Let entrepreneurs use pension pots, urges IoD

Wednesday 20 September 2017

For many entrepreneurs, securing the funding you need to set up a business can be the most difficult step in becoming self-employed. Many business organisations have spoken of the need for easier access to money in order to help with this issue, and most recently the Institute of Directors (IoD) has come up with an interesting new option.

The business group has called upon the UK government to consult on allowing people to withdraw money from their pension pots, tax-free, as long as it is used to invest in their own start-up enterprise. This would be in addition to the 25 per cent tax-free allowance that currently exists.

Lady Barbara Judge, the IoD's chairman, said: "It is a cause for celebration that an increasing number of experienced workers are going it alone as entrepreneurs. It is crucial that those who choose these routes have the right tools, and feel adequately supported in the process."

This call comes off the back of research conducted by the IoT, which found that one in six business leaders does not intend to retire. The business group suggests that starting a business could be one way to achieve this, especially considering the surprising statistic that 53 per cent of IoD members consider themselves entrepreneurs.

The IoD's 'Age of the Older Entrepreneur' report found that the fastest-growing demographic among the self-employed in the UK - "by a long way" - is older people, particularly those over the age of 60. The group therefore has looked to ways of supporting the older entrepreneur, and allowing them to withdraw from their pension pots is merely one way to achieve this.

For example, the IoD believes the current tax system should be changed to allow for more professional development for older people. The group has proposed the introduction of a "shadow personal allowance" that would be offset against income tax liability in order to allow people to access more training than they are currently able to.

Lady Judge said that older entrepreneurs "are people with wisdom, experience and good judgement, who can have many years of productive work ahead of them". She added: "The government should consider introducing tax incentives to encourage people to pursue their ideas and invest in training, so that they can continue to have fulfilling working lives beyond the age expected by previous generations."

By Victoria McDonnell

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