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Helping our clients address their income requirements and inheritance tax

Our clients, a married couple, were looking for advice on how to use their investments to fund their retirements. The couple held assets in pensions, ISAs, and taxable investment accounts, whilst also holding a large amount of cash in the bank earning low interest.


Our clients, 62 and 63, were imminently about to retire. They had held senior positions with various companies during their working lives, which had allowed them a good lifestyle and to build up a relatively large portfolio of pensions, investments, and cash.  They did not have a mortgage and their children were no longer financially dependent on them. They anticipated that their income requirements would be around £7,000 per month (net) in today’s terms for the remainder of their lifetime, and they wanted to have the ability to take additional ad hoc lump sum withdrawals for other expenditure as required throughout their retirement.

Key Needs

The clients were keen to be able to draw their income flexibly and tax efficiently from their portfolio.  They also wanted to invest some of their surplus cash to improve growth potential over the longer term. They had an Inheritance Tax issue, and wished to address this also, potentially including making gifts to their children and grandchildren. Although their investments had performed relatively well over the years, they did not fully understand them and wished to have someone who could provide them with expert guidance and help them to better understand their financial planning.

Our Solution

We used cashflow modelling to calculate how much the couple could sustainably withdraw each year, while still leaving a buffer to help with unforeseen circumstances. We concluded that they could safely take enough to reach their £7,000 per month objective (after tax), including their State Pensions.

We restructured their investments to ensure they were efficiently held, reducing their ongoing charges, consolidating their investments where possible, and utilising multiple tax allowances. We introduced an Offshore Bond to their portfolio, which lessened their exposure to Capital Gains Tax as a result and would provide them with an alternative stream of income in future, alongside their other tax wrappers.

Their income would primarily be drawn from the ISAs and taxable accounts as the couple were keen to keep assets within their pensions as part of their estate planning strategy, given pension assets are classed as outside of the estate for Inheritance Tax purposes and can therefore be inherited by their children tax efficiently.

We also assessed the impact of gifting £100,000 to each of their children and concluded it would be possible, although we advised the couple to assess their actual expenditure over the next year before proceeding with the gifts.