Wealth Preservation
There are many threats and challenges to the preservation of wealth such as a poor investment strategy, absence of effective risk management, inflation, lack of credit, taxes, business risks, fluctuations in investment markets, emergence of new technologies, lack of a successful business exit strategy or succession plan.
Several of these are risks of the trade that we must all consider and plan for as best we can. However there are also those where professional planning and advice can make a valuable and significant contribution.
Tax Planning
The vagaries and complexities of the taxation and legal systems, both in the UK and overseas, as well as increasingly in their interaction, are a major threat to wealth preservation.
According to the latest published HMRC statistics, in 2008/09 Income Tax receipts were £147.856bn and National Insurance accounted for a further £96.882bn. The number of people paying tax at top rate has risen to in excess of 3.5m. These figures will further increase following the introduction of the 50% rate of income tax in the 2010/11 tax year.
That rate applies to those earning more than £150,000 and those with earnings above £130,000 will lose their personal allowances.
Taxation of Pensions
Those making personal pension contributions on an irregular basis or benefiting from employer contributions and who have earnings of £130,000 or more can currently expect to lose tax relief and/or suffer tax penalties. In addition, as from April 2011 those earning more than £180,000 will have their tax relief on pension contributions reduced to the basic rate only.
Taxation of Non UK Domiciles
Non UK Domiciles have already experienced a significant worsening of their tax treatment, for example in relation to remittances and Offshore Trusts.
In addition, more people now own, or plan to own, overseas property and yet more are planning to live abroad when they retire. The future tax implications of either or both are yet another example of where specialist planning advice can be highly effective and therefore should be sought.
Estate Planning
Inheritance Tax has been the fastest growing tax of all with revenues rising from £2.35billion in 2001/02 to £3.82billion in 2007/08, an increase of 62%. It should also be born in mind that Inheritance Tax is a tax on taxed income or capital, equivalent to a marginal rate of 64%. A clear example of how tax can seriously damage your wealth. Estate planning is therefore a key strategy in preventing what is otherwise wealth erosion.
It is therefore essential that those with private wealth and higher income levels, which may include an interest in or control of a business enterprise, have an effective wealth preservation strategy.
Fiducia is able to advise, implement and keep such a strategy under review by working as one with professional partners.
If you are looking for a Financial Adviser in Colchester or an IFA in Essex then please Contact us
