Leon Buckley

Tax and succession planning for a retired City exec, saving her millions of pounds

I was introduced to a recently retired city exec who was initially keen to understand her pension position. She had a collection of pensions including PPP, DB and AVCs. The client had realised that she had failed to submit her application for Enhanced Protection. Her total pension benefits exceeded £5m, including the DB and thus she was subject to a significant IHT liability. As the conversation progressed, it transpired that she had a number of inter-generational planning issues: her father wanted to gift two properties to her whilst she was also looking to pass assets to her own adult children. To complicate matters further, her father’s properties were heavily pregnant with gain and thus the gift would have given rise to a significant CGT liability.

As part of a wider family review, we were able to pass £1m in property to her daughters directly, mitigating £160k CGT and sidestepping the client. We restructured the pension benefits opting out of the DB scheme, putting protection in place to mitigate almost £30k of lifetime allowance tax charges, this enabled the client to start a process of annual gifts into trust from surplus income. Finally, the additional financial flexibility means the client can move up to £10m into a family investment company potentially securing the financial future of several generations to come. The potential IHT savings could amount to several million.