Company Pension Planning Case Study
The Client
Our client, a limited company, had been trading in a specialist area of the medical market for many years; they had been offered the opportunity to take on new product lines which complement their existing offering.
The company owned their business premises from which they operated with a value of £350,000, debt free other than a floating charge held by the bank for the overdraft. The MD had a personal pension plan valued at £450,000.
Their Needs
The company already had an overdraft facility, £100,000, which was adequate for day to day needs but the new lines would need substantial initial investment in stock putting significant strain on the business.
The MD wanted to know if there were any ways of structuring his personal pension arrangement could be used to help his business.
Solution
We set up Small Self-Administered Scheme (SSAS), transferred in the £450,000 funds from the MD’s personal pension. The SSAS then purchased the property from the company and subsequently entered into a commercial rental arrangement with the company.
Benefits
This released £350,000 back to the company which then had more than sufficient funds to finance expansion without being beholden to the bank. The rent on the business premises is an allowable expense and will be covered easily from the increased profitability.
The MD now has an asset in his pension scheme receiving a guaranteed (subject to the ongoing profitability of the company) return and can plan for retirement. In addition the company has surplus funds which could be paid into the MD’s pension which would be a benefit for him and more than offset a small Corporation Tax liability on the gain on the sale of the property.
We have also established a regular ongoing review service to help invest the future pension contributions and rental income the scheme receives.
This information is not intended as investment advice. The products mentioned above are not suitable for everyone and you should seek advice before deciding to invest.
Wealth Management and Estate Planning Case Study
The Client
Mr & Mrs H came to us as their previous adviser had retired and they now had assets with a number of companies who were being paid legacy commission but they were not receiving any advice.
They were both in their 80s and had large sums of money spread across predominantly equity based investments and a discretionary managed portfolio with no real investment strategy. Their total Estate was in excess of £2.5m, yet no one had talked to them about Estate planning. They also had an existing trust with multiple standalone investments.
Their Needs
They wanted to simplify the administration of their portfolio and to review the funds which had been added over a number of years to make sure they were offering them the best returns. They also wanted to look at ways of reducing the potential Inheritance Tax (IHT) liability on their Estate that would be payable on their death.
The Solution
We overhauled their investment strategy and simplified the administration by bringing 18 different investments onto a single ‘platform’. That gave them online access and the ability to obtain a consolidated valuation in an instant.
We were also able to link a family trust to their personal accounts to further simplify things for them and their family.
Given their age and the fact that they were in relatively poor health we looked at ways to mitigate IHT in as short a time as possible using Business Property Relief (BPR). We transferred some of their share portfolio into a portfolio of UK AIM listed shares. After holding this for 2 years the portfolio should qualify for BPR and fall outside of their Estate for IHT with a potential tax saving of 40% on the value of those assets. We also moved some of their other higher-risk assets into a separate BPR based scheme that is designed to provide steady returns whilst qualifying for BPR relief after 2 years.
The Benefits
By consolidating their assets onto a platform we enabled them to monitor their investments easily. The Estate planning we carried out has the potential to significantly reduce the IHT liability on their Estate once it has been in place for 2 years.
We have also established a regular ongoing review service to help ensure their investments remain appropriate for them and to ensure they make use of the ongoing tax-breaks available to them.
This information is not intended as investment advice. The products mentioned above are not suitable for everyone and you should seek advice before deciding to invest.