Susie Laws, Director & Chartered Financial Planner

Background

Mr & Mrs Brown downsized from a substantial property in the home counties. In doing so, they cleared their remaining mortgage and released £1m of equity.  Mr Brown is approximately 2 years away from retirement and is looking to structure his portfolio tax efficiently to maximise his future income in retirement.  Once Mr Brown eventually retires, they are hoping to achieve a net income of c. £50,000 from the funds and Mr Brown is likely to be a higher rate taxpayer.

Problem

Mr Brown is currently an additional rate taxpayer, meaning that any income generated from cash deposits would be taxed at 45%.  Cash deposits are also unlikely to enable him to meet his income target once he fully retires and are unlikely to keep pace with inflation.

Solution

Fiducia arranged the following tailored investment solutions for Mrs & Mrs Brown to achieve their income target once retired:

Investment Wrapper

Amount Owner Potential Income Generated Approximate Net income

Offshore Bond

£500,000

Joint

£25,000

£25,000

General Investment Account

£100,000

Mr

£5,000

£5,000*

General Investment Account

£360,000

Mrs

£18,000

£17,610*

ISA

£20,000

Mr

£1,000

£1,000

ISA

£20,000

Mrs

£1,000

£1,000

Totals £1,000,000 £50,000

£49,610

 

*Using a combination of dividend allowance and capital withdrawals (CGT allowances).  Mrs Brown’s personal allowance has assumed to have been fully utilised by state pension but neither client uses their CGT allowance elsewhere.  Funds would be moved annually into their ISA wrappers to shelter further monies from CGT and income tax.

Susie Laws, Director & Chartered Financial Planner

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