How we helped Alan and Laura to set up financial plans for the future

Making it possible to achieve security in the long-term future

Financial planning, starting with cash flow modelling, is an excellent way to assess the couple’s current situation and look for ways to invest for growth, reduce tax liabilities and secure the family’s long-term future. 

Getting to know Laura and Alan

Alan and Laura are both in their late forties and married with two children approaching their teens. When they first approached us, they had paid off their mortgage and had around £500,000 spread across several previous workplace pension schemes, plus one from Alan’s current employers. They also had around £50,000 in stocks & shares ISAs, and a UK rental property that produces an income of around £30,000 p.a.

Why Alan and Laura needed our help

Alan and Laura asked us for advice about making financial plans for their future. Alan wanted to give up work by the age of 60, so the couple needed to set up arrangements that would ensure they had enough to enjoy a good life together in retirement. They also wanted to support their children through university, and ultimately leave a legacy for them.

They had never given much thought to financial planning, and hadn’t reviewed any of their pension plans or ISAs for several years. They also had no idea whether they were making the most of any tax allowances.

Our Canaccord Wealth solution

We started with a cash flow planning exercise to show how much the couple would need to set aside and earn from their investments to meet their goals. We then reviewed their pensions and ISAs to ensure they were right for their investment objectives and agreed attitude to risk.

Based on what we discovered, we made several recommendations:

• Alan could make further pension contributions from his bonus each year; as an additional rate taxpayer he would receive 45% tax relief
• Alan and Laura should use their full annual ISA allowances, currently £20,000 each
• They could also contribute another £9,000 each year into Junior ISAs for each child, to help with university funding
• They should transfer the rental property to Laura’s sole name, as the portion of the rental income taxed at additional rate tax (45%) in Alan’s name would only be subject to basic rate tax (20%) in Laura’s name
• Any cash savings, plus other investments apart from pensions and ISAs, should be held in Laura’s name to use her personal savings allowance and basic rate tax band
• However, they should consider switching some investments to joint names each year to use both of their capital gains tax exemptions.

What happened next

Alan and Laura were happy to follow our advice and we made the recommended changes. We also spoke about the option of investing further funds within an investment bond once Laura had made full use of her basic rate tax band. 

They now have provisions in place to help achieve their future plans, and reassurance that they are managing their affairs in a tax-efficient manner.

Keeping in touch

We constantly monitor the tax structure of Alan and Laura’s affairs and the performance of their investments. We have regular review meetings to ensure their plans are still on course to meet their long-term financial objectives.