Every business owner wants to protect and grow their hard-earned wealth. We have worked with a wide range of clients to help them find the right balance of tax planning, asset protection and succession strategies. This blog explores key approaches that can support business owners who want to keep more of what they have built and pass it on in a structured way.
Why wealth retention matters
Successful businesses bring rewards, but they also create obligations. The more you earn, the more tax you may be expected to pay, and the more risk you may face if your assets are not protected. Planned measures can reduce these pressures. A proactive approach also helps you support future generations, whether you intend to pass your business on or use your wealth to create new opportunities.
According to a report from the Office for National Statistics, family-run businesses account for more than 25% of the UK’s GDP. These enterprises often seek guidance on how to retain wealth over the long term. We help clients by showing them how to manage taxes, develop contingency plans and safeguard personal and commercial assets.
Strengthening wealth with effective tax planning
Tax rules have a direct impact on how much wealth you can retain. For instance, the annual exempt amount for capital gains tax (CGT) in 2024/25 and 2025/26 is £3,000 for individuals. This figure has been reduced from previous levels and could affect your strategy if you plan to sell shares or assets. There is also a lower dividend allowance of £500, which means that dividends above this amount are taxed. Higher-rate taxpayers may be liable for even more.
Business owners often pay themselves through both salary and dividends, so we help them explore the best mix. Salaries incur national insurance contributions, while dividends above the allowance are taxed at dividend rates. A balanced approach might involve taking some income as salary to retain state pension benefits, with the remainder as dividends to reduce overall tax.
Regular reviews of your tax position can reveal new allowances or reliefs that could save money. For example, reinvesting profits in qualifying business assets can bring tax relief. Reliefs such as business asset disposal relief might apply if you sell your business. Staying informed about tax updates can guard against unnecessary bills. The HMRC website has official guidance for reference, or we are just a call away.
Guarding personal wealth with asset protection
Asset protection ensures your personal wealth is shielded from potential threats. Some business owners place valuable personal assets (such as investment properties) in separate legal structures. This approach can protect them if the business faces legal action. Directors can also consider personal liability insurance.
A strong shareholder or partnership agreement can reduce problems if disputes arise. These agreements specify rules for ownership, decision-making and what happens if key individuals leave. They can also include clauses that restrict the transfer of shares to external parties.
Succession planning for long-term security
Many business owners want to pass on their enterprise to relatives. This is where succession planning comes in. It sets out who will take control, how ownership will be transferred and how everyone involved is supported. Changes to inheritance tax thresholds or reliefs can affect the final plan, so it pays to review them well before retirement.
The nil-rate band for inheritance tax remains at £325,000 for the upcoming tax year and the residence nil-rate band is still £175,000. The business property relief rules can reduce the charge on certain types of business assets. Thinking ahead can prevent misunderstandings, reduce tax charges and ensure a smooth handover. We recommend starting succession talks with family and advisers early, so all parties have time to consider options.
Taking steps to invest in your future
Business owners often reinvest profits in the company, which can be a solid strategy for growth. Yet it may be wiser to diversify. Many clients we work with choose to invest in pensions, ISAs or other assets. In 2024/25 and 2025/26, the maximum annual pension allowance for most individuals is £60,000, subject to earnings. This higher limit offers scope for business owners to top up retirement savings. ISAs remain a popular choice for those who want tax-free returns, with an annual subscription limit of £20,000.
Investing outside the company can help soften the impact of economic ups and downs. An unexpected shift in demand or a sudden expense might harm one area of your business, but diversified funds can provide a buffer. Some business owners also explore venture capital trusts or the Enterprise Investment Scheme. These options can bring tax reliefs, but they carry higher risk. Professional advice is recommended before making decisions on more complex investments.
Reviewing and adjusting plans regularly
Tax legislation changes, and so does your life and business. An annual or biannual review of your wealth-retention strategies can confirm you are making the most of available reliefs and allowances. Adjustments may be needed if your turnover gross, if you plan to expand or if personal circumstances change.
Comprehensive reviews might involve discussions with accountants, solicitors and financial advisers. Each professional offers a different perspective. We often coordinate with our client’s solicitors to align succession plans with legal documents like wills. We also work with independent financial advisers to ensure investment strategies reflect your goals and the current tax rules.
How we support you
We have more than 180 years of experience at Pearson May, and we use our knowledge to help business owners find a practical approach to wealth-retention strategies. Our team can suggest ways to reduce tax, build investment portfolios and put forward plans for future generations. Learn more about our services here.
We work closely with clients to develop wealth-retention strategies that fit their commercial aims and personal goals. Visit our private client services page for further details or to arrange an initial meeting. Our advice is built on thorough analysis and our focus is always on your peace of mind.
Final words
Wealth-retention takes careful planning and a willingness to stay informed. A combination of wealth-retention tax strategies, asset protection and succession plans can help you keep more of your wealth and share it according to your wishes. We know no two businesses are the same, so personalised advice often makes a difference.
If you’d like guidance on how to keep more of what you’ve built, talk to us at Pearson May. We’re ready to help you put the right plans in place.