After what has been a super tough year, my husband and I decided we needed to get away with the kids and some friends for the weekend, make some new memories. We decided upon Woolacombe. It’s my absolute happy place, with its beautiful sandy beach, where I can surf with the kids in the day, great pubs and normally plenty of sunshine.
One evening – after a glass or two of bubbles – I had an idea (fizz always generates the best ideas ha). As a business owner myself, I’ve been wanting to share a look into my business and the ‘real’ me. As an accountant it can be hard to detach yourself from the profession. So, what better setting than holiday times, a glass of prosecco and my friend Zoe to draw out the real Carrie and the things that really matter to me in business and in life.
Fuelled with Prosecco we talked about everything from… properties to plans, to pensions…..and practicing what I preach.
I think I may have geeked Zoe out a little with my love for tax efficiency, but I can tell I rubbed off on her a little. Here goes….
ZOE: You and I have known each other for a long time, and I obviously know you well but lots of people reading this won’t. So, let’s get straight into it, who is Carrie and what is it that makes you tick? Ha, this could be therapy!
CARRIE: This does feel a little like therapy! Although perhaps not with a glass of prosecco in my hand?!
But I guess first off, this is when I am my happiest, with family, friends and fizz. I try to make the most of life, enjoying the simple things. And Neil and the kids are everything to me. Will’s now 11 and Lucy is 8, although going on 16! I swear I’m not old enough!
But me personally, I absolutely love being in the outdoors – especially running – and getting stuck into a challenge. I’m always trying to beat my PB. I’d definitely say I am an ambitious person. I’ve always got some kind of goal I’m working towards, whether that’s for me or Spotlight. Although it can be hard to separate the two sometimes. But yeah I’m always doing something!
And I’m always, planning for the future. This is important to me. Over the years we’ve invested in properties, and I want to focus on how these are structured over the next five years. I also want to up my game in terms of funding my pension provisions, so that we can look to buy a commercial property we have out of the business.
Sorry, I slipped into business mode there! But this does all come back to family for me, and so ultimately, I need to understand how I can pass everything down to the kids, and more importantly in the most tax efficient way.
ZOE: You don’t have to apologise, I wish I was as on it as you are! You’ve achieved so much, especially with Spotlight it’s amazing, I’m a very proud friend.
But how did it all start? What made you think I’m going to start a business today?
If only it was that easy! It’s been a bit of journey to get to where Spotlight is now. It’s more than 20 years ago – shock horror – since I started out with my accountancy training at, BDO. After almost 5 years there I moved into industry, running the finance function for a group of companies. And I don’t know if it was just where I was in life, or the business – a bit of both probably – but the frustrations started to kick in.
I just didn’t feel like I had any real quality of life, I was getting to burn out. But I did always secretly want my own practice too though. Back to even when I was a kid, I used to help my Grandad count the cash in his pub at the end of the night whilst eating digestive biscuits.
But, there was a real low point for me back in the corporate world. It was Neil’s Christmas do and I’d waited up to go and collect him from the party. On the way back he fell asleep in the car and so when we got back, I started working on the banking reports for the business I was finance director in so we could release the funds for payroll. I know, terrible. Neil woke up and couldn’t believe what I was doing. That was a bit of a wake-up call really…something had to change. So, we did.
We had enough to cover my salary from a buy to let property we had sold and we took the risk. It was scary but oh so liberating!
After about 4 years in, it finally felt like I had a business, but I’d built a bit of a monster. I made some classic mistakes, taking on any business and not investing enough into the right staff. In the end I sold 75% of the fee base and retained a small portfolio of clients building it up to where Spotlight is today. And I’ve done some pretty exciting things work taking me to Cyprus and even working with celebs. Who says accountancy is boring?
ZOE: So how is it going at Spotlight today?
CARRIE: I genuinely feel like I’m finally where I want to be, doing the really fulfilling work that I love doing for clients and it feels great. I’ve got a great team of 5 around me too, which is growing to 6. I’m also much more selective about the clients I take on.
But I feel ready to go for that next step, the next goal. I’ve always got a goal, haven’t I?!
And although doing more for the clients I have, is my number one, I do want to get 24 new clients. That’s 24 really good clients, that have invested in their growth and are at £250K-£2M turnover. A bit like Spotlight and me, they’ll be wanting an even better understanding of their business numbers, advice for being as tax efficient as possible and business planning to support their growth.
I’ve done the calculations, and developed a business plan, so I know my business can support this. I also recently brought in another full-time accountant, so I can spend more of my time working on these higher value services for clients, like tax advice and consultancy-based services.
I’m careful to practice what I preach though. After all, it’s how I’m able to help my clients get to where they want to go.
ZOE: It does amaze me how passionate you are about your clients and helping them.
What’s in Carrie’s plan then?
CARRIE: I do care about my clients a lot. I’m on this journey with them and I want them to be successful. That’s what I mean when I say I practice what I preach.
So, amongst the business planning and financial forecasting, one of the services is a Tax Diagnostic Review. I’ve recently done the Growth Tax Diagnostic Review on myself and Spotlight, and this feeds into the plan.
And if I stick to my plan, I’ll be able to take an extra £624,350 of value out of the business over the next 5 years – all TAX EFFICIENTLY. That’s a pretty big deal.
But there’s three kind of main areas in the plan. There’re the things I want to do that relate to our properties, then other things I want to put through/take out of the business to improve our lives as a family, and finally what I want to do for the business and the team.
Ultimately though the plan is just about facilitating what we want and need as a family……mainly sorting these properties!
ZOE: That is a really big deal! So, breaking down this plan, starting with the properties in your life. So, when it comes to tax, what are you doing that relates to the properties to get more for you?
CARRIE: There’s just a few properties in my life. I guess that’s what happens when you marry a builder! For me, it’s simple: it’s all about understanding what the business needs to do in order to help fund our various property projects. There are three main properties in the plan though, and we basically want to renovate and maximise the income from these. As you can imagine the current project needs funds.
One of the simplest things we are doing relates to employee number six I mentioned before, this is actually Neil as he is getting more and more involved in the business. As employees, together we can take out £100K tax efficiently each year between us via salaries and dividends. This income splitting allows us to access a lower tax bracket and an additional personal allowance. The salary paid to Neil will be subject to lower rates of tax compared to mine due to his other income. Then splitting the dividends between us will reduce the tax payable based on his lower tax rates. Furthermore, Neil will be able to receive tax free pension payments from the company as well as contribute personally before his salary is taxed (up to his annual allowance). This gives us enough for a comfortable living and means we can invest the rest into the current project!
I’ve also taken out the relevant tax-free company loans from the business to invest into the property, I’m backing myself here as one day it WILL be a decent revenue generator.
And the last property I’ll mention – the one owned by the business – we’ve actually borrowed against it, so we can invest into the current project.
I do love the current project though. It’s 4-story Georgian town house – that one day will be an Air BNB – with a really cool bank vault. As you know we are living in it now. But the plan is to renovate it fully over the next 5 years, move out and then rent it out. In terms of a return on investment we’re aiming for 45%.
Ahh and then there is our dream home, our forever home. As you know at the moment it is just a field, but at the moment the plan is to get it built and clear the mortgage over the next 15 years.
The last property is the one owned by the business. This is probably more in our 5yr + plan. But once we get current project fully renovated and the dream home mortgage is well on its way, I do want to start increasing my pension contributions because of the benefits. Tax relief on the first 25%, carry forward rules and protection from tax until passing make a pension a sound place to park profits where they can continue to be invested and grow. So bringing this back to the property currently owned by the business. If I can put myself in the right position, I can transfer the business into my own SSAS fund, to eventually purchase this property out of the business.
When the property is owned by my pension, I can rent it to my business and the rent received will be tax free. Also, any growth in the value of the property will also be tax free if my pension decides to sell the property at a later date. All of this allows me to build up a bigger pension pot for my future retirement without losing a chunk in tax and maximising the value I extract form my business.
ZOE: Sounds exhausting! Top up? I can see how all of that massively contributes to your life goals. What other things are you putting through/taking out of the business to build a better life?
CARRIE: Ah yes, top-up please! So, with everything else, it’s all about getting an understanding of where I can maximise what I can put through and take out of the business. You know me I only need a nice holiday abroad every so often. And cars aren’t really important to me (though I’ve helped a number of my clients with switching to electric for the tax benefits).
But there are things we do that would be silly not to. For example, there are items that Neil and I own that we rent to the business, for which we receive the interest. We’re both receiving the full £1K tax free out of the business here.
And I always ensure I’m maximising all allowable business expenses meaning money is coming out of the right business pocket, not mine when it would be wrong for me to expense it personally. For example, always claiming business miles and home working expenses, totally relevant now with the impact of Covid-19.
Then there’s trivial benefits which are keeping me, and you nicely topped up with prosecco (well not quite)! But via trivial benefits you can purchase anything via the company up to a value of £50. The total amount that can be spent is £300 in a year, which is a great little benefit. Invariably this does go on my favourite tipple, shared with good company. This is something I can share with the team too. It’s just a really nice, and personalised way to say thanks for everything they do.
ZOE: Cheers to that! Are there other things in the plan that effect the team?
Yeah, I mean the trivial benefits are just a nice treat really but amazing all the same!
There are other lovely benefits we maximise, like staff functions. Providing the cost per head is less than £150 – it’s not taxable on the employees. I think after the year or so we have had with Covid-19 we’re overdue a good do!
And after working so hard to get to the right team, I’d hate to lose any of them. It’s more than that though. I want to see them grow and be successful alongside the business. That’s why at the right point in the future, I’d like to seriously consider a company share option plan for the right people in the business. It’s a great way of getting key team players seriously invested into the success of the business. They get to benefit – tax efficiently – from the company’s growth.
The team are such a big part of the success of Spotlight, I want to be able to reward the right people properly.
ZOE: Sounds like a fab place to work, and fab little team you have. Well, I’d never have thought tax savings could have such an impact on your life.
CARRIE: I knew I’d be able to get you excited by tax! It’s pretty amazing the impact tax can have on your life, and it’s not just your business. By focusing on the tax position of the business, it can genuinely help build you a better life. You’ve just got to understand your numbers first.
Do you know the business numbers you need to build the life you’ve dreamed of?
Let us help you build a plan to get you there.Get in touch and start your journey with Spotlight today.