Chris

Chris is a project manager who specialises in Technolomangy. His last salaried role was three years ago and since then he has been operating on a consultancy basis through his own limited company. He is currently on a twelve month contract at an Asset Management firm and charges £700 per day. He is married to Diane who works as a Civil servant and is on a good income. They have no children but are planning to start a family over the next few years.

Chris typically pays himself an annual salary of £10,000 and dividends of £30,000, leaving surplus funds in the business each year. Funds are starting to accrue and the current balance on his business account is £150,000, of which £100,000 is to be considered for investment. He does not expect to need these funds for six or seven years, when they plan to move to a larger home once the children are old enough to benefit from the extra space. Neither Chris nor Diane wish to take more than a small amount of risk with these funds.

They went to visit a Financial Planner who recommended that Chris withdraws £100,000 from the business as a dividend and personally invests these funds into a personal portfolio. He went on to explain that they should take funds out of the portfolio each year and each use these to reinvest into ISAs, up to the prevailing maximum permitted amounts. Both the personal portfolio and each of the ISAs should take a low risk approach and the adviser explained that he would construct a portfolio with a significant allocation to lower risk assets such as corporate bonds and property to meet this objective.

Patricia

womanPatricia recently turned fifty and plans to retire in six years’ time. She works as a Business Analyst for a US investment bank and typically pays herself around £70,000 per annum, as a combination of a low salary and high dividends. She is currently on contract and has operated through her own limited company for over twelve years.

Patricia is married to Mark who works as a teacher, they have two children, both at university. Mark works on a part time basis and plans to continue doing so until he retires, around the same time as Patricia.

Patricia has a trusted accountant who is very aware of her situation and future plans. They have discussed what might happen when Patricia eventually dissolves her limited company.

Patricia recently sold some shares which she had owned for several years and made a considerable profit, which used up all of her annual Capital Gains Tax allowance. She currently has £200,000 sitting in her business account: £40,000 of this is earmarked for future expenses but she would like to consider the best way to invest the remaining £160,000.

Patricia and Mark went to visit a financial adviser who recommended that she invested her company assets directly into an offshore bond. Patricia has a high risk tolerance and the adviser proposed a portfolio with a high allocation to domestic and overseas equity.

Contact Paul Hyland of Wingate Financial Planning on 0188 333 22 62

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