Aspiring older entrepreneurs should be given greater tax-free access to their pension savings in order to fund new business ventures, a lobby group has advised.
In its new “Age of the Older Entrepreneur” report, the Institute of Directors (IoD) has urged the government to extend the existing arrangements that allow retiring workers a 25 per cent tax-free withdrawal from their pension savings, if the money is earmarked for a new business.
A relaxing of tax penalties by the Treasury would help fuel entrepreneurship among talented older people in an ageing population, the IoD claimed.
Outlined in the report was a theoretical £100,000 cap on the withdrawal amount, or ten per cent of the fund’s value, if the money is invested in the same year.
The group also called for greater flexibility in the tax system to help workers of all ages access skills training, and proposed the introduction of a “shadow personal allowance” to reflect individuals’ income tax liability and support new enterprise.
Commenting on the proposals, Lady Barbara Judge, chairman of the IoD, said the “wisdom, experience and good judgement” of would-be older entrepreneurs should be met with a greater financial support for starting a business.
“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,” she said in a statement.
“It is crucial that those who choose these routes have the right tools, and feel adequately supported in the process.”
Research from the IoD revealed that over half of its members identified as entrepreneurs, with a majority of respondents aged over 50 years old.
Judge added: “Choosing to take financial and business risks later in life can be difficult and I applaud any person who decides to take this route.”
The rise of the olderpreneur
A recent study confirmed Britain’s older entrepreneurs – the “olderpreneurs” – to be the fastest-growing age group of new business founders in the last ten years.
The research, by Barclays Business Banking, found that older entrepreneurship had increased by 140 per cent in the last decade, supporting the IoD’s claims that retiring and pension age workers continue to demonstrate a strong appetite for enterprise.
By comparison, there was only a 23 per cent rise in the number of startups founded by those aged 25 to 34 years old.
Welcoming the figures, Barclays Business Banking CEO, Ian Rand, said that it was important to acknowledge Britain’s growing community of olderpreneurs.
“At a time when they could be planning for retirement, the over-55s are utilising their skills by putting their wealth of experience and business knowledge to use, breaking down stereotypes in the process,” Rand said.
Top ten business tips for mature entrepreneurs
- Have confidence in your abilities
- Know your subject – it is key
- Know your business strategy inside out
- Get tech savvy
- Always take your time, even if you feel like it is limited
- Look after your wellbeing
- Trust your gut instinct
- Find your passion
- Prioritise what is important to you
- Don’t be afraid to ask for help
Find out how to prevent your new business idea from being stolen
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