Lower tax bills now and tax-free future income for Jim

Jim (not his real name), had been referred to us by one of our clients. “Don’t talk to me about pensions I hate them,” was how he greeted us as we walked into his office. We immediately responded with, “As a business owner you have many methods of providing income in retirement more efficiently and effectively; in fact in certain circumstances a pension might be the last thing you would need.” He calmed down and a meaningful discussion began.

Jim’s concerns and other issues we identified:

• He had lost faith with pensions as a means of providing income in retirement.
• He received little information and  guidance from his existing advisers.
• He was as keen to make provision for his retirement but was unsure what options other than pensions were available.
• He was keen to to reduce his overall tax bill.
• His financial affairs were somewhat disorganised.
• He would like the option of retiring at 55.

We talked with Jim at length and gained a full understanding of his financial circumstances and those of his business. We then went away and ran some cashflow projections on various investment and income generation scenarios and, have discussed these with Jim and agreed a way forward, we:

• gave Jim a detailed explanation about on the various ways he could generate the retirement income he needs.
• simplified and consolidated the investments and pensions he already had
• agreed and set up a disciplined and structured investment programme that would deliver the income he required in retirement
• using risk-profiling software, we assessed his appetite for risk and reward
• ensured that all his investments are aligned with his risk/reward profile on an on-going basis.

The results so far – Jim now:

• has a co-ordinated approach to retirement income and is no longer relies simply on his pensions for the income he will need
• pays less income tax and his company pays less corporation tax
• has arrangements in place with the ability to produce a tax-free income stream in the future
• knows that his capital is now working for him and his family rather than locked in his pension
• is better informed and confident that he has made sensible provision for his ‘retirement’.

Please note that although this story is based on a real client, we have changed their name and aspects of their personal information to protect their privacy and identity.

4 October 2023

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