Why did Tom come to us?
Tom is a solicitor who had been referring clients to us for many years. Seeing how we had dealt with his clients, he now wanted help with tax planning and building a retirement strategy for himself.
What did we recommend?
We started the process by asking Tom to complete an online fact find and attitude to risk questionnaire. We then analysed his existing pensions, savings and investments and built a cash flow forecast to show the client what he needed to put away each year.
We recommended Tom start a low-cost SIPP (Self-Invested Personal Pension) funding it through his limited company to receive Corporation Tax relief. The strategy will allow Tom to start the pension in the early years of his business and take money out of his company tax-efficiently, with a view to building up a fund large enough to purchase a commercial property for his business within five years.
We also discovered that as the main earner in his family, Tom needed to protect his income should he become seriously ill or die to ensure the financial security of his family.
We recommended that Tom insure his income in the event of long-term accident or sickness. We also recommended a Relevant Life Plan which would pay a lump sum equal to 20 times Tom’s annual salary to his wife and dependants. This ensures that, in the event of death, his dreams and aspirations for his children would not be lost.
In common with the SIPP, the premiums to the Relevant Life Plan attract Corporation Tax relief, reducing the effective cost.
How has Tom benefited from our advice?
Tom’s retirement plans are now on track.
Prior to coming to us, he had no idea as to how much he needed to save each month to sustain the lifestyle that he desired in retirement. That is no longer the case.
The solution will also allow him to purchase premises for his business in years to come should he wish to do so.
Finally, by offering Tom a full overview of his finances, we also addressed other issues which he hadn’t thought of, such as protecting income, in the event of death or illness.