Case Study - The IT Contractor

Background

Mr Client aged 62
Married with no children
IT contractor
Receives £28,000 annual income from final salary pension

Challenges

• 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
• Previous pensions are a mess and no clear savings strategy

What we did

• 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

The Results

• 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.
• Created tax efficient saving strategy for clients, further reducing the tax bill.

....because Wealth Matters

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