was astounded to find out nobody had ever mentioned this thing. And I eventually realized it’s because they don’t make any fees. They get commissions from it, no commissions at all. So this was one of the greatest secrets that I uncovered. Wow, and I was so passionate. I’ve written a number of books on this subject, but you can set up a trust, and this will help mitigate inheritance tax, any number of things. And it to be honest, it brings pensions to life. You can acquire commercial property in your SAS. You can do all investment strategies that you normally can. You can invest into Bitcoin.
Bitcoins, what can’t you do with a SAS? You can’t invest so the SAS can’t have any interest in residential property. That’s 99% true. There are a couple of minor exceptions, but you can’t invest in residential and you can’t own tangible movable assets, so things that can be lifted up. So your car collection, for boats watches, you know your Gulfstream g6 so now you can’t have that in your SaaS trust, but pretty much everything else you can great commercial property investments, and there are a couple of unique things as well. So I could loan you money, right? You could loan me money. Great. We could loan our company money, and that is unique. No other form of pension will allow you to loan to your company. It’s called a sponsoring company, and that’s a privilege given to us by HMRC, and we’ve both done it with our SaaS. So we know that that freedom and that freedom of being independent of other funders is a privilege we can take advantage of absolutely love that. Well, just to give an example, I recently did a an unallocated fund transfer into my pension, because you get your you can do your 60k a year, can’t you? And then there’s me and my wife as trustee. So we could do, we actually did a half, half a million pound between us, unallocated fund that went into the SAS zero corporation tax on that. So let’s just call it 25% that’s 125,000 pound tax saving. And then, literally, a few weeks later, the SAS lent back the company. Half of that, a quarter of a million quid, which can then be used to operate in marketing and staff and growing the business and all type of stuff. It’s, it’s absolutely incredible. And certainly, if you’re making, you know, whatever money you’re making actually, you know, again, if you’re a business owner, putting into a sassy is, is really, really, really, really good. So, and the the earliest you could have set up a SAS. And when I was born in 1969 the earliest time you could set up a SAS was 1973 so they’ve been around for 50 odd years. How many, how many people in the UK have got sasses? Would you say? So the pension regulators last statistics were just over 22,000 that is it. And how many business owners? 70 million population, and, you know, two or three millions business owners. What the hell 22,000 and that’s the unbelievable, isn’t it privilege. But as we said earlier on, there are no fees in it for the IFA now, it is a privilege to have a trust. There are clear rules, there are some constraints, but I think we can both agree as SAS trustees, the opportunities are almost boundaryless compared to your traditional stakeholder pension scheme, where you’re going to fund managers? Well, you can decide they say something like a fund manager will make you six or 7% a year, if you’re lucky, then they’ve got all their fees. And by doing a SaaS, you are in full control, working with your trustees, of course, full control of what you invest into. I’ve recently just undertook a whole bunch of investing mentoring. You know me, and you a huge on mentoring. I’ve got an investing mentor that’s really been showing me you know how to invest safely and securely, buying the right things at the right time, and getting involved with ETFs exchange traded funds, and it’s been. Absolutely remarkable, because now I can really see that I could be making double digit returns every single year and not paying out these huge fees. So any money you make in the SAS, so let’s say you get it, it’s uncapped as well. Now, isn’t it? It was capped recently. Can you just talk us through that? Because it was a million pound per trustee, and you can have 11 trustees on the SAS and just talk us through some of the positive changes that have happened recently. Yeah, yeah. So the Conservative government, back in April 2023 they lifted what was called the lifetime allowance, which, as you say, was, think it’s 1,000,070 and it was indexed up slightly, but they have now reduced that. Sorry, they’ve now eliminated that completely. So no lifetime allow uncapped now whether the new government will make changes back again, who knows, but we can just take advantage of the opportunity that exists for us. Fantastic. So there’s that continuous emphasis on the government is to make sure that people are in a vibrant position so they’re not a drain on the public sector purse when they get to retirement, great. And when you look at the retirement you know, pension contributions and the annuities. I mean, who can live on 1011, 12,000 of any form of life, yeah, yeah. So look loads of opportunity there. But as business owners, if we combine SaaS pensions with commercial conversion opportunity, yeah, I mean, you just get that double digit growth probably, you know, 20, 30% return on commercial property and on that tax efficiency. Brilliant, brilliant, amazing, brilliant. So anyway, well, thank for those insights.
I’m hoping that people tune in to this, have woken up that they do not have to carry on paying as much tax, tax as they have done in the past. And there is a way out. One of those ways out is to come and hang out with us right Mark and come to one of our commercial conversion discovery days. And we run those online. We do those in person, Mark and I, we run a three day advanced training. We’ve got great mentors like Phil elder and the whole assets for Life team. So look, if you are tuning into this now and you want to get more tax efficient, you want to start scale and grow a commercial conversions business.
You want to be making at least 250,000 pounds from just one simple property transaction. And just so you are clear, you don’t have to lift a brick, you don’t have to be a builder, you don’t have to be a surveyor, you haven’t got to be any of those things. And you’d also like to do this using none of your own money and scale. And ultimately, if you want to become a millionaire, if not a multi millionaire, and build that legacy for your future, this is the strategy for them. Would you say Mark 100% it’s possible. It’s the potential that resides in every single person out there, you just got to reach out and grasp it, make the
decision, get involved. Come and hang out with us. Www.assetsforlife.co.uk, get yourself booked on to one of our up and coming commercial conversion events. If you are new to this, this episode, please make sure that you subscribe, share and comment. We really want the algorithm to kick in and get this in front of as many people as possible. So we really appreciate if you could do that. Thanks for tuning in. Liam, Ryan, the deal maker podcast, and I’ll see you on the next episode.
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