Rob Casselden Independent Financial Adviser

1. The ‘Four Box Approach’ for a tax efficient retirement Rob Casselden Independent Financial Adviser

2. Tax efficient income planning in retirement

3. The Budget 19th March 2014 • Summary of some announcements, with a 12 week discussion period: • Increase in ISA allowance to £15,000 (1st July 2014), with ability to hold all in cash or stocks and shares = ‘New ISA’ • Chancellor announced “the most radical change to taxation of pensions since 1921”. Ability to withdraw money from their pension funds on a more flexible basis. This will fundamentally change the way people manage their money in retirement. • Other changes in pension death benefit, trivial commutation, drawdown limits. • The 10% ‘starting rate’ on savings income abolished. • Also announced “free, impartial, face to face advice” for retirees.

4. Using income streams together with the available tax allowances…. Bonds (Onshore Or Offshore) ISA Pension

5. Managing your tax risk

6. Tax Bands 2015/16 Order of taxation • Earned income • Interest/Savings • Dividends • Life policy gains OnshoreBond gains are always treated as the top slice of income, after earned income, savings income and dividends. Offshore Bondgains are treated as savings income, and are therefore taxed after earned income, but before dividends.

7. Example, Brian (aged 60) - 2015/16 tax year • He retires and wants £65,000 p.a. income, with reduced tax liability • He has an investment portfolio including the “4 investment boxes” • His assets include the following: • ISAs £150,000 • OEIC/Share portfolio £100,000 (Current dividend 3%pa net) • SIPP £300,000 • Offshore bond £300,000 (Originally £200,000 in 2004)

8. Example, Brian (aged 60) - 2015/16 tax year Brian’s adviser suggests he takes ‘income’ as follows : SIPP (PCLS & income) £ 18,000 ISA withdrawals £ 7,000 OEICs encashed (gain of £5,000) £ 19,000 Dividends (net of 10% dividend tax) £ 3,000 Bond (segment encashment) £ 18,000 Total£65,000

9. Example, Brian (aged 60) - 2015/16 tax year Brian’s tax calculation in 2014/15 : Current value £300,000 (100 segments) £18,000 required = 6 segments encashed Segment value £3,000 Less original investment £2,000 Taxable amount per segment £1,000 £1,000 x 6 segments = Total of £6,000 taxable Bond encashment calculation:

10. Example, Brian (aged 60) - 2015/16 tax year Brian’s adviser suggests he takes ‘income’ as follows : Tax Liability SIPP (PCLS 25% & Income 75%) £ 18,000 £13,500 ISA withdrawals £ 7,000 £0 OEICs encashed (gain of £5,000) £ 19,000 £0 Dividends (net of 10% dividend tax) £ 3,000 £0 Bond (segment encashment) £ 18,000£6,000 Total£65,000 £19,500

11. Brian’s tax liability 2015/16 Order of taxation • Earned income • Interest/Savings • Dividends • Life policy gains ISA Withdrawal = £0 Dividends (10% tax paid) = £333 Pension (£3,000 @20%) = £600 Bond (segment encashed) = £200 CGT (OEIC encashed) = £0 Total Tax on £65,000 = £1,133 Effective tax rate of 1.74%

12. Planning Considerations for IHT • ISAs: can’t be assigned and will be included in the estate for IHT purpose • OEICs/Shares: • No CGT on death, but value included in the estate for IHT purposes • Can be assigned/gifted, but this is a disposal for CGT and a gift for IHT • SIPP Lump sum death benefits: • Uncrystallised funds – pre 75, no tax • Crystallised funds - pre 75, taxed at 55% • Post 75 – taxed at 55% on all funds, including unused PCLS • Offshore Bond: can be assigned without creating a chargeable event, but treated as a transfer of value for IHT purposes • The 4 Box Investment Approach can also take into account IHT liabilities The value of investments may fall as well as rise. Past performance is not a guide to future performance and may not be repeated. UNDER REVIEW

13. Preparing For Your Retirement • Effective tax planning compliments good investment planning. • Everyone should consider building up ISAs, Pensions and Bonds to provide the most flexibility for retirement and legacy planning. • Following budget announcements, Offshore bonds are more attractive due to £5,000 savings allowance with no tax. • Different income strategies for different periods of retirement: • 60-65, 65-70, 70-75, 75 onwards? • Alternate the taking of pension income? • Assigning assets to spouse for income?

14. Summary - The ‘Four Box Approach’ • To benefit from the added flexibility and tax efficiency, accumulate monies in a range of assets Other assets Key investments • Cash deposits • Own company • Property • VCT • EIS Pension Bonds Funds ISA Are you ready for tax efficient retirement?

15. Thank you, any questions?

16. The content of this presentation is intended for general news and information only. No action should be taken without checking your own personal circumstances. Newell Palmer Financial Planning are not responsible for any advice unless a personal recommendation is provided. • The value of investments may fall as well as rise. Past performance is not a guide to future performance and may not be repeated. • Furthermore, this presentation represents Newell Palmer Financial Planning’s understanding of the law and HM Revenue & Customs practices as of May 2014. • The Financial Conduct Authority does not regulate tax advice. Newell Palmer Financial Planning Ltd, The Croft, Buntsford Gate Business Park, Stoke Heath, Bromsgrove B60 4JE Telephone: 01527 889 740 ; Email: info@npfp.co.uk ; Visit www.npfp.co.uk Newell Palmer Financial Planning Ltd is an appointed representative of the Newell Palmer Group Ltd, which is authorised and regulated by the Financial Conduct Authority. Company Registration No. 3298984