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21/10/2015
1
Photo by MIKI Yoshihito (´・ω・) - Creative Commons Attribution License http://www.flickr.com/photos/7940758@N07 Created with Haiku Deck
Mike Hague From our files:
Harry & Sally
Photo by Marion Doss - Creative Commons Attribution-ShareAlike License http://www.flickr.com/photos/7337467@N04 Created with Haiku Deck
21/10/2015
2
Photo by Jack Amick - Creative Commons Attribution-NonCommercial License http://www.flickr.com/photos/20909379@N00 Created with Haiku Deck
Photo by Duncan Rawlinson - @thelastminute - Duncan.co - Creative Commons Attribution-NonCommercial License http://www.flickr.com/photos/44124400268@N01 Created with Haiku Deck
21/10/2015
3
Photo by _jjph - Creative Commons Attribution-NonCommercial-ShareAlike License http://www.flickr.com/photos/23849931@N08 Created with Haiku Deck
•People
•Pounds
•Planning
21/10/2015
4
1 Establish and
define the client-planner
relationship
2 Gather client data
including goals
3 Analyse and
evaluate your financial position
4 Develop and
present Financial Planning
5 Implement the
Financial Planning recommendations
6 Monitor the
Financial Planning
recommendations
1 What do you
want to achieve?
2 Where are you now?
3 Analysis and projections
4 What
alternatives should we consider?
5 Implement
the planning
6 Monitor,
evaluate and review over time
21/10/2015
5
Objectives Current Position Analysis and projections
Develop Action Plan
Implementation Review
21/10/2015
6
Three wishes (Assumptions)
• Harry and Sally are in a “steady state.”
• FCA return assumptions turn out to be real.
• Tax etc. tomorrow is the same as tax etc. today
Photo by Sebastiaan ter Burg - Creative Commons Attribution-ShareAlike License http://www.flickr.com/photos/31013861@N00 Created with Haiku Deck
21/10/2015
7
What needs to happen?
What other information do you
need?
What do they want to achieve?
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
Objectives Current Position Analysis and projections
Develop Action Plan
Implementation Review
Assets House, joint tenants, £400,000 Cash ISAs £20,000 each. Money from time of house move and business start up. Put here “just in case” General chattels – not a lot really Equal Shareholding in AlphaOmega Ltd No pensions other than the state pension entitlement
Liabilities None after this month’s mortgage payment
Income Salary £20,000 each Dividends – regularly £10,000 each plus ad hoc for kids etc.
Expenditure Been difficult to pin down but seems to be £40,000 pa
21/10/2015
8
Objectives Current Position Analysis and projections
Develop Action Plan
Implementation Review
Balance sheet
Assets Cash at bank £200,000 Debtors £300,000 Fixed Assets £30,000
Liabilities Trade Creditors £250,000 Corporation tax £20,000
AlphaOmega
Profit Regularly £100,000 pa
Objectives Current Position Analysis and projections
Develop Action Plan
Implementation Review
Income Harry
Salary £20,000
Dividend £10,000
State Pension
Sally
Salary £20,000
Dividend £10,000
State Pension
Total Income £60,000
Expenditure Tax estimate
Harry
Salary/pension £1,880
Dividend £375
Sally
Salary/pension £1,880
Dividend £375
General Living Costs £40,000
Total Expenditure £44,510
Surplus (shortfall) £15,490
Harry Sally Joint Total House £400,000 £400,000
Savings £20,000 £20,000 £40,000
Business Shares £130,000 £130,000 £260,000
£150,000 £150,000 £400,000 £700,000
21/10/2015
9
Objectives Current Position Analysis and projections
Develop Action Plan
Implementation Review
Age 50 51 52 53 54 55 56 57 58 59 60
Income
Harry
Salary £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000
Dividend £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000
State Pension
Sally
Salary £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000
Dividend £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000
State Pension
Total Income £60,000 £60,000 £60,000 £60,000 £60,000 £60,000 £60,000 £60,000 £60,000 £60,000 £60,000
Expenditure
Tax estimate
Harry
Salary/pension £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880
Dividend £375 £375 £375 £375 £375 £375 £375 £375 £375 £375 £375
Sally
Salary/pension £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880
Dividend £375 £375 £375 £375 £375 £375 £375 £375 £375 £375 £375
General Living Costs £40,000 £40,000 £40,000 £40,000 £40,000 £40,000 £40,000 £40,000 £40,000 £40,000 £40,000
Total Expenditure £44,510 £44,510 £44,510 £44,510 £44,510 £44,510 £44,510 £44,510 £44,510 £44,510 £44,510
Surplus (shortfall) £15,490 £15,490 £15,490 £15,490 £15,490 £15,490 £15,490 £15,490 £15,490 £15,490 £15,490
Objectives Current Position Analysis and projections
Develop Action Plan
Implementation Review
Age 50 51 52 53 54 55 56 57 58 59 60
Income
Harry
Salary £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000
Dividend £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000
State Pension
Sally
Salary £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000
Dividend £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 £10,000
State Pension
Total Income £60,000 £60,000 £60,000 £60,000 £60,000 £60,000 £60,000 £60,000 £60,000 £60,000 £60,000
Expenditure
Tax estimate
Harry
Salary/pension £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880
Dividend £375 £375 £375 £375 £375 £375 £375 £375 £375 £375 £375
Sally
Salary/pension £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880 £1,880
Dividend £375 £375 £375 £375 £375 £375 £375 £375 £375 £375 £375
General Living Costs £40,000 £40,000 £40,000 £40,000 £40,000 £40,000 £40,000 £40,000 £40,000 £40,000 £40,000
Total Expenditure £44,510 £44,510 £44,510 £44,510 £44,510 £44,510 £44,510 £44,510 £44,510 £44,510 £44,510
Surplus (shortfall) £15,490 £15,490 £15,490 £15,490 £15,490 £15,490 £15,490 £15,490 £15,490 £15,490 £15,490
21/10/2015
10
£36,400
£53,134
£70,208
£87,631
£105,408
£123,548
£142,058
£160,945
£180,217
£199,882
£219,948
£0
£50,000
£100,000
£150,000
£200,000
£250,000
50 51 52 53 54 55 56 57 58 59 60
Closing Capital
Objectives Current Position Analysis and projections
Develop Action Plan
Implementation Review
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
Age 60 61 62 63 64 65 66 67 68
Income
Harry
Salary £20,000
Dividend £10,000
State Pension £7,865 £7,865
Sally
Salary £20,000
Dividend £10,000
State Pension £7,865 £7,865
Total Income £60,000 £0 £0 £0 £0 £0 £0 £15,730 £15,730
Expenditure
Tax estimate
Harry
Salary/pension £1,880 £0 £0 £0 £0 £0 £0 £0 £0
Dividend £375 £0 £0 £0 £0 £0 £0 £0 £0
Sally
Salary/pension £1,880 £0 £0 £0 £0 £0 £0 £0 £0
Dividend £375 £0 £0 £0 £0 £0 £0 £0 £0
General Living Costs £40,000 £40,000 £40,000 £40,000 £40,000 £40,000 £40,000 £40,000 £40,000
Total Expenditure £44,510 £40,000 £40,000 £40,000 £40,000 £40,000 £40,000 £40,000 £40,000
Surplus (shortfall) £15,490 -£40,000 -£40,000 -£40,000 -£40,000 -£40,000 -£40,000 -£24,270 -£24,270
21/10/2015
11
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
Closing Capital
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
Working
Not Working
Pensioners
Income surplus/shortfall
21/10/2015
12
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
Working
Not Working
Pensioners
Income surplus/shortfall
Paying for care
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
Increase net income by c.£33,500 pa until age 60
Paying for care
21/10/2015
13
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
Sales Minus
Cost of sales Gives
Gross Profit Minus
Overheads Gives
Operating Profit Minus
Taxation Leaves
Net Profits
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
Sales Minus
Cost of sales Gives
Gross Profit Minus
Overheads Gives
Operating Profit Minus
Taxation Leaves
Net Profits
Reward for work done: Salary Bonus Benefits in Kind Pension
Reward for risk taken Share of profit (dividend)
• National Insurance Contributions • Employer • Employees
• Income Tax
Dividend Tax
21/10/2015
14
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
An extra £100 as salary Personal Allowance
Basic Rate Higher Rate
£100k Rate Additional Rate
Corporation Tax
Employer's National Insurance Contributions
Employee's National Insurance Contributions
Income Tax
Dividend Tax
Total
"Net" Salary
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
An extra £100 as salary Personal Allowance
Basic Rate Higher Rate
£100k Rate Additional Rate
Corporation Tax £0.00
Employer's National Insurance Contributions £3.24
Employee's National Insurance Contributions £2.88
Income Tax £0.00
Dividend Tax £0.00
Total £6.11
"Net" Salary £93.89
21/10/2015
15
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
An extra £100 as Salary Personal Allowance
Basic Rate Higher Rate
£100k Rate Additional Rate
Corporation Tax £0.00 £0.00
Employer's National Insurance Contributions £3.24 £13.80
Employee's National Insurance Contributions £2.88 £12.00
Income Tax £0.00 £20.00
Dividend Tax £0.00 £0.00
Total £6.11 £45.80
"Net" Salary £93.89 £54.20
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
An extra £100 as Salary Personal Allowance
Basic Rate Higher Rate
£100k Rate Additional Rate
Corporation Tax £0.00 £0.00 £0.00
Employer's National Insurance Contributions £3.24 £13.80 £13.80
Employee's National Insurance Contributions £2.88 £12.00 £2.00
Income Tax £0.00 £20.00 £40.00
Dividend Tax £0.00 £0.00 £0.00
Total £6.11 £45.80 £55.80
"Net" Salary £93.89 £54.20 £44.20
21/10/2015
16
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
An extra £100 as Salary Personal Allowance
Basic Rate Higher Rate
£100k Rate Additional Rate
Corporation Tax £0.00 £0.00 £0.00 £0.00 £0.00
Employer's National Insurance Contributions £3.24 £13.80 £13.80 £13.80 £13.80
Employee's National Insurance Contributions £2.88 £12.00 £2.00 £2.00 £2.00
Income Tax £0.00 £20.00 £40.00
Dividend Tax £0.00 £0.00 £0.00
Total £6.11 £45.80 £55.80
"Net" Salary £93.89 £54.20 £44.20
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
An extra £100 as Salary Personal Allowance
Basic Rate Higher Rate
£100k Rate Additional Rate
Corporation Tax £0.00 £0.00 £0.00 £0.00 £0.00
Employer's National Insurance Contributions £3.24 £13.80 £13.80 £13.80 £13.80
Employee's National Insurance Contributions £2.88 £12.00 £2.00 £2.00 £2.00
Income Tax £0.00 £20.00 £40.00 £60.00 £45.00
Dividend Tax £0.00 £0.00 £0.00 £0.00 £0.00
Total £6.11 £45.80 £55.80 £75.80 £60.80
"Net" Salary £93.89 £54.20 £44.20 £24.20 £39.20
21/10/2015
17
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
An extra £100 as Dividend Personal Allowance
Basic Rate Higher Rate
£100k Rate Additional Rate
Corporation Tax £20.00 £20.00 £20.00 £20.00 £20.00
Employer's National Insurance Contributions £0.00 £0.00 £0.00 £0.00 £0.00
Employee's National Insurance Contributions £0.00 £0.00 £0.00 £0.00 £0.00
Income Tax £0.00 £0.00 £0.00 £0.00 £0.00
Dividend Tax £0.00 £6.00 £26.00 £32.00 £30.48
Total
"Net" Dividend
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
An extra £100 as Dividend Personal Allowance
Basic Rate Higher Rate
£100k Rate Additional Rate
Corporation Tax £20.00 £20.00 £20.00 £20.00 £20.00
Employer's National Insurance Contributions £0.00 £0.00 £0.00 £0.00 £0.00
Employee's National Insurance Contributions £0.00 £0.00 £0.00 £0.00 £0.00
Income Tax £0.00 £0.00 £0.00 £0.00 £0.00
Dividend Tax £0.00 £6.00 £26.00 £32.00 £30.48
Total £20.00 £26.00 £46.00 £52.00 £50.48
"Net" Dividend £80.00 £74.00 £54.00 £48.00 £49.52
21/10/2015
18
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
An extra £100 as Dividend Personal Allowance
Basic Rate Higher Rate
£100k Rate Additional Rate
Corporation Tax £20.00 £20.00 £20.00 £20.00 £20.00
Employer's National Insurance Contributions £0.00 £0.00 £0.00 £0.00 £0.00
Employee's National Insurance Contributions £0.00 £0.00 £0.00 £0.00 £0.00
Income Tax £0.00 £0.00 £0.00 £0.00 £0.00
Dividend Tax £0.00 £6.00 £26.00 £32.00 £30.48
Total £20.00 £26.00 £46.00 £52.00 £50.48
"Net" Dividend £80.00 £74.00 £54.00 £48.00 £49.52
"Net" Salary £93.89 £54.20 £44.20 £24.20 £39.20
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
An extra £100 Pension Contribution
Tax
Personal Allowance
Basic Rate Higher Rate £100k Rate Additional Rate
Corporation Tax £0.00 £0.00 £0.00 £0.00 £0.00
Employer's National Insurance Contributions £0.00 £0.00 £0.00 £0.00 £0.00
Employee's National Insurance Contributions £0.00 £0.00 £0.00 £0.00 £0.00
Income Tax
Dividend Tax £0.00 £0.00 £0.00 £0.00 £0.00
Total
"Net" Pension
21/10/2015
19
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
An extra £100 Pension Contribution
Tax
Personal Allowance
Basic Rate Higher Rate £100k Rate Additional Rate
Corporation Tax £0.00 £0.00 £0.00 £0.00 £0.00
Employer's National Insurance Contributions £0.00 £0.00 £0.00 £0.00 £0.00
Employee's National Insurance Contributions £0.00 £0.00 £0.00 £0.00 £0.00
Income Tax £0.00 £15.00 £30.00 £45.00 £33.75
Dividend Tax £0.00 £0.00 £0.00 £0.00 £0.00
Total £0.00 £15.00 £30.00 £45.00 £33.75
"Net" Pension £100.00 £85.00 £70.00 £55.00 £66.25
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
An extra £100 Pension Contribution
Tax
Personal Allowance
Basic Rate Higher Rate £100k Rate Additional Rate
Corporation Tax £0.00 £0.00 £0.00 £0.00 £0.00
Employer's National Insurance Contributions £0.00 £0.00 £0.00 £0.00 £0.00
Employee's National Insurance Contributions £0.00 £0.00 £0.00 £0.00 £0.00
Income Tax £0.00 £15.00 £30.00 £45.00 £33.75
Dividend Tax £0.00 £0.00 £0.00 £0.00 £0.00
Total £0.00 £15.00 £30.00 £45.00 £33.75
"Net" Pension £100.00 £85.00 £70.00 £55.00 £66.25
"Net" Dividend £80.00 £74.00 £54.00 £48.00 £49.52
"Net" Salary £93.89 £54.20 £44.20 £24.20 £39.20
21/10/2015
20
£0.00
£10.00
£20.00
£30.00
£40.00
£50.00
£60.00
£70.00
£80.00
£90.00
£100.00
Personal Allowance Basic Rate Higher Rate £100k Rate Additional Rate
"Net" Pension "Net" Dividend "Net" Salary
21/10/2015
21
What do they want to achieve?
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
Pass “Harry’s share” to his children and “Sally’s share” to her children.
Objectives Current Position
Analysis and projections
Develop Action Plan
Implementation Review
Other things
• Check • Wills
• LPAs
• Consider • What if…
• Life Cover
• CIC Cover
• Income protection
21/10/2015
22