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Can You Claim Financial Advisor Fees Through Your Business?
A financial advisor can be invaluable when it comes to growing your wealth, protecting your money, and reducing tax on your estate, income, and investments. They help you make smarter financial decisions, whether it’s planning for retirement, managing business profits, or safeguarding your assets. But can the fees you pay for their advice be claimed as a business expense? Let’s break it down.
Disclaimer
This blog is for informational purposes only and does not constitute financial or tax advice. Always consult with a qualified financial advisor or accountant to discuss your specific circumstances and ensure compliance with current regulations.
When You Can Claim Financial Advisor Fees
You can claim these fees as a business expense if:
- The advice is solely for the business. For example, guidance on investing business profits, structuring employee pensions, or succession planning.
- It directly benefits the company. Think advice on company tax strategies or setting up a corporate investment fund.
Top Tip: Keep the invoice and ensure it clearly states the advice was for business purposes.
When You Can't Claim Financial Advisor Fees
Unfortunately, some fees can't be claimed through the business:
- Personal advice. This includes advice on personal pensions, ISAs, or investments.
- Mixed-use advice. If the advice covers both personal and business matters, it’s not straightforward to claim.
- Fees tied to personal gain. For example, private wealth management or estate planning.
Important Note: Financial advisors like St. James’s Place often include fees in ongoing commissions instead of upfront charges. Speak to your advisor to clarify what’s business-related.
Personal vs. Business Financial Advice
- Personal: Pension advice for your retirement, private investments, or mortgage planning.
- Business: Setting up employee benefits, tax planning for company directors, or business protection insurance.
If in doubt, speak to both your financial advisor and your accountant to make sure you’re claiming correctly.
How Do Financial Advisors Charge?
Financial advisors usually charge in one of these ways:
- Hourly Rate – Pay for the time spent giving advice.
- Fixed Fee – A set cost for a specific service.
- Percentage of Assets – A yearly fee based on the value of your investments.
- Commission – Fees included in the products they recommend.
Some advisors, like St. James’s Place, incorporate fees into ongoing charges instead of upfront payments. Always ask for a breakdown so you know what you’re paying for.
Sole Director Scenario: Can Pension Contributions Be Claimed?
If you're a sole director of your company, pension contributions can still offer significant tax benefits. However, whether these contributions are considered a business expense depends on the type of pension arrangement:
- Workplace Pension: Contributions to a workplace pension, even as a sole director, can be treated as a tax-deductible business expense. This is because the payments are made by the company and are directly related to employee benefits—your role as the director counts here.
- Personal Pension: Contributions to a personal pension are generally not tax-deductible for the company. These are treated as your personal expenses, even if funded from your salary or dividends.
- Corporate Pension Scheme: If your company sets up a corporate pension scheme, contributions made by the company can usually be claimed as a business expense, provided they are reasonable and align with your role and remuneration.
Key Tip for Sole Directors
To maximize tax efficiency, ensure pension contributions are structured as employer contributions through the business. Speak to your financial advisor and accountant to confirm the setup aligns with HMRC guidelines and your overall financial strategy.
Speak to a Financial Advisor
Want tailored financial advice to match your personal or business goals? Reach out to a financial advisor to discuss your specific needs and take control of your future.
Understanding the distinction between personal and business financial advice is key to maximizing tax efficiency and avoiding costly mistakes. A tailored approach ensures your financial decisions align with both personal and business goals."– Dan Buckland, Futurum Financial Advice
Meet Futurum
Futurum Financial Advice is here to help you reach your financial goals. They give expert advice to grow, protect, or manage your wealth.
They’re based in London and North West Kent and are super flexible. You can meet them at their rooftop London office, Blue Rocket’s Dartford office, or even at your home.
Blue Rocket Accounting and Futurum have a great relationship. If you’d like to know more, you can contact Futurum directly or ask the friendly Blue Rocket team.
As a Partner Practice of St. James’s Place Wealth Management, Futurum offers trusted advice for personal or business needs.
Why not get in touch and start planning your future today?
Wrap-Up
Claiming financial advisor fees as a business expense depends entirely on the purpose of the advice. When it’s for the company, you’re good to go. For personal advice, you’ll need to keep it separate. Got questions? Get in touch with us today.
Read More About The Benefit Of Pensions
Check out these helpful blogs to learn more:
- Pension Tax Planning for High Earners
- Reduce Your Tax Bill with Our Blue Rocket Tips!
- Curious About Investing Your Own Pension? Learn About SIPPs and SSAS
