Case profile: The 'older' contractor

Background

Mr Client aged 62, married with no children

  IT contractor receiving £28,000 annual income from final salary pension

Background

• Wanted to retire in next few years but on a larger salary than £28,000
• Had a large cash lump sum in business and wished to extract it in a tax efficient manner
• Pays himself a salary and dividends but his billing rate is far greater than the total of his expenses, salary and dividends

Challenges

• Made a larger personal pension contribution than salary allowed and claimed back large tax bill from previous tax year
• Showed client how to extract money from his company tax efficiently. We explained the trade off between NI, income tax and corporation tax to create tax efficient investments
• Utilised pension rules to maximise company and personal pension contributions
• New pension set up and incorporated old underperforming pensions. New scheme can be monitored on-line, funds are bought and sold when appropriate and Wealth Matters provide investment bulletin to review funds, every quarter

What we did

• Created a clear budget so client can reach their retirement goals within the next three years.
• Claimed back £20,000 in income tax for clients.
• Saved client 43.8% in tax charges on their limited company through our tax planning strategies.
• New investment strategy improved performance and reduced risk at the same time.
• Create tax efficient saving strategy for clients, further reducing the tax bill
  

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NB: This is an example case history only and is not intended to represent any specific individual or their situation. Its purpose is solely to give you an idea how financial planning could work in a given set of circumstances. We always aim to keep things simple, but should you have any questions relating to the case study above, please feel free to contact your financial planner at Wealth Matters as per the details given on our contacts page.