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The Senior Executive
The plan

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Bloomsbury discusses the various observations and conclusions with Tony, to identify how he feels about the various options.

After discussing the pros and cons of the various planning options, and considering the overall position, Tony and his Bloomsbury planner formulate the overall financial plan incorporating the following main points:

• Tony and his wife should each create enduring powers of attorney, to allow each of them to deal with the other's affairs in the event of incapacity;
• Tony and his wife should have new wills drawn up which maximise the use of their nil rate bands and thus save over £100,000 in inheritance tax;
• His wife should request a tax return so that she can reclaim the overpaid tax on her deposit interest;
• He should convert the mortgage on the main property to a flexible type and then pay in the bulk of the existing cash savings to reduce the balance to zero. This will provide a risk-free and tax-free effective return equal to the loan interest rate as well as total flexibility to withdraw the capital at any time in the future;
• Tony should switch the investment of his executive pension plans to an index-linked gilt strategy and apply for primary protection. He should then carefully review the extent to which his employer makes further pension contributions each year, so that he does not exceed the uplifted lifetime limit.
• Tony should crystallise sufficient gains on his portfolio to use up all of his unrealised losses and his annual CGT exemption and then transfer sufficient additional assets to his wife so that she can make use of her own exemption as well. In addition, next year's exemptions can be used after 6th April;
• Tony should transfer some of his shares in his employer to his wife to make better use of her personal income tax allowances and annual CGT exemption, and purchase 'put' options to protect his position in case the value falls suddenly.
• Tony moves his investment portfolio into a nominee service provided by Bloomsbury's third party specialists. The funds are reallocated to a 60/40 equity/bond split to reflect Tony's and his wife's risk and return profile. In addition all funds are allocated to passive institutional pure asset class funds, which both reduces the risk inherent in holding direct equities and reduces the expense ratio to 1.25% - an annual saving of 0.85% - a saving which no longer needs to be funded by a riskier investment strategy.
• Tony's wife should pay annual net pension contributions of £2,808, as she will receive basic rate relief on the contribution even though she pays only 10% or 20% at most on her dividends and interest. When she draws benefits, she can take up to 25% tax-free and the balance is unlikely to be taxed at a rate as high as that at which she received relief on contributions.