Unsure what to do with excess company funds

C

CrossFlares

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8
Just found out from my Financial Advisor this week that there will be restrictions placed on employer PRSA contributions from January 2025.
They told me not to worry about it as there are ways around it and we've plenty of scope to make contributions for previous years service.

Both me and my partner (both the only directors/owners of our company) are in our mid 40's.

We have just over €500k of cash reserves in the business earning next to nothing in our business savings and current accounts. I have contacted our bank twice this year to see what other types of accounts are available for these funds and I'm still waiting to hear back from our 'Relationship Manager' whom I've spoken to once in 10 years.

The plan in our heads was to let this build up to €1m which should be achievable in the next few years. Then I step back from the company and take out the cash by availing of 'entrepreneurial relief' and we buy ourselves a dream forever home.

However, reading other posts, it may not be that clear cut extracting the cash like that.

Our current pension planning is as follows:
Me -
Irish State Pension
UK State Pension
Pension Income from 2 bed property purchased in 2024 through Pension Structure

Partner -
Irish State Pension
UK State Pension
Plans to purchase property through their Pension Structure in 2025 (probably 2 bed apartment)

Jointly -
We own a residential property in our own names (not through company or pension). Rental Income €2,500 p.m. The rent covers the mortgage and most of the tax bill. This tracker mortgage should be paid off by the time we retire. House is worth approx. €400k and €180k left on mortgage.

Other personal assets
Enough savings to cover our salaries for 8 months.
Our current family home that has about €300k left on the mortgage. Equity is approx. €350k.

I'm just a bit concerned that our financial advisor didn't get in touch to let us know of the change in pension regulations. I only found out when I got in touch with them to query a fee by the pension provider of 0.25%, on top of that the financial advisor charges a fee of 1% of assets.

So I guess my question is - is our plan to buy our dream home availing of entrepreneurial relief viable or should we be pumping it all into pensions instead? And should I think about changing our Financial Advisor?

Thanks in advance
 
That's not how entrepreneurial relief works unfortunately. Retirement relief is closer to what you're thinking about, but ultimately you really need to have a very deep discussion with your advisor about this.
 
flyingfolly said:
That's not how entrepreneurial relief works unfortunately. Retirement relief is closer to what you're thinking about, but ultimately you really need to have a very deep discussion with your advisor about this.
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Thanks for your reply. Hoping to avail of it before I'm 55 which rules out retirement relief unfortunately. I was under the impression I could avail of entrepreneurial relief by disposing of my share in the company.
 
Yes but you can't just sell your share in the company and pull out all of the money at 10% tax. Someone needs to buy your company shares and you get charged 10% on the sale of those. Noone would buy a company just for the cash in it so you need to look more into this
 
Absolutely, sure if it was that easy we'd all be doing it! I definitely need to do more research. I've been reading the Revenue Tax and Duty Manuals on the topic but worried I'm not interpreting them correctly. I clearly need specialist tax advice, any recommendations (if allowed) would be greatly appreciated.
 
Have you an accountant?
 
You should find yourself and AITI/CTA qualified tax adviser. Neither the bank nor this financial adviser person seem to have a notion.
 
I wouldn't rely on it for your final tax advice BUT chatgpt is useful to have a discussion with and ask it questions around how it all works. THEN go to an advisor for your financial advise with the basic knowledge at least.

That's what I did with entrepreneurial tax relief (sold my company last month)
 
Gordon Gekko said:
You should find yourself and AITI/CTA qualified tax adviser. Neither the bank nor this financial adviser person seem to have a notion.
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Thank you
That's an excellent idea, never thought if using chatgpt but ideal for helping me gain a better understanding of the ins and outs before I go to an advisor. Thank you so much.
 
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