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Wealth Management

Case Study

Our wealth management solutions are tailored to ensure that you are fully capitalising on all the UK tax incentives available through your business. Please find below a case study that displays a few different ways we can assist you. 

CaseStudy Ltd has 2 directors who are 50/50 shareholders. CaseStudy Ltd had an annual turnover of £500,000 of which £200,000 is profit. This resulted in a Corporation Tax bill of £38,000 (19% of total profits).

  1. Each director/shareholder had various pension pots in place from previous employments which were worth £150,000 each when combined. These were consolidated into new personal pensions for each of them which were linked to CaseStudy Ltd for tax planning purposes.
  2. £100,000 of CaseStudy Ltd’s profits were utilised by making £50,000 personal pension contributions for each director/shareholder. With £100,000 worth of profits extracted from the business tax-free, their corporation bill was immediately reduced by £19,000.
  3. The remaining £100,000 in profits were utilised by making £50,000 dividend withdrawals for each director/shareholder which were immediately invested into a Venture Capital Trust. A dividend is personally taxed at 32.5% in the UK; however, a Venture Capital Trust carries a 30% income tax credit meaning that each director/shareholder had extracted £50,000 for a net income tax liability of 2.5% each. Monies invested into Venture Capital Trusts mature after only 5 years.
  4. Shareholder Protection Policies were set up to provide the surviving director/shareholder with enough funds and the obligation to buy the deceased director/shareholder’s shares from the spouse/family of the deceased should a fatality occur. The assumed current business value was £1million (£500,000 each).
  5. Both director/shareholders also had personal mortgages which were switched onto fixed rates with lower interest. Assumed mortgage debts were £300,000 each.
  6. Life Insurance was set up for each director/shareholder to cover the mortgage debts and further funds for the family of the deceased (should a fatality occur). This was paid for by the business and the premiums were fully deductible for corporation tax purposes, completely reducing the payable corporation tax and improving the sustainability and longevity of the business and the director/shareholders’ combined personal wealth.

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