Client planning scenarios
Supporting good outcomes with tax efficient investments
Tax-efficient investments could help you meet the needs of a wide variety of clients. In each scenario below, you’ll meet an example client and learn about their needs and circumstances. Then you’ll see how a tax-efficient investment could be used to achieve better outcomes. This may help you develop appropriate strategies for your clients.
Financial Planner Jessica Tivey talks to us about Business Relief, and how she uses this for inheritance tax planning with her clients.
Please bear in mind that nothing here should be viewed as advice. Any suitability decisions should be based on a comprehensive review of your client’s objectives, needs and attitude towards risk.
“Consumer Duty puts emphasis on showing the value that you’re delivering. And tax- efficient investments can add significant value to a client’s financial planning”.
Dr Matthew Connell, Director of Policy and Public Affairs, PFS
The client scenarios
Explore each scenario. Do they resonate with a client you have?
Business Relief
Estate planning for clients who want to retain access to capital
Carol is aged 86 with a large estate. She’s worried about unexpected care costs and is reluctant to gift.
Estate planning for clients who have a power of attorney in place
Barbara and Malcolm have a power of attorney in place and an estate facing an inheritance tax liability.
Estate planning for clients who’ve sold a business in the last three years
Alan recently sold his business and wants to leave the proceeds to his daughters free of inheritance tax.
Estate planning for clients who want an inheritance tax-efficient ISA
Peter has a large ISA pot that’s subject to inheritance tax. He wants to plan for inheritance tax but keep the benefits of the ISA wrapper.
Estate planning for clients who worry it’s too late
Harold worries that in his 90s it’s too late to plan for inheritance tax.
Estate planning for clients who want to settle assets into trust
Louise is worried that her child’s marriage will end in divorce, and wants control over what will happen to her assets.
Ex-business owners investing for growth and planning for inheritance tax
Jin recently sold a business and has both inheritance tax and capital gains tax considerations.
Clients who have inherited a spouse’s ISA
Sylvia inherited her spouse’s ISA. She wants to plan for inheritance tax to leave as much of her estate to her children as possible.
Estate planning for clients with a loan trust in place
Tony has a loan trust in place. He’s concerned about the inheritance tax and the loan repayments from the trust.
Venture Capital Trusts
Clients who want to reduce their income tax bill
Anthony is a higher rate tax payer with significant pension and ISA investments.
Clients looking to extract money from a business tax efficiently
Vijay is an IT contractor who owns a limited company. He wants to pay himself a sizeable dividend and is concerned about taxation.
Clients in the medical profession looking to invest for retirement
Andrea is on the salary-linked NHS pension scheme. She’s looking for additional ways to tax efficiently invest for the future.
Clients who want to extract money from their pension
Kate is looking to extract money from her pension in a tax-efficient way.
Clients selling a buy-to-let property and targeting a tax-free income
Bobbie has sold an additional property for a gain. She wants to manage capital gains tax and target a tax-free income.
Clients who are landlords looking for a tax-efficient income stream
Daniel and Helen earn an income from buy-to-let properties. They’d like to invest the rental income tax-efficiently.
Enterprise Investment Scheme
Clients looking to invest in a diversified portfolio of early-stage companies
Michael is an experienced Venture Capital Trust investor who wishes to target high growth tax efficiently.
Ex-business owners investing for growth and planning for inheritance tax
Jin recently sold a business and has both inheritance tax and capital gains tax considerations.
Clients selling a buy-to-let property and targeting a tax-free income
Bobbie has sold an additional property for a gain. She wants to manage capital gains tax and target a tax-free income.
Sportsperson investing tax-efficiently in high growth opportunities
Isiah is a successful sportsperson seeking growth and to make use of valuable tax reliefs.
Clients looking for high growth investment opportunities
David is a high earner who wants to target high growth and support early-stage businesses.
Tax-efficient investments explained
Learn more about tax-efficient investing and how we can help
What is Business Relief?
Business Relief (BR) is an established relief that allows certain investments to be left to loved ones free from inheritance tax.
What are Venture Capital Trusts?
Venture Capital Trusts invest in a diversified portfolio of early-stage companies.
What is the Enterprise Investment Scheme?
EIS typically appeals to experienced investors who want to back companies with high growth potential.
What tax-efficient investment should I consider for my client?
Answer two questions about your client’s investment and tax objectives and we’ll suggest potential investments.
Risks to bear in mind
Capital at risk
The value of an investment, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest.
Volatility and liquidity
VCT, smaller and unquoted company shares could fall or rise in value more than other shares listed on the main market of the London Stock Exchange. They may also be harder to sell.
Qualification status
Tax reliefs depend on VCTs maintaining their qualifying status or portfolio companies maintaining their BR- or EIS-qualifying status.
Tax treatment
Tax treatment depends on individual circumstances and could change in the future.
An award-winning investment provider
Octopus has won numerous awards, including the Five Star Investment Provider Award at the Financial Adviser Service Awards, voted for by financial advisers, ten years running.
