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 Pres02. Investment Planning Opportunities. Ian D Black APFS Chartered Financial Planner Wealth Solutions Sales Manager. For intermediary use only – not for use with your clients. Session objective. To consider tax planning opportunities following the Finance Act 2009

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Pres02

Investment Planning

Opportunities

Ian D Black APFS

Chartered Financial Planner

Wealth Solutions Sales Manager

For intermediary use only – not for use with your clients


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Session objective

  • To consider tax planning opportunities following the Finance Act 2009

  • To agree a strategy together to maximise the opportunities

Presentation based upon current understanding of Budget 2009


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National Savings

Certs

ISA

Tax- free growth

Limited amounts

Tax efficient growth

Limited amounts

Wrapper allocation

Budget 2009

Individual Savings Accounts

From October 2009

  • Introduced HIGHER ISA Allowances for over 50s

    • £10,200 Total

    • Up to £5,100 in Cash Component

      From April 2010

  • HIGHER ISA Allowances extended to all

    • £10,200 Total

    • Up to £5,100 in Cash Component


Now is the time to structure for tax rises future tax rises for individuals l.jpg

2010/11 restricting personal allowance for those over £100,000

Personal allowance reduction on a 2 for 1 basis over £100,000

2010/11 proposed new higher rate income tax for incomes over £150,000

50% for Savings and other income

42.5% for dividend income

Budget 2009 22 April 2009

Now is the time to structure for tax rises- future tax rises for individuals


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What can you do? £100,000

  • Consider income producing assets to non-income producing assets

    • Move to Non Yielding Funds

    • Use Investment Bonds

  • Use Tax Efficient investments

    • VCT

    • ISA

    • Investment Bonds

    • Pensions

  • Consider Offshore Bonds for Non Domiciled individuals to allow Remittance Basis to be claimed without £30,000 tax charge


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Income Over £100,000 £100,000Income Details


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Income Over £100,000 £100,000Investment Portfolio Details


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Income Over £100,000 £100,000Personal Allowance Calculation 2010/11

*2009/10 Tax Allowance used for illustration purposes as 2010/11

Allowances are not yet known


Income over 100 000 income tax calculation l.jpg
Income Over £100,000 £100,000Income Tax Calculation

*2009/10 Tax Bands used for illustration purposes as 2010/11

Bands are not yet known


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Switch existing unit trust portfolio to non-yielding funds. £100,000

Encash just enough units to fully utilise CGT allowance to produce ‘income’.

Or use part disposal calculation (section 42 of TCGA 1992).

CARE Be careful of potential CGT liability and costs when switching.

CARE Non-yielding funds may not be suitable for client’s attitude to risk.

Income over £100,000Possible actions (1)


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Liquidate Unit Trust Portfolio £100,000

BUT be careful of CGT liability

Invest Deposits and proceeds from Unit Trusts into Unfettered Offshore Bond

Hold Deposit Account in Offshore Bond

Recreate Unit Trust Portfolio in Offshore Bond

If income required use 5% tax deferred withdrawals from Bond

Income over £100,000Possible actions (2)


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Income Over £100,000 £100,000After Changes - Income Details

Other income can be replaced using 5% Tax Deferred Withdrawals


Income over 100 000 after changes investment portfolio details l.jpg
Income Over £100,000 £100,000After Changes -Investment Portfolio Details


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Income Over £100,000 £100,000After Changes – Personal Allowance Calculation 2010/11


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Income Over £100,000 £100,000Income Tax Calculation

Immediate Tax Saving of £6,555*

*Tax may be due on Final Encashment

or any Chargeable Events


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2010/11 £100,000 proposed new higher rate income tax for trust income

50% for savings and other income

42.5% for dividend income

Budget 2009 22 April 2009

Now is the time to structure for tax rises- future tax rises for trusts


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What can you do? £100,000

  • Convert income producing assets to non-income producing assets

    • Move to Non Yielding Funds

    • Use Investment Bonds


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Trust £100,000

Discretionary TrustIncome Details


Discretionary trust investment portfolio details l.jpg

Trust £100,000

Discretionary TrustInvestment Portfolio Details


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Trust £100,000

Discretionary TrustIncome Tax Calculation


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Trust £100,000

Discretionary TrustSuggested Course of Action

  • Liquidate Unit Trust Portfolio

    • BUT be careful of CGT liability

  • Invest Deposits and proceeds from Unit Trusts into Unfettered Offshore Bond

  • Hold Deposit Account in Offshore Bond

  • Recreate Unit Trust Portfolio in Offshore Bond

  • If income required use 5% tax deferred withdrawals from Bond


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Trust £100,000

Discretionary TrustAfter Changes - Income Details

Income can be replaced using 5% Tax Deferred Withdrawals


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Trust £100,000

Discretionary TrustAfter Changes –Investment Portfolio Details


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Trust £100,000

Discretionary TrustAfter Changes - Income Tax Calculation

Immediate Tax Saving of £8,950*

*Tax may be due on Final Encashment

or any Chargeable Events



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Pay Less Tax on returns from Investment Bonds £100,000

Age 66

State Pension £4,953

Private Pension £ 977

Total Income £5,930

Personal Allowance £9,490

Unused Personal £3,560

Allowance


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£6,000 gross profit encashed £100,000

Onshore v Offshore

Net Return £4,800

Net Return £5,756

£0

Basic rate

Taxed @ 20% = £0

No further tax to pay if top sliced gain below higher rate tax threshold

£4,800 Chargeable Profit

£2,440

Lower rate

Taxed @ 10% = £244

Fund taxed at a rate of 20% maximum

Tax Free

£3,560

Unused Personal Allowance

£1,200 tax In fund

Assumes Final Surrender After Top Slicing Is Within Higher Rate Tax Threshold


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Investment Tax Efficiency £100,000

5% Tax deferred

Life Assurance

ISA / PEP

Capital Gains

£10,100

Income

10% Income Tax Band

Income

Personal Allowance

£6,475


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Treating Customers Fairly £100,000

Outcome 1

Consumers can be confident that they are dealing with firms where fair treatment of customers is central to the corporate culture.

Outcome 2

Products and services marketed and sold are designed to meet the needs of identified consumer groups and are targeted accordingly.

Outcome 3

Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale.

Outcome 4

Where consumers received advice, the advice is suitable and takes into account their circumstances.

Outcome 5

Consumers are provided with products that perform as firms have led them to expect, and the associated service is both of an acceptable standard as they have been led to expect.

Outcome 6

Consumers do not face unreasonable post-sale barriers imposed by firms to change products, switch provider, submit a claim or make a complaint.


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Zurich’s Adviser Tools £100,000

Inheritance

tax

Tax wrapper

Adviser

tools

Business

assurance

Portfolio

planning


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Consultant and Technical support £100,000- Freephone 0500 546546

Investment

& Trust

Specialists

Pensions

Specialists

Consultant

and

Relationship

Manager

Technical

Connections

Techlink

Protection

Specialists

E Business

Specialist

Technical

Helpline


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Session Summary £100,000

  • Wrapper selection will be key during the era of higher taxation

  • Asset mix and desire for growth or income will influence choice

  • Tax drag can have a significant impact

  • Plan to use allowances

Presentation based upon current understanding of Budget 2009


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Thank you for listening £100,000

Importantinformation

The tax and legislation information contained in this document is based on Zurich Intermediary Group current understanding as at August 2009 and may change in the future.

HM Revenue and Customs (HMRC) practice, and the laws relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

The value of any investment and the income from it can fall as well as rise as a result of market and currency fluctuations and your client may not get back the amount originally invested.

Sterling is a trading name of Zurich Assurance Ltd, authorised and regulated by the Financial Services Authority, for its life assurance, pension and investment products. Registered in England and Wales under company number 02456671. Registered Office: UK Life Centre, Station Road, Swindon SN1 1EL.

Zurich Intermediary Group Limited authorised and regulated by the Financial Services Authority. Registered in England and Wales under company number 01909111 Registered Office: UK Life Centre, Station Road, Swindon SN1 1EL. Telephone no. 0500 546 546. We may monitor or record calls to improve service.

For use by professional financial advisers only. No other person should rely on, or act on any information in this advertisement when making an investment decision. This advertisement has not been approved for use with clients.

2009z 636 (Expiry – 31/12/2009)


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