Investment Planning Opportunities

1.  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

2. 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

3. 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

4. 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

5. What can you do? • 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

6. Income Over £100,000Income Details

7. Income Over £100,000Investment Portfolio Details

8. Income Over £100,000Personal Allowance Calculation 2010/11 *2009/10 Tax Allowance used for illustration purposes as 2010/11 Allowances are not yet known

9. Income Over £100,000Income Tax Calculation *2009/10 Tax Bands used for illustration purposes as 2010/11 Bands are not yet known

10. Switch existing unit trust portfolio to non-yielding funds. 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)

11. 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 Income over £100,000Possible actions (2)

12. Income Over £100,000After Changes - Income Details Other income can be replaced using 5% Tax Deferred Withdrawals

13. Income Over £100,000After Changes -Investment Portfolio Details

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

15. Income Over £100,000Income Tax Calculation Immediate Tax Saving of £6,555* *Tax may be due on Final Encashment or any Chargeable Events

16. 2010/11 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

17. What can you do? • Convert income producing assets to non-income producing assets • Move to Non Yielding Funds • Use Investment Bonds

18. Trust Discretionary TrustIncome Details

19. Trust Discretionary TrustInvestment Portfolio Details

20. Trust Discretionary TrustIncome Tax Calculation

21. Trust 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

22. Trust Discretionary TrustAfter Changes - Income Details Income can be replaced using 5% Tax Deferred Withdrawals

23. Trust Discretionary TrustAfter Changes –Investment Portfolio Details

24. Trust Discretionary TrustAfter Changes - Income Tax Calculation Immediate Tax Saving of £8,950* *Tax may be due on Final Encashment or any Chargeable Events

25. Tax efficiency for low income investors

26. Pay Less Tax on returns from Investment Bonds Age 66 State Pension £4,953 Private Pension £ 977 Total Income £5,930 Personal Allowance £9,490 Unused Personal £3,560 Allowance

27. £6,000 gross profit encashed 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

28. Investment Tax Efficiency 5% Tax deferred Life Assurance ISA / PEP Capital Gains £10,100 Income 10% Income Tax Band Income Personal Allowance £6,475

29. Treating Customers Fairly 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.

30. Zurich’s Adviser Tools Inheritance tax Tax wrapper Adviser tools Business assurance Portfolio planning

31. Consultant and Technical support- Freephone 0500 546546 Investment & Trust Specialists Pensions Specialists Consultant and Relationship Manager Technical Connections Techlink Protection Specialists E Business Specialist Technical Helpline

32. Session Summary • 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

33. Thank you for listening 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)