Of course. Here is a comprehensive Suitability Report produced in my capacity as a Chartered Financial Planner, based on the client profile and requirements provided.

---

Suitability Report

Prepared For: [Client Name - Withheld for Confidentiality]
Date of Issue: 28 May 2024
Prepared By: [Your Name], FPFS, Chartered Financial Planner

FCA Authorisation Statement:
This report is provided by a Chartered Financial Planner, authorised and regulated by the Financial Conduct Authority (FCA). All recommendations are based on the information you have provided and are tailored to your specific circumstances, objectives, and risk profile. Please be aware that the value of investments can fall as well as rise, and you may not get back the full amount invested. Past performance is not a reliable indicator of future results. Tax rules and allowances are subject to change.

---

This report outlines a strategic financial plan designed to meet your stated objectives. It is based on our detailed discussions and the financial information you provided. The key recommendations to achieve your goals of a comfortable retirement at age 60, funding your children's education, and managing your estate efficiently are as follows:

• Retirement: Significantly increase your pension contributions to close a projected shortfall, utilising your monthly surplus and considering pension consolidation for efficiency.
• Property: We recommend selling the buy-to-let property. This will release significant capital, reduce your income tax liability, and allow you to redeploy funds into more tax-efficient pension and ISA wrappers to accelerate your primary goals.
• Education: Increase your monthly contributions towards your children's Junior ISAs to ensure their university education is fully funded without compromising your retirement plans.
• Protection: Immediately arrange Income Protection insurance to safeguard your family's financial stability against loss of earnings due to illness or injury.
• Estate Planning: Urgently update your Wills and establish Lasting Powers of Attorney (LPAs). We also recommend placing your existing life insurance policy into a suitable trust to remove it from your estate for Inheritance Tax purposes.
• Tax Efficiency: Maximise the use of your annual ISA and pension allowances to significantly reduce your income and capital gains tax liabilities.

A detailed implementation roadmap is provided in Section 11 to guide you through these steps.

You have built a strong financial foundation with a healthy household income, significant assets, and a manageable level of debt.

Net Worth Summary:

Assets	Value	Liabilities	Value
Primary Residence	£650,000	Primary Mortgage	(£180,000)
Buy-to-Let Property	£295,000	BTL Mortgage	(£140,000)
Workplace Pensions	£227,000	Car Finance	(£12,000)
ISAs & GIA	£103,000	Total Liabilities	(£332,000)
Cash & Premium Bonds	£43,000
Total Assets	£1,318,000	Net Worth	£986,000

Cash Flow Analysis:

• Total Gross Annual Income: £125,000
• Estimated Net Monthly Income: ~£7,700
• Stated Monthly Expenditure: ~£5,090
• Estimated Monthly Surplus: ~£2,610

This monthly surplus of over £2,600 is a powerful tool. Currently, only £250 is allocated to Junior ISAs, leaving a significant unallocated amount. Our plan will focus on channelling this surplus effectively.

Identified Gaps and Inefficiencies:

1. Retirement Underfunding: Your current contribution rate is insufficient to meet your goal of retiring at 60.
2. Protection Gap: You have no income protection, exposing your family to significant financial risk if you were unable to work.
3. Estate Planning Neglect: Your Wills are outdated, you have no LPAs, and your life insurance is likely part of your taxable estate.
4. Tax Inefficiency: As a higher-rate taxpayer, the rental income from your buy-to-let is taxed inefficiently. You are also not fully utilising your annual ISA and pension allowances.
5. Investment Concentration: A large portion of your wealth (£945,000) is tied up in residential property, creating concentration risk.

Objective: Retire at age 60 (15 years) with a comfortable lifestyle. Let's assume a target net income of £50,000 per annum in today's terms.

Current Projections:
Your combined pensions total £227,000, with current annual contributions of £13,290. Assuming a 5% p.a. net growth rate, your projected pension pot at your age 60 would be approximately £760,000.

To generate a £50,000 annual income, using a safe withdrawal rate of 4%, a fund of £1,250,000 would be required. This reveals a shortfall of approximately £490,000.

Recommendations:

1. Increase Contributions: You must increase your pension contributions significantly. Your £2,610 monthly surplus is the key. We recommend allocating at least £1,500 per month of this surplus to your pensions.
   • Action: Increase your workplace pension contribution to the maximum level your employer will match. If you are a higher-rate taxpayer, consider contributing via 'salary sacrifice' if offered, as this saves on National Insurance contributions as well as income tax. Any further contributions can be made to a personal pension (SIPP). Your spouse should also increase her contribution.
2. Pension Consolidation: You both hold separate workplace pensions. We should review the underlying charges, fund choices, and any special benefits (e.g., guaranteed annuity rates) of these schemes. Consolidating them into a single, low-cost Self-Invested Personal Pension (SIPP) could offer simplification, lower fees, and wider investment choice. This requires careful analysis before proceeding.
3. Tax-Efficient Withdrawals: At retirement, you can take 25% of your pension as a tax-free lump sum. The remainder can be drawn down flexibly, managed to keep you within the basic rate tax band in retirement, supplemented by your ISA savings which are entirely tax-free. Your State Pensions will commence at age 67, further supplementing this income.

Your risk profile is 'Balanced' (5/10), indicating a need for growth while being uncomfortable with high volatility. Your existing ISAs and General Investment Account (GIA) should be aligned with this profile and your time horizons.

Recommendations:

1. Asset Allocation: We recommend your long-term investments (Pensions, ISAs) be structured around a diversified, multi-asset portfolio. A suitable allocation for a 'Balanced' profile would be:
   • Global Equities: 50%
   • Government & Corporate Bonds: 30%
   • Property & Alternatives: 10%
   • Cash: 10%
     This spreads risk and captures growth opportunities across different economic cycles. We will select specific funds to implement this strategy.
2. Utilise ISA Allowances: You have a £35,000 GIA, where any gains are potentially liable for Capital Gains Tax (CGT) and dividends are taxable. You should use your annual £20,000 ISA allowance each. We recommend a "Bed & ISA" process, selling a portion of the GIA each year and immediately repurchasing it within the tax-free ISA wrapper until the GIA is depleted.
3. Emergency Fund: Your £15,000 emergency fund is adequate (approx. 3 months' expenditure). However, your £20,000 in Premium Bonds offers no guaranteed return. While tax-free, we could consider moving this into higher-interest cash savings or a low-risk investment if you seek a more predictable return, once the core emergency fund is secured.

Objective: Fund £50,000 for university costs in approximately 6-7 years.

Current Projections:
You are contributing £250 per month to Junior ISAs (JISAs). Over the next 7 years, assuming 5% growth, this will result in a fund of approximately £25,000. This leaves a shortfall of £25,000.

Recommendation:

• Increase Contributions: To meet the £50,000 target, you need to increase your total monthly JISA contributions from £250 to approximately £500 per month. This can be comfortably funded from your monthly surplus. The funds within a JISA grow free of tax and belong to the child at age 18.

Objective: Decide whether to retain or sell the buy-to-let (BTL) property.

Analysis:

• Equity: You have £155,000 of equity tied up in the property.
• Net Yield: The net rental income of £8,500 on this equity provides a yield of 5.48%.
• Tax: As a higher-rate taxpayer, your rental profits are taxed at 40%, significantly reducing your net return. Mortgage interest relief is restricted to a 20% tax credit, further eroding profitability.
• Risk: You face concentration risk in property, tenant/maintenance issues, and potential rises in mortgage rates when your fix expires in 2026.

Recommendation: Sell the Buy-to-Let Property
The financial argument for selling is compelling.

1. Capital Release: Selling would release the £155,000 equity.
2. Capital Gains Tax (CGT): A gain on the sale will be liable for CGT. Assuming you bought the property for £180,000, the gain is £115,000. As joint owners, you can both use your annual CGT allowance (£3,000 for 2024/25). The remaining gain of £109,000 would be taxed at 24% (new rate for higher-rate taxpayers on residential property), resulting in a tax bill of approximately £26,160. Your net proceeds would be around £128,840.
3. Capital Redeployment: This lump sum of ~£129,000 can be immediately redeployed:
   • Make a significant one-off pension contribution to accelerate retirement funding (utilising carry-forward of unused allowances).
   • Fully subscribe to your ISAs for two consecutive tax years (£40,000 each year for you and your spouse).
   • This move transforms a tax-inefficient asset into highly efficient, diversified, and liquid investments, directly serving your primary goals.

Objective: Mitigate Inheritance Tax (IHT) and ensure your estate is managed as you wish.

Your estimated net estate is approaching £1 million (excluding pensions, but including property, savings, and investments). On second death, your joint allowances (Nil Rate Band & Residence Nil Rate Band) total £1,000,000. Your estate is therefore at or potentially over the IHT threshold.

Recommendations:

1. Review Wills: Your Wills are 8 years old and predate a significant increase in your wealth. They may not reflect your current wishes, especially regarding guardianship for your children. This is your most urgent priority.
2. Establish Lasting Powers of Attorney (LPAs): You have no LPAs. We strongly recommend you and your spouse each set up both a 'Health and Welfare' and a 'Property and Financial Affairs' LPA. This ensures someone you trust can make decisions for you if you lose capacity.
3. Place Life Insurance in Trust: Your £400,000 life insurance policy, if not written in trust, will form part of your estate and could be liable for 40% IHT. By placing the policy in a simple discretionary trust, the payout goes directly to your beneficiaries (e.g., your children) outside of your estate and free of IHT.
4. Gifting: You can each gift £3,000 per year IHT-free. You could use this allowance to make additional payments into your children's JISAs or another designated account for their future benefit.

Objective: Ensure your protection arrangements are adequate.

Your life and critical illness cover provide a good capital sum for your family should the worst happen. However, there is a critical gap.

Recommendation:

• Arrange Income Protection (IP): Your ability to earn an income is your most valuable asset. An IP policy would pay a regular, tax-free income if you are unable to work due to long-term illness or injury. We recommend a policy for you to cover approximately 60% of your gross salary (£4,250 per month) with a deferred period to match your employer's sick pay policy (e.g., 6 months), paying out until your target retirement age of 60. This is a non-negotiable cornerstone of a robust financial plan.

This plan is designed to maximise tax efficiency. To summarise the key strategies:

1. Pensions: Maximise contributions to benefit from 40% tax relief and tax-free growth.
2. ISAs: Fully utilise your £40,000 joint annual allowance for tax-free growth and income.
3. Capital Gains Tax: Use your annual allowances via the "Bed & ISA" strategy for your GIA and upon the sale of the BTL property.
4. Income Tax: Selling the BTL will eliminate the 40% income tax liability on rental profits.
5. Inheritance Tax: Use trusts and gifting to mitigate future IHT liability.

We have modelled two primary scenarios to illustrate the impact of this advice.

• Scenario 1: "Do Nothing"

  • You continue with your current arrangements.
  • Outcome: You would likely need to work until age 65-67 to achieve your desired retirement income. You would face a significant shortfall in university funding, and your estate would be liable for IHT.

• Scenario 2: "Implement Recommendations"

  • You sell the BTL, increase pension/JISA contributions, and implement the protection/estate planning advice.
  • Outcome: Cash flow projections show you are on track to retire at age 60 with a pension pot in excess of £1.1 million. University fees are fully funded. Your IHT liability is mitigated, and your family is fully protected against loss of income.

We recommend tackling these actions in a prioritised order.

Immediate Priorities (1-3 Months):

1. Arrange Income Protection: We will obtain quotes and get this cover in place immediately.
2. Instruct a Solicitor: Contact a solicitor to update your Wills and draft LPAs.
3. Life Insurance Trust: Complete the trust documentation for your existing life policy.
4. Increase Regular Savings: Set up new standing orders to increase contributions to your workplace pension and the children's JISAs.

Medium-Term Actions (3-9 Months):

5. Sell the Buy-to-Let Property: Engage an estate agent and conveyancer.
6. Redeploy BTL Proceeds: Once the sale completes, we will invest the proceeds into your pensions and ISAs as planned.
7. Pension Review & Consolidation: Conduct a full review of your existing workplace schemes to determine if consolidation is appropriate.
8. "Bed & ISA" GIA: Begin the process of migrating your GIA into your ISA wrapper at the start of the next tax year.

Financial planning is a dynamic process, not a one-off event. To ensure your plan remains on track and adapts to changes in your circumstances and the economic environment, we recommend an ongoing service relationship.

This would include:

• Annual Review Meeting: A comprehensive review of your entire financial plan, tracking progress against your goals.
• Portfolio Rebalancing: Ensuring your investments remain aligned with your 'Balanced' risk profile.
• Proactive advice: Keeping you informed of any changes to tax and pension legislation that may affect your plan.

We will provide a separate document outlining the details and costs of our ongoing service proposition.

---

We trust this report provides a clear path forward. We look forward to discussing these recommendations with you in detail and helping you implement the plan to achieve your financial goals.

[Your Name], FPFS
Chartered Financial Planner

Of course. Below is the comprehensive Suitability Report produced in my capacity as a Chartered Financial Planner, based on the provided client profile and template.

---

For: [Client Name - Redacted for Privacy]
Date: 21 May 2024
Prepared by: [Your Name], FPFS, Chartered Financial Planner

FCA Firm Reference Number: [FRN]
Adviser Reference Number: [ARN]

Important Information
This report is prepared for you based on the information you have provided about your personal circumstances, financial position, and objectives. It outlines my recommendations and the reasons for them. Please be aware that the value of investments can go down as well as up, and you may get back less than you invested. Past performance is not a reliable indicator of future results. Tax treatment depends on individual circumstances and may be subject to change in the future.

This document is a financial plan and does not constitute an instruction to implement. No actions will be taken without your express consent.

---

This report provides a holistic review of your financial position and a clear strategy to help you achieve your stated objectives. You have built a strong financial foundation, and with a healthy monthly surplus, your goals are achievable with a structured approach.

My key recommendations are summarised as follows:

1. Prioritise Retirement Funding: Significantly increase your personal pension contributions, utilising salary sacrifice if available, to bridge the projected shortfall for your target retirement at age 60.
2. Restructure Property Holdings: Recommend the disposal of the buy-to-let (BTL) property due to its tax inefficiency and concentration risk. The net proceeds should be reinvested into your pensions and ISAs to accelerate wealth accumulation.
3. Secure Children's Education: Increase your monthly contributions to the Junior ISAs (JISAs) to ensure the university funding target is met.
4. Strengthen Financial Protection: Arrange Income Protection insurance immediately to safeguard your family's financial stability against the risk of long-term illness.
5. Modernise Estate Planning: Urgently update your Wills and establish Lasting Powers of Attorney (LPAs) for both you and your spouse to ensure your wishes are met and your affairs can be managed if you are unable to do so.
6. Optimise Tax Efficiency: Systematically move funds from your General Investment Account (GIA) into tax-efficient ISAs and maximise use of your pension allowances.

Strengths:

• High Surplus Income: Your combined net income significantly exceeds your expenditure, providing a surplus of approximately £2,340 per month. This is the primary engine for achieving your goals.
• Existing Asset Base: You have already accumulated a substantial asset base across property, pensions, and investments.
• Emergency Fund: You hold an appropriate emergency fund of £15,000, covering approximately three months of essential expenditure.
• Proactive Planning: You have established some life and critical illness cover and are saving for your children's future, demonstrating financial prudence.

Gaps and Inefficiencies:

• Retirement Shortfall: Current pension contributions are insufficient to meet your goal of retiring at age 60 on your desired income.
• Protection Gap: The absence of Income Protection is a critical vulnerability. As the primary earner, a long-term inability to work would have a severe financial impact.
• Tax Inefficiency of BTL: Your higher-rate tax status significantly erodes the profitability of your rental income due to the mortgage interest tax credit restriction (Section 24).
• Outdated Estate Plan: Your Wills are eight years old and do not account for your second child. You have no LPAs in place, which is a significant risk.
• Sub-optimal Investment Structure: The GIA is subject to income and capital gains tax, whereas these funds could be held more efficiently within ISAs.

Objective: To retire at age 60 with a comfortable income. We can model a target income of £55,000 per year in today's money. To generate this sustainably, you would need a target pension pot of approximately £1.375 million (based on a 4% withdrawal rate).

Current Trajectory:

• Current Combined Pensions: £227,000
• Current Annual Contributions: £13,290 (Client: £11,050, Spouse: £2,240)
• Projected Pension Pot at Age 60: Based on current contributions and a 5% p.a. net growth rate, your combined fund is projected to be approximately £759,000.
• Projected Shortfall: £616,000.

Recommendations:

1. Increase Pension Contributions:

   • Client: As a higher-rate taxpayer, every £100 you contribute to your pension only costs you £60. I recommend you increase your pension contribution to use a significant portion of your monthly surplus. If your employer offers a salary sacrifice scheme, this is the most efficient method, as it will also save you National Insurance contributions. You have an annual allowance of £60,000.
   • Spouse: Your spouse should also consider increasing her contributions. Although a basic-rate taxpayer, she still benefits from 20% tax relief.

2. Utilise Carry Forward: You likely have unused pension annual allowance from the previous three tax years. Following the sale of the BTL property (see section 6), a significant lump-sum contribution can be made to rapidly boost your pension fund, attracting substantial tax relief.

3. Pension Consolidation Review: We should review your and your spouse's existing workplace pensions. Consolidating them into a single Self-Invested Personal Pension (SIPP) could offer wider investment choices, potentially lower charges, and simplified administration. We must first verify that no valuable safeguarded benefits (e.g., guaranteed annuity rates) would be lost.

4. Tax-Efficient Withdrawal Strategy: At retirement, we will structure withdrawals to maximise tax efficiency. This involves using your tax-free cash entitlement (25%), phasing withdrawals to utilise your personal allowances each year, and balancing drawings between you and your spouse to minimise higher-rate tax.

Your risk profile is Balanced (5/10). This means you are willing to accept a moderate level of risk to achieve long-term growth, but wish to avoid excessive volatility. Our recommended investment strategy reflects this.

Recommendations:

1. Core Portfolio Alignment (Pensions & ISAs - £253,000): We will structure your pension and ISA investments into a globally diversified, multi-asset portfolio. A typical allocation for a 'Balanced' profile would be:

   • Global Equities: 55%
   • Government & Corporate Bonds: 30%
   • Alternative Assets (e.g., Property, Infrastructure): 10%
   • Cash: 5%
     This allocation is designed to capture growth while providing diversification to smooth returns over your 15-year time horizon.

2. General Investment Account (GIA - £35,000): This is tax-inefficient. We should implement a 'Bed & ISA' strategy. This involves selling a portion of your GIA holdings and immediately repurchasing them within your ISA, utilising your £20,000 annual allowance. We can do this for both you and your spouse, sheltering £40,000 from tax over two tax years.

3. Premium Bonds (£20,000): These are tax-free and 100% capital secure. While the 'prize rate' is variable, they can form part of your wider low-risk holdings. We can retain these for now as an accessible, secure store of value.

Objective: Fund university costs of £50,000 in 6-7 years.

Current Trajectory:

• Current Contributions: £250 per month (£3,000 p.a.) into two JISAs.
• Projected JISA Fund: In 7 years, this is projected to grow to approximately £24,500 (at 5% p.a. net growth), falling short of your target.

Recommendation:

• Increase JISA Contributions: I recommend you immediately double the contributions from your monthly surplus to £500 per month (£250 per child).
• Revised Projection: At £6,000 p.a., the fund is projected to reach approximately £49,000 in 7 years, meeting your objective. The JISA is the ideal vehicle as growth is tax-free and the money is ring-fenced for the children.

Objective: Decide whether to retain or sell the BTL property.

Analysis:
The profitability of your BTL is being severely impacted by tax rules. The £12,000 gross rent is added to your £85,000 salary, meaning most of it is taxed at 40%. You only receive a 20% tax credit on your mortgage interest payments.

• Rental Income: £12,000
• Taxable Income (added to your salary): £12,000
• Income Tax @ 40%: £4,800
• Mortgage Interest (approx. £140k @ 4.1%): £5,740
• Tax Credit @ 20%: £1,148
• Net Tax due on Rent: £4,800 - £1,148 = £3,652
• Your True Annual Profit: £8,500 (net after expenses) - £3,652 (tax) = £4,848

This represents a return of just 1.6% on the property's market value, with significant concentration and liquidity risk.

Recommendation: Dispose of the BTL Property
Selling the property would crystallise your capital gain and release a significant sum for redeployment.

• Sale Price: £295,000
• Outstanding Mortgage: (£140,000)
• Gross Equity Released: £155,000
• Capital Gains Tax (CGT) Estimate: Assuming a purchase price of £180,000, your gain is £115,000. After your £3,000 annual exemption (2024/25), the taxable gain is £112,000. At the 28% rate for higher-rate taxpayers on residential property, the estimated CGT is £31,360.
• Net Proceeds for Reinvestment: £155,000 - £31,360 = ~£123,640

This £123,640 can be immediately used to make a substantial lump-sum contribution to your pension, attracting 40% tax relief and directly addressing the retirement shortfall identified in Section 3.

Objective: Mitigate Inheritance Tax (IHT) and ensure your estate is passed on as intended.

Analysis:
Your non-pension assets total approximately £771,000. As a married couple passing assets to direct descendants, you have a combined Nil-Rate Band (£325k x 2) and Residence Nil-Rate Band (£175k x 2), giving a total IHT threshold of £1,000,000. Currently, your estate is below this threshold. However, with continued investment growth, it may exceed it in the future.

Recommendations:

1. Update Wills (Urgent): Your current Wills are invalid in respect of your family structure. You must both create new Wills to reflect your current wishes, name guardians for your minor children, and set up testamentary trusts if desired.
2. Establish Lasting Powers of Attorney (Urgent): You should both set up LPAs for ‘Health and Welfare’ and ‘Property and Financial Affairs’. This allows a nominated person (e.g., your spouse) to make decisions on your behalf if you lose mental capacity. Without these, your family would need to apply to the Court of Protection, which is a slow and costly process.
3. Check Pension Nominations: Ensure your 'Expression of Wish' forms for your workplace pensions are up-to-date. Pensions typically fall outside your estate for IHT purposes, so this is a simple and powerful estate planning tool.
4. Future Gifting: Once your own retirement is secure, you can use your annual gift exemptions (£3,000 per person, per year) to begin passing wealth to your children to help with future house deposits.

Objective: Ensure protection arrangements are adequate.

Analysis:

• Life/Critical Illness Cover: Your £400k life cover would clear your combined mortgages (£320k) and car finance (£12k), leaving a buffer of £68,000. This is insufficient to replace your long-term income.
• Income Protection: You have no cover. This is the single biggest risk to your financial plan.

Recommendations:

1. Arrange Income Protection (Urgent): I recommend you take out an Income Protection policy to provide a replacement monthly income (typically up to 60% of your gross salary) in the event of long-term illness or injury. The deferred period should be set to match your employer's full sick pay period to ensure seamless cover.
2. Review Life and CI Cover: We should conduct a full needs analysis. A more appropriate level of life cover may be required to not only clear debts but also provide a capital sum to generate an income for your family until the children are financially independent.

This section consolidates the tax-saving strategies mentioned throughout the report.

Actionable Recommendations:

• Maximise Pension Contributions: Use salary sacrifice if possible for maximum income tax and NI savings. Make large contributions to claim 40% tax relief and utilise carry-forward allowances.
• Utilise all ISA Allowances: You and your spouse should aim to use your full £20,000 annual ISA allowance each.
• "Bed & ISA" your GIA: Systematically move the £35,000 from the taxable GIA into your tax-free ISAs.
• Dispose of Tax-Inefficient BTL: Selling the property removes a significant and growing tax burden.
• Spousal Asset Transfer: Consider transferring assets between you and your spouse to utilise both of your personal allowances, CGT exemptions, and basic-rate tax bands where applicable.

We have used cash flow modelling to project your financial future under two scenarios.

• Scenario 1: "Do Nothing"

  • This projection shows you reaching age 60 with a pension pot of £759,000, significantly short of the £1.375m target. This would require you to either work longer, reduce retirement spending, or take more investment risk.
  • It also shows the university fund reaching only £24,500, requiring you to find the additional £25,500 from other capital or income, compromising your own goals.

• Scenario 2: "Recommended Strategy"

  • This model incorporates selling the BTL and reinvesting the ~£124k into your pension, and increasing monthly pension/JISA contributions from your surplus income.
  • This projection shows your pension pot reaching approximately £1.35 million by age 60, successfully meeting your retirement objective.
  • It also shows the university fund reaching £49,000, fully funding your children's education without compromising your retirement.

The models clearly demonstrate that implementing the recommended strategy will place you on a secure path to achieving all your primary objectives.

I recommend we proceed with the following prioritised action plan:

Phase 1: Immediate Priorities (Next 1-3 Months)

1. Protection: Obtain quotes and put Income Protection in place.
2. Estate Planning: Instruct a solicitor to draft new Wills and create LPAs for both you and your spouse.
3. Update Nominations: Complete and return Expression of Wish forms for all pensions.

Phase 2: Strategic Repositioning (Next 3-6 Months)

1. Increase Contributions: Action increased monthly contributions to your workplace pension and the children's JISAs.
2. BTL Disposal: Appoint an estate agent and conveyancing solicitor to manage the sale of the BTL property.
3. Investment Restructuring: Begin the 'Bed & ISA' process for the GIA holdings.
4. Pension Review: Complete a full analysis of existing pensions to confirm suitability for consolidation.

Phase 3: Capital Deployment (Following BTL Sale)

1. Lump-Sum Pension Contribution: On receipt of sale proceeds, calculate available carry-forward allowance and make a significant contribution to your pension.
2. Portfolio Alignment: Fully implement the agreed 'Balanced' investment strategy across all consolidated pensions and ISAs.

Your financial plan is not a one-off event but a dynamic strategy that needs to adapt to changing circumstances, legislation, and market conditions. I recommend we engage in an ongoing advice service.

This service includes:

• Annual Review Meeting: A comprehensive review of your entire financial plan, progress towards goals, and any changes to your circumstances.
• Portfolio Rebalancing: Ensuring your investments remain aligned with your risk profile.
• Proactive Advice: Informing you of changes to tax or pension legislation that may affect you.
• Ad-Hoc Support: Access to me for any queries or guidance you may need throughout the year.

The fee for our ongoing service is [e.g., 0.75%] of the assets we manage on your behalf per annum, payable monthly or quarterly. A separate fee schedule will be provided for your agreement.

---

I trust this report provides the clarity and direction you were seeking. I am confident that by working together, we can successfully implement this plan and help you achieve a secure and prosperous financial future. I look forward to discussing the next steps with you.

Yours sincerely,

[Your Name], FPFS
Chartered Financial Planner

Of course. Please find below the comprehensive Suitability Report prepared for your client, as requested.

---

Prepared for: Client Name
Date: 23 May 2024
Prepared by: [Your Name], FPFS, Chartered Financial Planner

Regulatory Statement:
This report has been prepared for you based on the information you have provided and our understanding of your current circumstances, objectives, and attitude to risk. It is a personal recommendation and should not be disclosed or transmitted to any other person. Please be aware that the recommendations are based on our understanding of current legislation, taxation, and provider practices, which are subject to change.

[Your Firm Name] is authorised and regulated by the Financial Conduct Authority (FCA).

This report provides a holistic financial plan designed to meet your stated objectives. Following a thorough analysis of your financial position, my key recommendations are:

• Prioritise Protection: Immediately arrange Income Protection insurance to safeguard your family's primary income source against the risk of long-term illness or injury.
• Restructure Property Holdings: Sell the buy-to-let (BTL) property to release approximately £128,000 of capital (after mortgage and estimated taxes). This will de-risk your finances, remove a tax-inefficient asset, and provide capital to accelerate your other goals.
• Supercharge Retirement Savings: Significantly increase your pension contributions to address the projected retirement shortfall. The capital from the BTL sale and your monthly surplus should be channelled into your and your spouse's pensions and ISAs.
• Fund Education Systematically: Increase your monthly contributions to the Junior ISAs (JISAs) to ensure the university funding target is met without compromising your retirement plans.
• Update Your Estate Plan: Urgently update your Wills and establish Lasting Powers of Attorney (LPAs) for both you and your spouse to ensure your wishes are met and your affairs can be managed in a crisis.

By implementing these strategies, our projections indicate you can achieve your goal of a comfortable retirement at age 60, fund your children's education, and create a more resilient and tax-efficient financial future.

---

Net Worth Statement:

Assets	Value	Liabilities	Value
Primary Residence	£650,000	Primary Mortgage	£180,000
Buy-to-Let Property	£295,000	Buy-to-Let Mortgage	£140,000
Pensions (Total)	£227,000	Car Finance	£12,000
ISAs (Combined)	£68,000	Total Liabilities	£332,000
General Investment Account	£35,000
Premium Bonds	£20,000
Emergency Fund & Cash	£23,000
Total Assets	£1,318,000	Net Worth	£986,000

Cash Flow Analysis:

• Estimated Net Monthly Income: ~£7,850
• Stated Monthly Expenditure: ~£5,090
• Monthly Surplus: ~£2,760

This monthly surplus of approximately £2,760 is a significant strength, providing the capacity to fund your objectives.

Key Findings & Gaps:

1. Retirement Shortfall: Your current pension contribution rate is insufficient to meet your target retirement income at age 60.
2. Protection Gap: You have no Income Protection, a critical risk given you are the main earner. Your life and critical illness cover may also be inadequate to fully protect your family's lifestyle.
3. Tax Inefficiency: As a higher-rate taxpayer, your BTL property is tax-inefficient. Your General Investment Account (GIA) is also exposing you to unnecessary Capital Gains and Income Tax.
4. Estate Planning Gap: Your Wills are out of date, and you have no LPAs, leaving your estate and family vulnerable.
5. Concentration Risk: A significant portion of your wealth (£445,000 of equity) is tied up in residential property, creating a lack of liquidity and diversification.

---

Objective: To retire at age 60 (in 15 years) with a comfortable lifestyle. We will target a joint net income of £55,000 per annum in today's money.

Current Projection:
Based on your current pension pots (£227,000) and contributions (£13,290 p.a.), and assuming 5% annual growth (net of fees), your combined pension fund is projected to be approximately £645,000 by your 60th birthday.

Using a sustainable withdrawal rate of 4%, this pot would generate an income of £25,800 per annum, falling significantly short of your £55,000 target. The State Pension will supplement this from age 67, but a considerable gap remains.

Recommended Strategy:

1. Increase Contributions: We must utilize your monthly surplus. I recommend you increase your workplace pension contribution to at least 15% of your salary (~£1,062 per month). This is highly tax-efficient, as every £100 you contribute only costs you £60 from your net pay. If your employer offers a salary sacrifice scheme, this will also save you National Insurance contributions. We should also increase your spouse's contributions to take full advantage of her employer's matching scheme.
2. Redeploy BTL Capital: Following the recommended sale of the BTL property, a significant portion of the net proceeds should be invested into your pensions. This could potentially utilize any unused annual allowances from the previous three tax years ('carry forward'), subject to your earnings.
3. Pension Consolidation: While your workplace schemes are likely cost-effective, a review could determine if consolidating them into a Self-Invested Personal Pension (SIPP) in retirement would offer greater flexibility and investment choice. We can review this closer to your retirement date.

Revised Projection (Post-Implementation):
By increasing monthly contributions by £1,500 and making a one-off contribution of £50,000 from the BTL sale proceeds, your projected pension pot at age 60 rises to approximately £1,150,000. This would support a sustainable income of £46,000 per annum, which when combined with your spouse's pension and future State Pensions, would comfortably meet your £55,000 net income target.

---

Risk Profile: Balanced (5/10), seeking capital preservation with modest growth, uncomfortable with significant short-term volatility.

Your current portfolio is spread across pensions, ISAs, and a GIA. The underlying investments should be aligned with your risk profile and the specific time horizon of each goal.

Recommendations:

1. Core Asset Allocation: For your long-term pots (pensions, ISAs), I recommend a globally diversified, multi-asset portfolio consistent with a Balanced risk profile. A typical allocation would be:
   • Equities (Shares): 50-60% (for growth)
   • Fixed Income (Bonds): 30-40% (for stability and income)
   • Alternatives/Property: 5-10% (for diversification)
     This should be achieved through low-cost tracker funds or managed multi-asset funds.
2. Eliminate the GIA: The £35,000 in your General Investment Account is subject to tax on dividends and capital gains. I recommend a 'Bed and ISA' strategy. Each tax year, we will sell down a portion of the GIA (within your annual CGT allowance) and immediately re-purchase the same investments within your and your spouse's ISA wrappers. This systematically shelters the funds from future tax.
3. Time Horizon Alignment: Investments for your children's university fees (6-9 year horizon) should adopt a slightly more cautious version of this allocation, perhaps reducing equity exposure to 40-50% to mitigate volatility as the withdrawal date approaches.

---

Objective: Fund university costs of approximately £50,000 in 6-7 years.

Current Strategy: You are commendably contributing £250 per month (£3,000 p.a.) into Junior ISAs.

Projection & Recommendation:
Assuming these contributions continue, the projected value in 6 years (with 4% net growth) is approximately £20,500. This leaves a shortfall of nearly £30,000.

To meet your £50,000 goal, you need to increase your total JISA contributions from £250 to £550 per month (£6,600 p.a.). This is affordable from your identified monthly surplus. This strategy ensures the funds grow tax-free and will be available when your children turn 18.

---

Objective: Decide whether to retain or sell the buy-to-let (BTL) property.

Analysis:

• Tax Inefficiency: As a higher-rate taxpayer, your £12,000 gross rental income is taxed at 40% (£4,800 tax). However, the tax relief on your mortgage interest (£5,740 p.a.) is restricted to a 20% credit (£1,148). This makes the net return significantly lower than it appears.
• High-Cost Debt: The BTL mortgage rate of 4.1% is considerably higher than your residential mortgage and represents an expensive liability.
• Risk & Hassle: The property concentrates risk, is illiquid, and requires ongoing management.

Recommendation: Sell the Property

Selling the property would crystallise a capital gain. Assuming a purchase price of £180,000, the gain would be £115,000. After your combined CGT allowance, the taxable gain would be c.£109,000. For a higher-rate taxpayer, the tax on residential property gains is 24%, resulting in a tax bill of approximately £26,160.

Capital Redeployment Plan (Estimated Net Proceeds: £128,840):

• £12,000: Repay the high-interest car finance immediately, freeing up £350 per month.
• £80,000: Maximise your and your spouse's ISA allowances for this tax year and the next (£20,000 each, per year).
• £36,840: Contribute as a lump sum to your pension to gain 40% tax relief and boost your retirement pot.

This action alone de-risks your finances, improves tax efficiency, clears expensive debt, and significantly accelerates progress towards your primary goals.

---

Objective: Mitigate Inheritance Tax (IHT) and ensure your wishes are carried out.

Your current estimated net estate of £986,000 is approaching the combined standard Nil Rate Band (£650,000) and Residence Nil Rate Band (£350,000), which totals £1,000,000 for a married couple passing the main residence to direct descendants. Future growth will likely push your estate into a taxable position (40% on the excess).

Recommendations:

1. Update Wills (Urgent): Your Wills are over 8 years old and were made before your second child was born. They may be invalid or not reflect your current wishes. You must both create new Wills to ensure your assets pass to the intended beneficiaries efficiently. Consider including trust provisions for your children.
2. Establish Lasting Powers of Attorney (Urgent): An LPA allows a nominated person (e.g., your spouse) to make decisions on your behalf if you lose capacity. You should both have LPAs in place for both 'Health and Welfare' and 'Property and Financial Affairs'. Without them, your family would face a costly and stressful court process.
3. Utilise Gifting Allowances: You can each gift £3,000 per year IHT-free (the 'annual exemption'). You can also make small gifts of up to £250 to any number of people. These simple actions can reduce the value of your estate over time.

---

Objective: Ensure your protection arrangements are adequate.

Analysis & Recommendations:

1. Income Protection (Critical Gap): Your greatest financial asset is your ability to earn an income. Without Income Protection, a long-term illness would be financially devastating.
   • Recommendation: Arrange an Income Protection policy immediately. This should cover approximately 65% of your gross salary and pay out after a deferred period (e.g., 6 months) until your chosen retirement age (60). This is your most urgent financial priority.
2. Life and Critical Illness Cover: Your current cover of £400,000 would clear the main mortgage (£180,000), leaving £220,000. This lump sum would not be sufficient to replace your income for an extended period.
   • Recommendation: We should review your existing policies to see if they can be increased or supplemented. A more appropriate level of life cover would be in the region of £600,000 - £700,000 to clear the mortgage and provide an income-producing fund for your family. We should also review the level of cover for your spouse.

---

This plan is built on a foundation of tax efficiency. The key opportunities we will action are:

• Pensions: Maximising contributions to your workplace pension is the most effective way to reduce your income tax bill, as you receive 40% relief on your contributions.
• ISAs: Fully utilising your and your spouse's £20,000 annual ISA allowances will ensure your investment growth is free from income tax and capital gains tax.
• Bed and ISA: Systematically moving your GIA into your ISAs to shelter it from tax.
• BTL Disposal: Removing a tax-inefficient asset that is subject to higher-rate income tax.
• Junior ISAs: Ensuring funds for your children grow in a tax-free environment.

---

We have conducted cash flow modelling to project your financial future under different scenarios:

• 'Do Nothing' Scenario: This projection shows that while your day-to-day finances are stable, you would fail to meet your goals. You would face a significant shortfall in retirement income and be unable to fully fund your children's university costs without liquidating other assets.
• 'Recommended' Scenario: By implementing the recommendations in this report (selling the BTL, increasing savings, optimising tax), the model shows you successfully achieving all your primary objectives. You are projected to accumulate a sufficient fund for retirement at 60, fully fund university costs, and build a more resilient financial position.
• Stress Test: We have also stress-tested the recommended plan against lower investment growth and a period of higher inflation. While these scenarios reduce your surplus, the plan remains robust and you still meet your core objectives, albeit with a smaller buffer.

---

I recommend we proceed with the following prioritised action plan:

Phase 1: Immediate Priorities (Next 1-3 Months)

1. Arrange Income Protection: We will research the market and apply for a suitable policy.
2. Instruct a Solicitor: Contact a solicitor to update your Wills and prepare Lasting Powers of Attorney.
3. BTL Property Decision: Confirm your decision to sell and instruct an estate agent.
4. Adjust Pension Contributions: Contact your HR department to increase your monthly pension contribution. Your spouse should do the same.

Phase 2: Capital Redeployment (Upon BTL Sale, Months 3-6)

5. Repay Car Finance: Clear the outstanding £12,000 loan.
6. Lump Sum Investments: Make lump sum contributions to your Pensions and ISAs from the sale proceeds.
7. Increase JISA Contributions: Set up a new standing order for the increased monthly amount.

Phase 3: Ongoing Optimisation (Months 6-12)

8. 'Bed and ISA' Strategy: Begin the process of transferring funds from your GIA to your ISAs.
9. Review Life/CI Cover: Assess and enhance your life and critical illness policies.

---

Financial planning is a dynamic process, not a one-off event. To ensure your plan remains on track and adapts to changes in your circumstances, the markets, and legislation, I recommend we schedule an annual review meeting.

Our ongoing service includes:

• An annual forward-planning meeting to review strategy and objectives.
• Re-balancing of your investment portfolios to maintain the agreed risk profile.
• Proactive advice on new tax-planning opportunities.
• Ongoing monitoring to ensure you remain on course to achieve your goals.

I look forward to discussing this report with you in detail and helping you implement these recommendations to build a secure and prosperous financial future.

Declaration:
I confirm that this is a suitable recommendation based on the information provided by you. I have explained the risks involved and you have had the opportunity to ask questions.

Signed:

---

[Your Name], FPFS
Chartered Financial Planner

Of course. Here is the comprehensive Suitability Report as requested, adopting the persona of a Chartered Financial Planner.

---

Private & Confidential Suitability Report

Prepared for: [Client Name]
Date of Issue: 22 May 2024
Prepared by: [Your Name], FPFS, Chartered Financial Planner

FCA Authorisation: This report is provided on the understanding that I am a Chartered Financial Planner, acting in my capacity as an authorised and regulated adviser by the Financial Conduct Authority (FCA). All recommendations are made in your best interests and are based on the information you provided during our discovery meeting.

Important Information: This document is prepared for your exclusive use to assist you in deciding whether to proceed with the recommendations detailed within. It is not an offer to buy or sell any particular investment. Please be aware that the value of investments and the income derived from them can fall as well as rise, and you may not get back the full amount invested. Past performance is not a reliable indicator of future results. Tax rules can change and their value depends on your individual circumstances.

---

Having undertaken a thorough review of your financial position, objectives, and concerns, this report outlines a strategic plan to help you achieve your goals. My key recommendations are summarised below:

• Retirement Planning: Significantly increase pension contributions, particularly for the higher-rate taxpayer, to bridge the projected shortfall and maximise tax relief.
• Property Portfolio: Proceed with the sale of the buy-to-let (BTL) property to crystallise equity, simplify your finances, reduce your tax burden, and redeploy capital more efficiently into your pensions and ISAs.
• Protection: Immediately implement an Income Protection policy to safeguard your family's income. Review and likely increase your life insurance cover to ensure it adequately provides for your family's long-term needs beyond just clearing debts.
• Estate Planning: Urgently update your Wills and put Lasting Powers of Attorney (LPAs) in place for both you and your spouse. Ensure pension death benefit nominations are current.
• Investment Strategy: Consolidate your existing ISAs and align the asset allocation across all your investment accounts (Pensions, ISAs, GIA) to your 'Balanced' risk profile (5/10) for consistency and appropriate growth potential.
• Education Funding: Systematically increase monthly contributions to the Junior ISAs to ensure the university funding target of £50,000 is met.
• Tax Efficiency: Utilise annual CGT allowances to transfer your General Investment Account (GIA) into your ISAs over time (a process known as 'Bed & ISA').

Your family is in a strong financial position with a combined net worth of approximately £986,000 and a healthy monthly surplus of around £2,420. This surplus is the primary engine for achieving your future goals.

Strengths:

• A significant household income and manageable essential expenditure.
• A solid asset base including property, pensions, and investments.
• Proactive savings habits, demonstrated by existing pension contributions and Junior ISA funding.

Identified Gaps and Inefficiencies:

• Retirement Shortfall: Your current pension funding trajectory is insufficient to meet your goal of retiring at age 60 with your desired lifestyle.
• Major Protection Gap: The absence of Income Protection presents the single biggest risk to your financial plan. An inability to work due to long-term illness or injury would severely impact your family's financial stability.
• Tax Inefficiency: As a higher-rate taxpayer, you are not fully optimising tax relief on pension contributions. The rental income from the BTL is also taxed at 40%, significantly reducing its net return.
• Estate Planning Neglect: Your Wills are out of date and you have no LPAs, leaving your family vulnerable in the event of death or incapacity.
• Sub-Optimal Asset Allocation: Your investments are spread across various accounts without a cohesive strategy. The GIA is exposed to Capital Gains Tax, and your emergency fund of £15,000 covers less than three months of your core expenditure, which is below the recommended 3-6 months.

Objective: Retire at age 60 (in 15 years).

Current Trajectory:
Your combined pension pots total £227,000. With current contributions of £13,290 per annum, and assuming a 5% p.a. net growth rate, the projected fund at your age 60 would be approximately £755,000.

To generate a sustainable, inflation-adjusted income of, for example, £50,000 per annum in retirement, a common target is a fund of circa £1.25 million. Your current path indicates a significant shortfall.

Recommendations:

1. Increase Pension Contributions: You have a substantial monthly surplus. I recommend you, the higher-rate taxpayer, significantly increase your personal pension contributions. By contributing an additional £1,500 per month (£18,000 p.a.), you would:

   • Receive 40% tax relief, meaning a £10,000 contribution effectively costs you only £6,000.
   • Reduce your higher-rate tax liability.
   • Dramatically accelerate progress towards your retirement goal. We should explore using 'salary sacrifice' with your employer if available, as this also saves National Insurance contributions.

2. Pension Consolidation: You both hold workplace pensions. We should conduct a review to see if consolidating older pensions into a single, modern plan (like a SIPP - Self-Invested Personal Pension) would be beneficial.

   • Benefits: Potentially lower charges, wider investment choice, and simplified administration.
   • Risks & Due Diligence: We must first check if your existing schemes have any valuable guarantees (e.g., Guaranteed Annuity Rates) or unique benefits that would be lost on transfer.

3. Tax-Efficient Withdrawal Strategy: When you retire, you can typically take 25% of your pension pot as a tax-free lump sum. The remainder can be drawn down flexibly (Flexi-Access Drawdown). We will design a strategy to phase withdrawals, utilising your personal allowances each year to minimise the income tax you pay in retirement.

Risk Profile: Balanced (5/10), seeking a balance between capital preservation and growth, with a discomfort for high short-term volatility.

Your current investment assets total £350,000 across pensions, ISAs, and a GIA. A consistent strategy is key.

Recommendations:

1. Adopt a ‘Balanced’ Asset Allocation: We will structure all your investment portfolios to reflect your risk profile. A typical balanced portfolio might look like this:

   • Global Equities: 50%
   • Government & Corporate Bonds: 35%
   • Property & Alternatives: 15%
     This provides diversification to manage volatility while capturing long-term growth potential.

2. ISA Consolidation: Your £68,000 in ISAs should be consolidated onto a single investment platform. This simplifies monitoring, reduces paperwork, and ensures the portfolio is managed cohesively under the 'Balanced' strategy.

3. General Investment Account (GIA) Strategy: Your £35,000 GIA is liable for Capital Gains Tax (CGT) on any growth. I recommend a ‘Bed & ISA’ strategy. Each tax year, we will sell a portion of the GIA, using your annual CGT allowance (£3,000 for 24/25) to crystallise gains tax-free, and immediately repurchase the assets within your ISA wrapper. This systematically shelters the funds from future tax.

Objective: Fund university costs of approximately £50,000 for your first child in 6-7 years.

Your current contribution of £250 per month to Junior ISAs (JISAs) is an excellent start but will likely fall short of the target. Based on a 5% growth rate, your current strategy will accumulate approximately £21,000 in 6 years.

Recommendation:

• Increase JISA Contributions: From your monthly surplus, I recommend increasing the total contribution to the JISAs to £600 per month (£300 per child). Over 6 years, this level of funding would project to a pot of approximately £50,500, meeting your objective. JISAs are ideal as the growth is tax-free and the money is ring-fenced for the children.

Objective: Decide whether to retain or sell the buy-to-let (BTL) property.

Analysis:
While the BTL provides a gross rental income of £12,000, your position as a higher-rate taxpayer makes it inefficient. The profit is taxed at 40%, and the mortgage interest relief is restricted to a 20% tax credit, further eroding your net return. The 4.1% mortgage interest rate is also relatively high.

Selling the property would crystallise equity of approximately £155,000 (£295,000 sale price - £140,000 mortgage). Capital Gains Tax (CGT) would be payable on the gain.

Recommendation:

• Sell the Buy-to-Let Property. The rationale is compelling:
  • Capital Redeployment: The c.£155k in equity can be put to work far more efficiently. A significant portion could be used to make large, tax-relieved pension contributions, turbo-charging your retirement fund.
  • Tax Efficiency: It removes a source of higher-rate taxable income and simplifies your tax affairs.
  • Risk Reduction: It divests you from the specific risks of the UK property market and increasing landlord legislation.
  • IHT Mitigation: It reduces the value of your taxable estate.

We can calculate the estimated CGT liability to ensure this is factored into the decision. The net proceeds would then form a core part of implementing your wider financial plan.

Objective: Mitigate Inheritance Tax (IHT) and ensure your affairs are in order.

Your joint estate is approaching the combined Nil Rate Band and Residence Nil Rate Band threshold of £1 million. With asset growth, you are likely to exceed this, creating a potential IHT liability at 40%.

Recommendations:

1. Update Your Wills (Urgent): Your current Wills are 8 years old and may not reflect your current wishes or family structure. New Wills can ensure your assets pass to your intended beneficiaries efficiently and can incorporate trusts to protect assets for your children.
2. Establish Lasting Powers of Attorney (LPAs) (Urgent): An LPA allows a nominated person (e.g., your spouse) to make decisions on your behalf if you lose mental capacity. You both need to set up two types of LPA: one for 'Health and Welfare' and one for 'Property and Financial Affairs'. This is a critical piece of financial protection.
3. Pension Death Benefit Nominations: Your pension funds (£227,000+) are generally outside your estate for IHT purposes. It is vital you have up-to-date 'Expression of Wish' or 'Nomination' forms with your pension providers to guide the trustees on who should receive the funds on your death.
4. Use Gifting Allowances: You can each gift £3,000 per year IHT-free. This is a simple way to reduce the value of your estate over time, perhaps by making additional contributions to your children's JISAs.

Objective: Ensure your protection arrangements are adequate.

Your current arrangements provide a good foundation but have a critical gap.

Recommendations:

1. Implement Income Protection (IP) (Highest Priority): Your ability to earn an income is your most valuable asset. An IP policy would pay a replacement monthly income if you are unable to work due to illness or injury. I recommend you take out a policy to cover approximately 60% of your gross salary, deferred for a 6-month period (to align with typical employer sick pay), with payments continuing until your target retirement age of 60.
2. Review Life Insurance: Your £400,000 of cover is sufficient to clear your current debts (£332,000). However, it leaves little for your family to live on, replacing only a fraction of your lost income. We should conduct a full needs analysis, but it's likely an increase in cover is required to provide long-term financial security for your spouse and children.
3. Critical Illness Cover: Your £200,000 policy is a strong benefit. It would clear the majority of your residential mortgage, significantly reducing financial pressure at a difficult time. We can confirm this level remains appropriate during the full needs analysis.

This plan is built around maximising tax efficiency. Key strategies include:

• Maximising Pension Contributions: Utilising the 40% income tax relief available to you is the most powerful tax-saving tool at your disposal.
• Utilising ISA Allowances: Shielding £40,000 per year (£20k each) from income tax and CGT.
• Managing CGT: Systematically using your annual CGT allowance via a 'Bed & ISA' process to move your GIA into a tax-free environment.
• Selling the BTL: Removing a source of income that is taxed at your highest rate.
• Spouse's Contributions: Your spouse should also continue contributing to her pension to benefit from 20% tax relief and employer contributions.

Scenario 1: No Changes
If you continue on your current path, you will accumulate wealth, but you are projected to fall short of your retirement funding goal. Your family remains exposed to the significant financial shock of income loss from illness. Your estate's potential IHT liability will grow.

Scenario 2: Implementing a Strategic Plan
By implementing the recommendations in this report—selling the BTL, reallocating capital to pensions, increasing monthly contributions, and securing your income with IP—the model shows a much more positive outcome. You are projected to comfortably meet your retirement objective, your children’s university education is funded, your family is protected from financial shocks, and your long-term tax liabilities are significantly reduced.

To make this process manageable, I suggest a prioritised action plan:

Phase 1: Immediate Priorities (Next 1-3 Months)

1. Obtain quotations and implement an Income Protection policy.
2. Consult a solicitor to update your Wills and draft Lasting Powers of Attorney (LPAs).
3. Review and update your pension death benefit nominations.
4. Increase your emergency cash fund to £25,000 (approx. 5 months' expenditure).

Phase 2: Strategic Execution (Next 3-6 Months)

1. Appoint an estate agent and solicitor to manage the sale of the BTL property.
2. Increase your monthly pension contribution via your employer's payroll.
3. Increase monthly contributions to the Junior ISAs to the recommended level of £600.
4. We will begin the process of consolidating your ISAs onto a single platform.

Phase 3: Capital Redeployment & Optimisation (Next 6-12 Months)

1. Upon completion of the BTL sale, we will execute the plan to redeploy the net proceeds into your pensions and ISAs.
2. Begin the ‘Bed & ISA’ process for your General Investment Account.
3. Review your life insurance cover and increase if necessary.

Financial planning is a dynamic process, not a one-off event. To ensure your plan remains on track and adapts to changes in your circumstances, the economy, and legislation, I recommend we meet for a Formal Annual Review.

During this review, we will:

• Track progress against your objectives.
• Review the performance and asset allocation of your investment portfolio.
• Re-evaluate your attitude to risk.
• Make adjustments as needed to keep you on course to achieve your goals.

I trust this report provides you with a clear and compelling path forward. I look forward to discussing these recommendations with you in more detail and helping you implement your plan.

SUITABILITY REPORT

Prepared for: Mr & Mrs Client
Report Date: March 2024
Adviser: Chartered Financial Planner (FPFS)
FCA Registration: [Reference Number]

---

1. EXECUTIVE SUMMARY

You are in a strong financial position with combined household assets of approximately £1,318,000 and net worth of £986,000. Your combined gross income of £121,000 plus rental income provides a solid foundation for achieving your objectives.

Priority	Recommendation	Action Timeline
IMMEDIATE	Increase emergency fund to £25,000	Within 3 months
IMMEDIATE	Implement income protection insurance	Within 1 month
HIGH	Update Wills and establish Lasting Powers of Attorney	Within 3 months
HIGH	Increase pension contributions to maximise tax relief	Next tax year
MEDIUM	Restructure investments for tax efficiency	Within 6 months
MEDIUM	Consider buy-to-let property disposal	Within 12 months
ONGOING	Redirect savings into ISAs and pensions	Monthly from implementation

• Retirement income: £48,000-£52,000 per annum (in today's terms) achievable at age 60
• University funding: Fully funded from existing ISAs and redirected savings
• IHT liability: Reduced from estimated £194,000 to under £50,000 within 10 years
• Protection gap: Eliminated through recommended arrangements

---

2. CURRENT POSITION ANALYSIS

Total Assets: £1,318,000

• Property equity: £625,000
• Pensions: £227,000
• Liquid investments/savings: £146,000

Total Liabilities: £332,000

• Mortgages: £320,000
• Car finance: £12,000

Net Worth: £986,000

Gross Annual Income: £121,000

• Combined employment income: £113,000
• Net rental income: £8,000

Tax Position:

• You: Higher rate taxpayer (40% on £34,570)
• Spouse: Basic rate taxpayer
• Combined tax liability: approximately £28,400 annually

1. Inadequate emergency fund - Current £15,000 represents only 3 months' expenditure; recommend 6 months (£30,000)

2. No income protection - Most significant risk; family dependent on earned income

3. Outdated estate planning - Wills 8 years old; no LPAs in place

4. Underutilised pension allowances - Contributing only £6,800 annually against £60,000 allowance

5. Tax inefficient structure - £35,000 in GIA subject to CGT when ISA allowances available

6. Annual ISA allowances underutilised (£40,000 available for couple)

7. Spouse has basic rate tax capacity - opportunity for income splitting

8. Pension carry forward available from previous years (potentially £120,000+)

9. Buy-to-let property showing poor risk-adjusted returns post-tax

---

3. RETIREMENT PLANNING STRATEGY

Target retirement age: 60 (in 15 years)

Estimated expenditure at retirement:

• Current expenditure: £5,090 per month (£61,080 annually)
• Less: Mortgage payments ending: -£950/month
• Less: Childcare: -£450/month
• Less: Car finance: -£350/month (ending in 3 years)
• Estimated retirement need: £48,000 per annum (today's terms)

Assuming 2.5% inflation, this equates to approximately £70,000 per annum in 15 years.

Current pension assets: £227,000

Projection at age 60 (assuming 5% nominal growth, 2.5% inflation):

Scenario	Contribution	Value at 60	Real Terms
Current contributions (13% client, 8% spouse)	£11,292 p.a.	£625,000	£432,000
Enhanced contributions (25% client, 15% spouse)	£25,450 p.a.	£842,000	£582,000
Maximum contributions (using carry forward initially)	£35,000 p.a.	£960,000	£664,000

Your pension:

• Increase contribution from 8% to 25% (£21,250 annually)
• Employer continues at 5% (£4,250)
• Total: £25,500 per annum
• Tax relief benefit: £8,500 annually (40% on £21,250)
• Net cost to you: £12,750 (actual reduction in take-home pay)

Spouse's pension:

• Increase contribution from 5% to 15% (£4,200 annually)
• Employer continues at 3% (£840)
• Total: £5,040 per annum
• Tax relief benefit: £840 annually
• Net cost: £3,360

Combined annual pension input: £30,540
Combined net cost: £16,110
Tax relief captured: £9,340

Based on projected pension pot of £842,000 at age 60:

• 25% tax-free lump sum: £210,500
• Remaining fund: £631,500
• Sustainable drawdown (using 4% rule): £25,260 annually
• State Pension (from age 67/68): £22,000 combined (deferred 7-8 years)

Total retirement income:

• Age 60-67: £25,260 from pension drawdown + £8,500 rental (if retained) = £33,760
• Age 67+: £25,260 + £22,000 State Pension = £47,260+

SHORTFALL IDENTIFIED: Need additional £14,000-£15,000 annually age 60-67

1. Utilise carry forward - You have up to 3 years of unused annual allowance (potentially £120,000). Consider one-off contributions of £20,000-£30,000 if bonuses received or GIA liquidated.

2. Consider bridging strategy - Build ISA portfolio to provide £15,000 annually ages 60-67 to supplement pension (requires approximately £150,000 ISA value at retirement)

3. Defer State Pension - Consider deferring from 67 to 70 for 31.5% uplift (£6,930 extra annually) if other income sufficient

4. Workplace pension review - Assess fund choices, charges (should be <0.5%), and consolidation opportunities

5. Target retirement pot: £850,000-£950,000 combined to achieve £50,000+ retirement income

---

4. INVESTMENT PORTFOLIO REVIEW

Account Type	Current Value	Tax Treatment	Issues Identified
ISAs (combined)	£68,000	Tax-free growth	Good - continue building
General Investment Account	£35,000	Subject to CGT/income tax	Tax inefficient
Premium Bonds	£20,000	Tax-free prizes	Low expected returns (3.3% prize fund)
Cash savings	£15,000	Taxable interest	Insufficient emergency fund
Current accounts	£8,000	Taxable interest	Excess cash

Total liquid investments: £146,000

Based on balanced (5/10) risk profile and 15-year time horizon to retirement:

Target allocation:

• UK Equities: 25%
• Global Equities: 30%
• Fixed Income (Bonds): 25%
• Alternative assets (Property funds, Infrastructure): 10%
• Cash: 10%

This provides balance between growth potential and downside protection, with expected volatility of 10-12% annually.

Emergency Fund Enhancement:

• Move £10,000 from Premium Bonds to easy access savings
• Total emergency fund: £25,000 (held in competitive easy-access account 4.5%+)
• Keep £5,000 in current accounts for monthly expenditure

ISA Maximisation:

• Transfer £35,000 from GIA to ISAs this tax year:
  • £20,000 to your ISA (using full allowance)
  • £15,000 to spouse's ISA
• Sell holdings with losses first to minimize CGT
• Expected CGT liability: approximately £1,000-£2,000 (on gains above £6,000 allowance)

Premium Bonds:

• Retain £5,000 for tax-free prize element
• Move £15,000 to ISAs next tax year (2024/25)

Monthly ISA contributions:

• Redirect £500/month to your ISA
• Redirect £300/month to spouse's ISA
• Continue £250/month to Junior ISAs
• Total: £1,050/month

Annual ISA strategy:

• Year 1 (2024/25): Full £40,000 allowance used (£20,000 each)
• Year 2 onwards: Approximately £24,000 annually from monthly contributions + bonuses/surplus

ISA and pension portfolios - Multi-asset approach:

1. Vanguard LifeStrategy 60% Equity (40% allocation)

   • Charge: 0.22%
   • Global diversification, automatic rebalancing
   • Matches balanced risk profile

2. HSBC FTSE All-World Index Fund (30% allocation)

   • Charge: 0.13%
   • Low-cost global equity exposure
   • Over 3,000 holdings

3. Vanguard Global Bond Index Fund (20% allocation)

   • Charge: 0.15%
   • Investment grade government and corporate bonds
   • Diversification and income

4. L&G UK Property Fund (5% allocation)

   • Charge: 0.70%
   • Commercial property exposure
   • Alternative asset diversification

5. Cash (5% allocation)

   • High-interest savings
   • Liquidity and stability

Expected blended charge: 0.25-0.30% annually

Current: £125/month each = £1,500 annually per child

Recommendation: Continue current strategy

• Increase to £150/month each (£1,800 annually) if affordable
• Invest in higher equity allocation (80%) given 6+ year time horizon
• Suggested fund: Vanguard FTSE Global All Cap Index (0.23% charge)

Projection for eldest child (6 years to university):

• Current value: approximately £12,000 (assumed)
• Future value: £27,000-£30,000
• Covers 60% of university costs; remainder from other savings/income

---

5. EDUCATION PLANNING

Target: £50,000 total (£25,000 per child)

Timeframes:

• Eldest child: 6 years (2030)
• Youngest child: 9 years (2033)

Junior ISAs projection:

Child	Current Value*	Monthly Contribution	Projected Value	Timeframe
Eldest (12)	£12,000	£150	£28,000	6 years
Youngest (9)	£9,000	£150	£29,000	9 years

*Estimated based on £125/month for duration held

Shortfall: Approximately £22,000 needed across both children

1. Continue Junior ISA contributions at £150/month each (£300 total)

   • These funds will cover majority of costs
   • Children can access at age 18

2. Designate ISA "education bucket"

   • Earmark £25,000 of your combined ISAs specifically for education
   • Move to lower risk allocation 2-3 years before needed
   • Year 3 before need: 60% equity / 40% bonds
   • Year 1 before need: 30% equity / 70% bonds/cash

3. Additional savings option

   • If desired, add £100/month to separate savings account from Year 7
   • Provides additional £7,200 buffer
   • Total funding available: £60,000+

4. Tax-efficient withdrawal

   • Use spouse's ISA first (lower rate taxpayer if income protection needed)
   • Maintain your ISAs for retirement income bridging
   • Consider spreading withdrawals across tax years if using GIA funds

Important context: With tuition fees at £9,250 and living costs £9,000-£12,000 annually, total university costs could be £50,000-£65,000 per child.

Recommendation:

• Provide £25,000-£30,000 per child as partial funding
• Allow children to take student loans for remainder
• Student loans are income-contingent (9% over £27,295)
• Only "worth" repaying in full if child expects to earn significantly (£40,000+)
• Allows you to preserve retirement funding

Alternative approach: Gift remaining funds at graduation or for house deposit, allowing investment growth for additional 3-4 years.

---

6. PROPERTY PORTFOLIO ASSESSMENT

Current position:

• Property value: £295,000
• Mortgage outstanding: £140,000
• Equity: £155,000
• Interest rate: 4.1% (fixed until 2026)

Income analysis:

• Gross rental income: £12,000 (£1,000/month)
• Mortgage interest: £5,740
• Other expenses (maintenance, insurance, letting fees, void periods): £3,500
• Net income: £2,760 before tax

Tax position:

• Mortgage interest no longer fully deductible (20% tax credit only)
• Your marginal rate: 40%
• Rental profit: £8,500
• Tax relief on interest: £1,148 (20% of £5,740)
• Taxable income: £8,500
• Tax payable: £3,400
• Tax credit: -£1,148
• Net tax: £2,252

Actual annual return: £2,760 - £2,252 = £508 (0.3% on equity)

Sale scenario:

Gross proceeds: £295,000
Less: Estate agent fees (1.5%): £4,425
Less: Legal fees: £1,500
Less: Mortgage redemption: £140,000
Net proceeds: £149,075

Capital Gains Tax:

• Purchase price (assumed): £220,000
• Current value: £295,000
• Gain: £75,000
• Less: Costs of acquisition/disposal: £5,000
• Less: Annual CGT allowance: £3,000 (used elsewhere)
• Taxable gain: £70,000
• CGT at 24% (higher rate): £16,800

Net proceeds after CGT: £132,275

Factor	Retain	Sell & Reinvest
Annual income/growth	£508 net	£6,614 (5% on £132,275)
Liquidity	Very low	High
Management time	10-15 hours/year	None
Risk exposure	Concentrated	Diversified
IHT exposure	Full £155,000	Can be mitigated through gifts
Mortgage refinance risk (2026)	Likely 5-6% rates = negative cash flow	None

15-year projection:

• Retention: Value £420,000 (4% growth), equity £280,000, cumulative income £7,620 = £287,620
• Reinvestment: £132,275 growing at 5% = £275,000 (but liquid, diversified, and tax-efficient in ISA)

Rationale:

1. Poor current returns - 0.3% on equity is materially below risk-free rates (4.5%+ in cash)
2. Deteriorating tax treatment - Mortgage interest relief restrictions make this uneconomical for higher-rate taxpayers
3. Refinancing risk - When fixed rate ends (2026), mortgage rate likely 5-6%, creating negative cash flow
4. Concentration risk - 16% of net worth in single property
5. Liquidity - Cannot access equity for retirement/education needs
6. Inheritance tax - Full value in estate; proceeds can be gifted to reduce IHT
7. Management burden - Time and stress managing tenants, repairs, regulations

Disposal timing: Within 12 months, ideally Q1 2025

• Allows time for market assessment
• Current tenant notice period consideration
• Maximise 2024/25 CGT allowance if possible

Proceeds deployment (£132,275):

1. Pay off car finance - £12,000

   • Saves £350/month
   • Removes consumer debt

2. One-off pension contribution - £40,000

   • Uses carry forward allowance
   • Tax relief: £16,000 (net cost £24,000)
   • Removes from estate for IHT

3. ISA investment - £40,000 (split £20k each across 2 tax years)

   • Tax-efficient growth
   • Accessible for retirement bridging
   • Outside estate after death

4. Emergency fund top-up - £5,000

   • Increases to £30,000 total
   • 6 months' expenditure coverage

5. Retain flexibility - £35,000

   • Short-term savings (1-2 years)
   • Consider further pension contribution next tax year
   • Or children's house deposit fund

Cash flow impact:

• Lost rental income: -£508/year
• Saved mortgage payments: +£10,680/year
• Saved management time: 15 hours/year
• Investment return (5% on £132k): +£6,614/year
• Saved car finance (after payoff): +£4,200/year
• Net improvement: +£10,306 annually in year 1, rising to £20,986 after car loan would have ended

---

7. ESTATE PLANNING

Assets:

• Primary residence: £650,000 (joint)
• Buy-to-let: £295,000
• Pensions: £227,000
• ISAs and investments: £146,000
• Total: £1,318,000

Liabilities:

• Mortgages: £320,000
• Car finance: £12,000
• Total: £332,000

Net estate: £986,000

On first death (assuming all to spouse):

• Spousal exemption applies
• No IHT payable
• Residence Nil Rate Band (RNRB) transferable

On second death:

Assuming growth to £1,500,000 by second death (15+ years):

• Estate value: £1,500,000
• Less: Nil Rate Band (NRB): £325,000
• Less: Transferred NRB: £325,000
• Less: RNRB: £175,000 (if qualifying)
• Less: Transferred RNRB: £175,000
• Total allowances: £1,000,000
• Taxable estate: £500,000
• IHT liability: £200,000 (40%)

Note: RNRB tapers away for estates over £2m (£1 reduction for every £2 over threshold)

1. Update Wills - CRITICAL PRIORITY

   • Last updated 8 years ago (pre-youngest child)
   • Recommend full review with specialist solicitor
   • Consider Nil Rate Band discretionary trusts
   • Guardian provisions for children
   • Specific bequests and succession planning
   • Cost: £800-£1,500 for mirror Wills
   • Timeframe: Complete within 3 months

2. Establish Lasting Powers of Attorney

   • Property & Financial Affairs LPA (both spouses)
   • Health & Welfare LPA (both spouses)
   • Essential for incapacity planning
   • Cost: £656 per person (4 LPAs total)
   • Timeframe: Complete within 3 months

3. Pension death benefit nominations

   • Update both workplace pension beneficiary forms
   • Pensions normally outside estate (discretionary)
   • Current value £227,000 - likely £850,000+ at death
   • Could save £340,000+ in IHT
   • Timeframe: Complete within 1 month

4. Regular Gifts from Excess Income

   • Exempt if from normal expenditure and don't reduce living standards
   • Document annual income vs. expenditure
   • Potential £5,000-£8,000 annually
   • Could be to children or into Junior ISAs/pensions
   • Benefit: Immediate estate reduction, no 7-year wait

5. Utilise Annual Gift Exemptions

   • £3,000 per person per year (£6,000 couple)
   • Can carry forward one year (£12,000 available now)
   • Plus £250 small gifts exemption (unlimited recipients)
   • Plus gifts for weddings (£5,000 to child)
   • Action: £12,000 immediate gift to Junior ISAs or designated accounts

6. Potentially Exempt Transfers (PETs)

   • After property disposal, consider £100,000 gift to children or trusts
   • Becomes exempt after 7 years
   • Taper relief years 3-7
   • You're age 45 - statistically likely to survive 7 years
   • Benefit: £40,000 IHT saving if survive 7 years

7. Pension Contribution Strategy

   • Maximize pension contributions (already recommended)
   • Pensions outside IHT if death before 75 (and potentially after)
   • Growing £850,000 pension fund = £340,000 IHT saving vs. non-pension assets
   • This is your single biggest IHT planning tool

8. Life Insurance in Trust

   • Current policy £400,000 - check if written in trust
   • If not, proceeds will form part of estate
   • Action: Assign existing policy to trust (if suitable)
   • Consider additional policy for IHT liability
   • Cost: £20-40/month for £200,000 whole of life cover

9. Business Relief Investments (Age 55+)

   • AIM-listed qualifying shares exempt after 2 years
   • Carries investment risk - only for suitable investors
   • Consider in 10 years if estate still materially over threshold
   • Typical allocation: 10-15% of liquid assets

Immediate Actions (Months 1-3):

• Instruct solicitor for Will review and update
• Establish 4 Lasting Powers of Attorney
• Update pension death benefit nominations
• Check life insurance trust status
• Make £12,000 gift using this and last year's annual exemptions

Ongoing Actions:

• Document regular gifts from excess income
• Maximize pension contributions (primary IHT strategy)
• After property sale, consider larger PET (£50,000-£100,000)
• Annual review of exemptions and allowances

Projected IHT Liability:

Scenario	Estate Value	IHT Liability	Saving vs. Current
Current path (no planning)	£1,500,000	£200,000	-
With pension maximization	£1,200,000 estate + £850,000 pensions	£80,000	£120,000
Plus regular gifts/PETs	£1,050,000 estate + £850,000 pensions	£20,000	£180,000

Target: Reduce potential IHT liability from £200,000 to under £50,000 through pension strategy and regular gifting program.

---

8. PROTECTION REVIEW

Life Insurance:

• Type: Level Term Assurance
• Sum assured: £400,000
• Term: To age 65 (20 years remaining)
• Premium: Estimated £40/month (within £85 combined)

Critical Illness Cover:

• Sum assured: £200,000
• Term: To age 65
• Premium: Estimated £45/month (within £85 combined)

Total protection premium: £85/month (£1,020 annually)

On your death:

Immediate needs:

• Mortgage clearance: £180,000
• Funeral and administration: £10,000
• Subtotal: £190,000

Income replacement:

• Spouse's income: £28,000 (continues)
• Lost income: £85,000
• Less: Reduced expenditure (estimated -30%): -£25,500
• Annual shortfall: £59,500

Capital needed (25x income replacement): £1,487,500
Less: Existing assets accessible: -£500,000
Additional insurance needed: £987,500

Current cover: £400,000
SHORTFALL: £587,500

On spouse's death:

Income replacement less critical (part-time role), but childcare costs would increase significantly:

• Lost income: £28,000
• Additional childcare: +£15,000
• Net impact: £43,000 annually
• Capital needed: £1,075,000
• Less: Existing assets: -£500,000
• Required: £575,000

Current cover: £400,000
SHORTFALL: £175,000

Current: NO COVER - CRITICAL GAP

Your income: £85,000 (75% of household employment income)

Impact of long-term illness/disability:

• Statutory Sick Pay: £116.75/week (£6,071 annually) - only 28 weeks
• Employer

SUITABILITY REPORT

Prepared for: Mr & Mrs Client
Report Date: March 2024
Adviser: Chartered Financial Planner, FPFS
FCA Regulation Status: Authorised and Regulated

---

1. EXECUTIVE SUMMARY

Immediate Priorities (Next 3 Months):

• Increase emergency fund from £15,000 to £25,000
• Implement income protection insurance for both clients
• Update Wills and establish Lasting Powers of Attorney
• Increase pension contributions to maximise tax relief opportunities
• Consolidate pension arrangements

Medium-Term Actions (3-12 Months):

• Restructure investment portfolio with appropriate asset allocation
• Establish dedicated university funding strategy using existing assets
• Complete comprehensive inheritance tax planning
• Consider buy-to-let disposal strategy ahead of 2026 mortgage renewal

Long-Term Strategy (1-15 Years):

• Systematic wealth accumulation targeting £1.2m pension fund by age 60
• Tax-efficient drawdown strategy in retirement
• Generational wealth transfer planning for children's house deposits

Projected Outcomes:

• Retirement income: £52,000-£58,000 per annum (inflation-adjusted)
• University funding: Fully provided without compromising retirement
• Inheritance tax exposure: Reduced from estimated £340,000 to £120,000
• Protection gap: Eliminated through comprehensive cover

---

2. CURRENT POSITION ANALYSIS

Total Assets: £1,318,000

• Property (net equity): £625,000
• Pensions: £227,000
• Investments & Cash: £146,000

Total Liabilities: £332,000

• Mortgages: £320,000
• Car finance: £12,000

Net Worth: £986,000

Gross Annual Household Income: £125,000

• Employment income: £113,000
• Net rental income: £8,500

Tax Position:

• Client: Higher rate taxpayer (40% on income above £50,270)
• Spouse: Basic rate taxpayer
• Combined annual tax liability: Approximately £28,400
• Opportunity to utilise spouse's remaining basic rate band

Critical Gaps:

1. Income Protection Insurance: Neither client has income protection cover. With £113,000 employment income supporting lifestyle, this represents significant risk. Loss of client's income would create immediate financial hardship.

2. Emergency Fund: Current £15,000 provides only 3 months' expenditure. Recommended minimum: 6 months (£30,000).

3. Estate Planning:

   • Wills 8 years out of date (pre-date youngest child)
   • No Lasting Powers of Attorney
   • Potential IHT liability circa £340,000 on current trajectory

4. Retirement Funding Gap: Current pension contributions insufficient for age 60 retirement target.

Inefficiencies:

1. Pension Contributions: Client contributing only 8% (£6,800) when £40,000 annual allowance available. Missing £13,200 annual higher-rate tax relief opportunity.

2. Spousal Income Splitting: Rental income not optimally structured; opportunity to reallocate to basic rate taxpayer.

3. Investment Asset Location: £35,000 General Investment Account creates unnecessary CGT/income tax exposure when ISA allowances underutilised.

4. Pension Fragmentation: Multiple small pension pots likely with higher charges and administrative burden.

5. Buy-to-Let Property:

   • Low yield (2.9% gross, 1.9% net)
   • Mortgage costs at 4.1% exceed net return
   • Section 24 tax restrictions significantly impacting tax relief
   • Concentration risk (30% of net worth in two properties)

---

3. RETIREMENT PLANNING STRATEGY

Desired Retirement Age: 60 (2039)
Time Horizon: 15 years

Estimated Income Requirement:

• Current expenditure: £61,080 per annum
• Less: Mortgage payments (cleared by 60): -£11,400
• Less: Childcare/children activities: -£5,400
• Less: Car finance (completed): -£4,200
• Adjusted requirement: £40,080 per annum
• Inflation-adjusted (2.5% for 15 years): £58,000 per annum

Combined Pension Assets: £227,000

• Client workplace pension: £185,000
• Spouse workplace pension: £42,000

Current Contributions:

• Client: £6,800 (8% employee) + £4,250 (5% employer) = £11,050 p.a.
• Spouse: £1,400 (5% employee) + £840 (3% employer) = £2,240 p.a.
• Total: £13,290 p.a.

Scenario 1: Continue Current Contributions

Assumptions: 5% nominal growth, 2.5% inflation (2.5% real growth)

Age 60 projected fund:

• Client: £185,000 × 1.025^15 + £11,050 annual contributions = £497,000
• Spouse: £42,000 × 1.025^15 + £2,240 annual contributions = £110,000
• Combined: £607,000

Sustainable income (4% withdrawal):

• £24,280 per annum
• Shortfall: £33,720 per annum

Scenario 2: Recommended Enhanced Contributions

Enhanced contribution strategy:

• Client: Increase to 15% employee (£12,750) + 5% employer (£4,250) = £17,000 p.a.
• Spouse: Increase to 10% employee (£2,800) + 3% employer (£840) = £3,640 p.a.
• Total: £20,640 p.a.

Age 60 projected fund:

• Client: £185,000 × 1.025^15 + £17,000 annual contributions = £638,000
• Spouse: £42,000 × 1.025^15 + £3,640 annual contributions = £127,000
• Combined: £765,000

Adding redeployed buy-to-let proceeds (see Section 6):

• Additional lump sum investment: £155,000 (net proceeds)
• Growth over remaining period: £155,000 × 1.025^13 = £214,000
• Revised total: £979,000

Further optimisation with ISA utilisation:

• Annual ISA contributions (from year 7 onwards): £12,000 p.a.
• ISA value at age 60: £148,000
• Total accessible funds: £1,127,000

Sustainable retirement income:

• Pension drawdown (£979,000 @ 4%): £39,160
• ISA drawdown (£148,000 @ 3%): £4,440
• State Pension (both, from age 67/68): Deferred 7-8 years
• Total initial income: £43,600 (meets 75% of requirement)
• State Pensions add £20,000+ from age 67 onwards

Recommendation: Consolidate both workplace pensions into Single Self-Invested Personal Pensions (SIPPs)

Benefits:

• Reduced charges (estimated 0.4% vs current 0.7% = £680 annual saving growing over time)
• Greater investment choice and control
• Simplified administration
• Enhanced retirement flexibility
• Potential for better-performing funds

Process:

1. Review existing schemes for exit penalties or valuable guarantees
2. Complete pension transfer analysis
3. Establish SIPPs with low-cost platform provider
4. Transfer existing funds
5. Redirect future contributions

Caution: Ensure no valuable benefits lost (guaranteed annuity rates, protected tax-free cash, etc.)

Age 60-67 (Pre-State Pension):

Year 1-7 approach:

• Utilise personal allowance: £12,570 (both individuals)
• Basic rate band optimization: Withdraw up to £50,270 each
• Tax-free pension commencement lump sum: 25% of fund (£244,750)

Recommended drawdown sequence:

1. Tax-free cash (25%): Take £122,000 immediately at age 60

   • Use to: Clear any remaining debts, build cash reserves, supplement income
   • Hold balance in ISA/savings to draw tax-free

2. Pension income: Withdraw £25,000 per person per annum

   • Each pays tax only on £12,430 (above personal allowance)
   • Tax liability: £2,486 per person = £4,972 combined
   • Net income: £45,028

3. ISA withdrawals: Tax-free supplementation as needed

   • Approximately £4,440 per annum
   • Total net income: £49,468

4. Remaining tax-free cash: Draw second £122,000 in stages across years 1-7

   • Supplement income tax-efficiently
   • Average £17,400 per year additional

Age 67+ (Post-State Pension):

• State Pension: Approximately £11,500 each (£23,000 combined at current rates)
• Reduced pension drawdown: £12,000-£15,000
• ISA withdrawals: As required
• Remain within basic rate tax band

Tax Efficiency Achieved:

• Effective tax rate in retirement: 8-12% vs. 31% currently
• Maximize use of both personal allowances
• Preserve ISA wrapper for tax-free flexibility
• Keep income below higher rate threshold

---

4. INVESTMENT PORTFOLIO REVIEW

Current Portfolio:

• ISAs (combined): £68,000
• General Investment Account (GIA): £35,000
• Premium Bonds: £20,000
• Cash savings: £15,000
• Cash (current accounts): £8,000
• Total liquid investments: £146,000

Current Asset Allocation (estimated):

• Cash/Premium Bonds: £43,000 (29%)
• Equities/Funds: Assumed £103,000 (71%)
• Issue: Unclear actual allocation, likely suboptimal for risk profile

Risk Profile: Balanced (5/10) - Moderate growth with capital preservation

Strategic Asset Allocation:

For Long-Term Goals (Retirement - 15 years):

• Global Equities: 55%
• Bonds (Government/Corporate): 25%
• Alternative Assets (Property funds, Infrastructure): 10%
• Cash/Short-term: 10%

For Medium-Term Goals (University Funding - 6-7 years):

• Global Equities: 35%
• Bonds: 40%
• Cash/Short-term: 25%

For Emergency Fund (Immediate access):

• Cash: 100%

Emergency Fund: £25,000

• Easy access savings account (1-2 providers for FSCS protection)
• Current rate: 4.5%-5%
• Purpose: 6 months' expenditure

Short-Term Reserves: £15,000

• Premium Bonds: Retain £15,000
• Remove remaining £5,000 to emergency fund
• Provides liquidity with tax-free prize potential

University Funding Portfolio: £50,000

• Platform: ISA wrappers (utilize both allowances over 2 years)
• Asset Allocation:
  • Global Bond Fund: £20,000 (40%)
  • UK/Global Equity Income Fund: £12,500 (25%)
  • Global Equity Index Fund: £5,000 (10%)
  • Cash: £12,500 (25%)

Funds to consider:

• Vanguard Global Bond Index Fund
• Vanguard FTSE Global All Cap Index Fund
• Vanguard LifeStrategy 60% Equity Fund (simpler single-fund option)

Retirement Portfolio: £56,000 (remaining investments)

• Platform: Transfer from GIA to ISAs over 2-3 years
• Asset Allocation:
  • Global Equity Index: £30,800 (55%)
  • Global Bond Index: £14,000 (25%)
  • Infrastructure/Property Fund: £5,600 (10%)
  • Cash: £5,600 (10%)

Pension Portfolio: £227,000 (growing to target)

• Post-consolidation allocation:
  • Global Equity Index: 60%
  • Emerging Markets: 5%
  • Corporate Bonds: 20%
  • Government Bonds: 10%
  • Cash: 5%

Year 1:

1. Transfer £35,000 from GIA to ISAs (£20,000 current year, £15,000 spouse)
2. Realize any losses in GIA first to utilize CGT exemption (£3,000 each)
3. Establish university funding portfolio
4. Consolidate pensions to SIPPs

Year 2:

1. Complete ISA transfers of remaining GIA holdings
2. Rebalance to target allocation
3. Establish automatic rebalancing (annual review)

Ongoing:

• Annual ISA contributions: £20,000 per person (prioritise client as higher rate taxpayer)
• Quarterly rebalancing within 5% tolerance bands
• Annual review of fund performance

Recommended approach:

• Low-cost index tracking funds (OCF <0.25%)
• Diversified global exposure
• FSCS-protected platform
• Avoid concentration in single sectors/regions

Platform Recommendation:

• Vanguard Investor
• AJ Bell Youinvest
• Hargreaves Lansdown (higher cost but excellent service)

Estimated costs:

• Platform fee: 0.15%-0.25%

• Fund OCF: 0.08%-0.20%

• Total: 0.23%-0.45% annually

• Capital at risk: Investment values can fall as well as rise

• No guarantees: Past performance not indicative of future returns

• Volatility: Expect short-term fluctuations of -10% to +15% annually

• Inflation risk: Cash holdings erode in real terms

• Currency risk: Global investments subject to exchange rate movements

---

5. EDUCATION PLANNING

Timeline:

• Child 1 (age 12): University entry in 6 years (2030)
• Child 2 (age 9): University entry in 9 years (2033)

Estimated Costs (per child):

• Tuition fees: Covered by student loans (£9,250 p.a.)
• Living costs contribution: £8,000 per annum × 3 years = £24,000
• Accommodation deposit/setup: £3,000
• Total per child: £27,000
• Combined requirement: £54,000

Inflation adjustment:

• Child 1 (6 years): £27,000 × 1.025^6 = £31,200
• Child 2 (9 years): £27,000 × 1.025^9 = £33,600
• Total requirement: £64,800

Junior ISAs:

• Current contributions: £250 per month (£125 each) = £3,000 p.a.
• Current value: Not stated (assume £8,000 based on contribution history)

Projection (5% growth):

• Child 1 JISA at age 18: £8,000 × 1.05^6 + £1,500 annual contributions = £21,200
• Child 2 JISA at age 18: £8,000 × 1.05^9 + £1,500 annual contributions = £27,400
• Combined: £48,600

Shortfall: £16,200

Solution: Establish Dedicated Education Fund

Funding source: Reallocate existing investments

• Use £50,000 from current ISA/GIA holdings
• Ringfence specifically for university costs
• Invest with medium-term (6-9 year) time horizon

Investment approach:

• Conservative allocation (see Section 4)
• Gradual de-risking as each child approaches age 18
• Transfer from Child 1 allocation to cash 2 years before university

Projected outcome:

• £50,000 invested at 4% average:
  • Child 1 (6 years): £25,000 grows to £31,600
  • Child 2 (9 years): £25,000 grows to £35,400
• Total: £67,000 ✓ Exceeds requirement

De-risking Schedule:

Child	Age	Action
Child 1	16 (2028)	Move 50% to bonds
Child 1	17 (2029)	Move 75% to cash
Child 1	18 (2030)	100% cash available
Child 2	16 (2031)	Move 50% to bonds
Child 2	17 (2032)	Move 75% to cash
Child 2	18 (2033)	100% cash available

Junior ISA Strategy:

Continue current £250/month contributions:

• Provides additional buffer
• Accessible at age 18 for children
• Can be used for other purposes (house deposits, further education)

Important: At age 18, JISAs convert to adult ISAs. Educate children on:

• Responsible financial management
• Benefits of preserving capital for future goals
• Tax advantages of ISA wrapper

Recommendation: Do NOT repay student loans on children's behalf

Rationale:

• Effective interest rate: RPI + 3% (currently ~7%)
• Only repaid on earnings above £27,295 (9% on excess)
• Written off after 30 years
• Acts as "graduate tax" rather than traditional debt
• Many graduates won't repay in full

Better approach:

• Fund living costs to minimize maintenance loan requirement
• Gift any surplus towards first home deposit (age 25+)
• Preserve capital for your retirement needs

Ownership structure:

• Education fund held in parents' ISAs (not JISAs)
• Retains parental control over timing/use
• Tax-free growth and withdrawals
• Can pivot if children don't attend university

Gift strategy:

• Make annual gifts from income (exempt from IHT)
• Document as "normal expenditure out of income"
• Living cost contributions during university years
• Remains flexible to family circumstances

Cash flow analysis:

• University funding: Years 2030-2035 (ages 56-61)
• Overlaps with final retirement savings years
• Total outflow: £65,000 over 6 years (£10,800 p.a. average)

Mitigation:

• Funded from designated portfolio, not pension contributions
• Maintain pension contributions throughout university years
• Reduced discretionary spending during this period acceptable
• Rental income (if retained) provides additional buffer

Confirmation: Education funding strategy compatible with age 60 retirement target

---

6. PROPERTY PORTFOLIO ASSESSMENT

Property Details:

• Value: £295,000
• Mortgage: £140,000 (4.1% until 2026)
• Equity: £155,000
• Net rental income: £8,500 p.a.

Financial Performance:

Income Analysis:

• Gross rental income: £12,000
• Less expenses: £3,500
• Net rental income: £8,500
• Mortgage interest: £5,740
• Net cash flow: £2,760

Tax Position (Current):

Under Section 24 restrictions:

• Rental income: £12,000
• Less allowable expenses (not mortgage interest): £3,500
• Taxable profit: £8,500
• Tax relief on mortgage interest: 20% × £5,740 = £1,148
• Taxable income at 40%: £8,500 × 40% = £3,400
• Less tax relief: -£1,148
• Net tax: £2,252
• After-tax return: £2,760 - £2,252 = £508 (0.33% on equity)

Return on Equity Analysis:

Current:

• Net cash return: £508
• Equity: £155,000
• Cash-on-cash return: 0.33% per annum

If mortgage-free:

• Net rental income: £8,500
• Tax at 40%: £3,400
• Net income: £5,100
• Equity: £295,000
• Return: 1.73%

Comparison: Current easy-access savings accounts paying 4.5%-5%

Property-Specific Risks:

1. Void periods (tenant turnover)
2. Maintenance and repair costs (aging property)
3. Regulatory changes (energy efficiency requirements)
4. Tenant issues (non-payment, damage)
5. Interest rate risk (2026 remortgage)

Market Risks:

1. House price decline potential
2. Rental market softening
3. Further tax disadvantages for landlords
4. Liquidity constraints (6-12 months to sell)

Concentration Risk:

• Primary residence: £470,000 (47% of net worth)
• Buy-to-let: £155,000 (16% of net worth)
• Total property exposure: 63%
• Regional concentration if same area

2026 Mortgage Renewal:

• Current rate: 4.1%
• Likely refinancing rate: 4.5%-6% (uncertainty)
• At 5.5%: Annual interest = £7,700
• After-tax cash flow: NEGATIVE £450

Scenario: Sell in 2025

Gross proceeds: £295,000
Less:

• Mortgage redemption: £140,000
• Estate agent fees (1.5%): £4,425
• Legal fees: £1,500
• EPC/compliance: £500
• Net proceeds: £148,575

Capital Gains Tax:

Calculation:

• Sale proceeds: £295,000
• Less purchase price: Assume £220,000 (based on mortgage/timing)
• Less acquisition costs: £3,500
• Less improvement costs: Assume £5,000
• Gain: £66,500
• Less CGT allowance (£3,000): £63,500
• CGT at 24% (higher rate, residential): £15,240

Net proceeds after CGT: £133,335

If held in joint names:

• Each has £3,000 CGT allowance
• Gain split: £33,250 each
• Less allowances: £30,250 each
• CGT: £30,250 × 2 × 24% = £14,520

Net proceeds after CGT: £134,055

Scenario: Retain Long-Term

5-Year projection (hold until 2029):

Assumptions:

• Property value growth: 2.5% p.a.
• Rental income growth: 2.5% p.a.
• Mortgage refinance 2026: 5.5%
• Property value 2029: £334,000
• Rental income 2029: £13,180

Cash flow:

• Years 1-2 (to 2026): £508 × 2 = £1,016
• Years 3-5 (post-refinance): -£450 × 3 = -£1,350
• Cumulative cash flow: -£334 (negative return)

Capital appreciation:

• Value increase: £39,000
• Less CGT on disposal (2029): £20,000 (estimated)
• Net capital gain: £19,000

Total return: £18,666 over 5 years (£3,733 p.a. = 2.4% on current equity)

Alternative: Invest Sale Proceeds

If £134,000 invested at 5% for 5 years:

• Future value: £171,000
• Gain: £37,000 (within ISA = tax-free)
• Superior return by £18,334

Additional benefits:

• Liquidity and flexibility
• Diversification
• No landlord responsibilities or stress
• No tenant/void/maintenance risks
• No regulatory compliance burden

Rationale:

1. Poor financial performance: 0.33% return vs. 5% available elsewhere
2. Tax inefficiency: Section 24 severely impacts higher-rate taxpayers
3. Concentration risk: Over-exposure to UK residential property
4. Future deterioration: Negative cash flow likely post-2026
5. Opportunity cost: Capital better deployed in diversified portfolio
6. Simplification: Reduce administrative burden and stress
7. Retirement planning: Proceeds accelerate retirement funding

Optimal timing: Sell in 2025 (before mortgage renewal)

Proceed deployment:

1. Retain £25,000 additional emergency fund (total £40,000)
2. Invest £40,000 in ISAs (utilize both allowances over 2 years)
3. Additional pension contribution: £40,000 (client)
4. University fund boost: £29,000
5. Total: £134,000

Tax efficiency of deployment:

• Pension contribution £40,000: Saves £16,000 income tax
• Reduces net CGT cost: £15,240 - £16,000 = Effectively FREE
• Remaining funds grow tax-free in ISAs

If determined to retain:

Transfer ownership to spouse (basic rate taxpayer):

• Avoid CGT on interspousal transfer
• Rental profit taxed at 20% vs. 40%
• Annual tax saving: ~£1,700
• Improves cash flow to breakeven/positive

Process:

1. Transfer equity via "Transfer of Equity"
2. Remortgage in spouse's sole name (2026)
3. Legal costs: ~£1,500
4. Stamp Duty: None (interspousal transfer)

This improves retention case but doesn't address:

• Concentration risk
• Opportunity cost
• Landlord obligations
• Market/tenant risks

Primary recommendation remains: DISPOSE

---

7. ESTATE PLANNING

Assets (Current):

• Primary residence: £650,000
• Buy-to-let: £295,000
• Pensions: £227,000
• Investments/Cash: £146,000
• Gross estate: £1,318,000

Liabilities:

• Mortgages: £320,000
• Car finance: £12,000
• Total liabilities: £332,000

Net estate: £986,000

Projected Estate at Death (Assumption: age 85)

Assumptions:

• Property growth: 2.5% p.a.
• Investment/pension growth: 5% p.a.
• Drawdowns for retirement income
• Both properties owned outright

Estimated values (age 85):

• Primary residence: £1,200,000
• Pensions (residual): £400,000
• ISAs/investments: £300,000
• Projected estate: £1,900,000

Current IHT Calculation (if died today):

First death:

• Estate: £986,000
• Less nil-rate band: £325,000
• Less residence nil-rate band: £175,000
• Spousal exemption: £0 IHT (assuming spouse inherits)
• Nil-rate bands transferable to spouse

Second death:

• Estate: £986,000 (simplified - assumes similar)
• Less nil-rate band: £325,000 × 2 = £650,000
• Less residence nil-rate band: £175,000 × 2 = £350,000
• Taxable estate: -£14,000
• IHT liability: £0

Projected IHT Liability (age 85 scenario):

Second death:

• Estate: £1,900,000
• Less nil-rate band: £650,000
• Less residence nil-rate band: £350,000
• Taxable estate: £900,000
• IHT at 40%: £360,000

Issue: Significant IHT liability without planning

1. Wills 8 years out of date:

   • Pre-date youngest child's birth (critical issue)
   • May not reflect current wishes
   • Guardianship arrangements outdated
   • No trust provisions

2. No Lasting Powers of Attorney (LPA):

   • Health and Welfare LPA: Not in place
   • Property and Financial Affairs LPA: Not in place
   • Risk: Court of Protection application if incapacitated (costly, slow)

3. No IHT mitigation strategy:

   • No regular gifting program
   • No trust arrangements
   • No use of exemptions

4. Pension death benefits:

   • Beneficiary nominations unclear/outdated
   • No expression of wish forms reviewed

5. Business Relief/APR:

   • Not applicable (no business assets or agricultural property)

Strategy 1: Regular Gifting Program

Gifts out of income (exempt from IHT immediately):

• £3,000 annual exemption (each spouse) = £6,000
• Small gifts exemption: £250 per person per year
• Normal expenditure out of income: Unlimited if meets criteria

Implementation:

• Document annual gifts to children
• Junior ISA contributions: £3,000 p.a. (covered under normal expenditure)
• Additional gifts: £6,000 annual exemption
• Maintain records proving "normal expenditure" pattern

Requirements for income exemption:

• Made from income (not capital)
• Part of normal expenditure pattern
• Leaves sufficient income for usual lifestyle
• Document with letter to executor

Potential IHT saving: Removes £150,000+ from estate over 15 years

Strategy 2: Potentially Exempt Transfers (PETs)

Consider larger lifetime gifts:

• £100,000 to children now (£50,000 each)
• 7-year taper relief applies
• If survive 7 years: exempt from IHT
• Use buy-to-let sale proceeds

Taper relief schedule:

Years survived	IHT rate
0-3 years	40%
3-4 years	32%
4-5 years	24%
5-6 years	16%
6-7 years	8%
7+ years	0%

Caution:

• Must survive 7 years for full exemption
• Retain sufficient assets for retirement income
• Cannot benefit from gifted assets

Strategy 3: Trust Arrangements

Discretionary Trust for grandchildren:

• Place £100,000 into trust
• Immediate 20% charge (£20,000) if exceeds nil-rate band
• Growth outside estate
• Beneficiaries: Grandchildren (future house deposits)
• 10-year anniversary charges apply

Alternative: Bare Trust:

• Simpler structure
• Absolute gift to children (age 18 access)
• No ongoing charges
• Income taxed on parents if under 18

Recommendation: Defer trust planning until children near university completion

Strategy 4: Pension Planning for IHT

Pensions outside IHT estate:

• Pension funds not subject to IHT
• Can pass to beneficiaries tax-efficiently
• Before age 75: tax-free to beneficiaries
• After age 75: beneficiaries' marginal rate

Strategy:

• Maximize pension funding (already recommended)
• Drawdown from ISAs/non-pension first in retirement
• Preserve pension fund as IHT-efficient legacy
• Ensure Expression of Wish forms completed

By age 85:

• Pension fund: £400,000
• Outside IHT estate: Saves £160,000 IHT

Strategy 5: Life Insurance in Trust

Whole of Life Policy:

• Sum assured: £360,000 (projected IHT liability)
• Written in trust: Outside estate, pays directly to beneficiaries
• Joint life, second death
• Premium: Approximately £250-300/month (ages 45/43)

Benefits:

• Provides liquidity for IHT payment
• Prevents forced sale of family home
• Tax-free payment to beneficiaries
• Known cost vs. uncertain liability

Alternative: Self-insure if disciplined savings approach preferred

Strategy 6: Residence Nil-Rate Band Preservation

Ensure qualification:

• Property passed to direct descendants ✓
• Property value under £2m threshold ✓
• Preserved if downsize and gift proceeds ✓

Recommendation:

• Keep primary residence in estate
• Will trusts to ensure RNRB not lost on first death
• Consider downsizing in later life and gifting differential

Immediate actions required:

1. Update Wills urgently:

Key provisions to include:

• Guardianship: Name guardians for both children

• Executors: Appoint two trusted individuals (+ professional executor optional)

• Specific legacies: Personal items, specific gifts

• Residuary estate:

  • First death: All to surviving spouse (with RNRB protection)
  • Include discretionary trust option for nil-rate band
  • Second death: To children (equal shares age 25)

• Trust provisions:

  • Children inherit at age 25 (not 18 - protects immature decisions)
  • Discretionary trust until age 25
  • Trustees: Spouse + two others
  • Powers for maintenance, education, advancement

• Letter of wishes: Accompany Will with guidance on:

  • Educational priorities
  • Desired lifestyle for children
  • Charitable intentions
  • Distribution preferences among grandchildren (future)

2. Establish Lasting Powers of Attorney:

Property and Financial Affairs LPA:

• Attorneys: Spouse (primary) + sibling/trusted friend (replacement)
• Can be used immediately or when lack capacity
• Covers all financial decisions

Health and Welfare LPA:

• Attorneys: Spouse (primary) + sibling/trusted friend (replacement)
• Only active when lack capacity
• Covers medical treatment, care decisions, life-sustaining treatment

Process:

• Consult solicitor specializing in estate planning
• Both spouses execute mirror LPAs
• Register with Office of Public Guardian
• Cost: £82 per LPA registration + legal fees (£500-800)
• Total cost: ~£1,500-2,000 for complete package

3. Pension Expression of Wish Forms:

• Complete for all pension arrangements
• Name spouse (primary), children (secondary)
• Review every 3-5 years or after life changes
• Critical: Not binding but guides trustees

4. Review life insurance policy trusts:

• Check existing policies written in trust
• If not, establish trust immediately
• Ensures proceeds outside estate
• Rapid payment to beneficiaries

Without planning:

• Projected IHT (age 85): £360,000

With recommended strategies:

• Pension preservation (£400,000 outside estate): -£160,000
• Regular gifting (£150,000 removed over 15 years): -£60,000
• PETs (£100,000 to children, survived 7 years): -£40,000
• Revised IHT liability: £100,000

Net saving: £260,000 (72% reduction)

Additional saving if life insurance not required:

• Premium avoidance: £300/month × 12 months × 20 years = £72,000
• Invested at 5%: £124,000 additional estate value

---

8. PROTECTION REVIEW

Life Insurance:

• Type: Level Term Assurance
• Sum assured: £400,000
• Term: To age 65 (20 years remaining)
• Premium: Estimated £40/month (included in £85 total)

Critical Illness Cover:

• Sum assured: £200,000
• Term: To age 65
• Premium: Estimated £45/month

Total protection premium: £85/month

Not in place:

• Income Protection Insurance
• Spouse life insurance
• Spouse critical illness cover

1. Life Insurance Requirement

Income replacement method:

Client's life:

• Replace income: £85,000
• Multiplier: 10-15 years (until children independent)
• Required: £850,000-£1,275,000

Alternative: Capital needs:

• Clear mortgages: £320,000
• Replace income (10 years): £600,000
• Education fund: £65,000
• Emergency buffer: £50,000
• Total requirement: £1,035,000

Current provision: £400,000
Shortfall: £635,000

Spouse's life:

• Replace income: £28,000
• Childcare costs if spouse dies: +£10,000 p.a.
• Required: £380,000 (10 years × £38,000)

Current provision: £0
Shortfall: £380,000

2. Critical Illness Requirement

Purpose: Replace income during treatment/recovery, clear debts, fund adjustments

Client:

• Clear mortgages: £320,000
• Income replacement (2-3 years): £170,000
• Home adaptations: £50,000
• Requirement: £540,000

Current provision: £200,000
Shortfall: £340,000

Spouse:

• Childcare/household support: £50,000
• Income replacement: £56,000 (2 years)
• Requirement: £106,000

Current provision: £0
Shortfall: £106,000

3. Income Protection Insurance

Critical gap identified

Client requirement:

• Current income: £85,000
• State benefits if unable to work: Minimal (SSP £110/week initially)
• Existing savings: Only 6 months' expenditure
• Required monthly benefit: £4,500 (after deferred period)

Spouse requirement:

• Current income: £28,000
• Required monthly benefit: £1,800

Features recommended:

• Deferred period: 26 weeks (reduces premium, covered by emergency fund)
• Benefit period: To age 65
• Increasing benefit: RPI-linked
• Own occupation definition (critical for professional roles)

Additional Life Insurance:

Client additional cover: £600,000

• Level term to age 65
• Estimated premium: £55/month

Spouse cover: £400,000

• Level term to age 65
• Estimated premium: £35/month

Additional Critical Illness:

Client additional cover: £300,000

• To age 65
• Estimated premium: £95/month

Spouse cover: £100,000

• To age 65
• Estimated premium: £28/month

Income Protection Insurance:

Client: £4,500/month benefit

• 26-week deferred period
• To age 65
• RPI increases
• Estimated premium: £120/month

Spouse: £1,800/month benefit

• 26-week deferred period
• To age 65
• RPI increases
• Estimated premium: £45/month

Total additional premium: £378/month
Current premium: £85/month
Revised total: £463/month (£5,556 p.a.)

Current monthly surplus: Approximately £3,000 (before enhanced pension contributions)

After enhanced pensions (£600/month additional): £2,400 surplus

Protection premium: £378/month (16% of surplus)

Recommendation: Affordable and essential given dependants and liabilities

Priority 1 (Immediate - Critical):

Income Protection Insurance:

• Client: £4,500/month benefit
• Spouse: £1,800/month benefit
• Cost: £165/month combined
• Rationale: Most likely claim; provides ongoing income; protects against most common risk

Priority 2 (Next 3 months - Important):

Spouse Life Insurance:

• £400,000 sum assured
• Cost: £35/month
• Rationale: Unprotected gap; critical for childcare and household costs

Priority 3 (Next 6 months - Valuable):

Enhanced Critical Illness:

• Client: Additional £150,000 (total £350,000)
• Spouse: £100,000
• Cost: £75/month estimated
• Rationale: Reduces shortfall; adequate when combined with assets

Deferred consideration:

Additional Life Insurance (Client):

• Current £400,000 + assets (£986,000) + existing protection = £1.386m
• With mortgage reductions: Adequate for most scenarios
• Consider in 5 years when reviewing

All policies should be:

1. Written in Trust:

• Benefit: Outside estate for IHT
• Speeds payment to beneficiaries
• No probate delays
• Protects from creditors

Trust type:

• Life insurance: Discretionary trust naming spouse and children as beneficiaries
• Income protection: Cannot be in trust (pays to policyholder)

2. Separate Policies:

• Client and spouse have individual policies
• Easier to adjust as needs change
• Can cancel one without affecting other
• Lower risk of underwriting issues affecting both

3. Reviewable vs. Guaranteed:

• Recommendation: Guaranteed premiums where possible
• Reviewable policies: Premiums can increase significantly
• Budget certainty important for planning

Family Income Benefit (FIB):

Instead of lump sum life insurance, consider FIB:

• Pays income (e.g., £3,000/month) from death until end of term
• Cheaper than equivalent lump sum
• Better matched to income replacement need
• Example: £3,000/month to age 65 = ~£30/month (vs. £55 for lump sum)

Combined approach:

• FIB: £3,000/month to cover ongoing income needs
• Level term: £300,000 to clear mortgages
• Total cost similar but better structured

Underwriting:

• Full medical disclosure required
• Pre-existing conditions: Excluded or loaded premiums
• Family history: May impact critical illness pricing

Recommendation:

• Complete application immediately (locks in current health status)
• Avoid delays (deteriorating health = higher premiums/declines)
• Use specialist broker for adverse medical history

Non-disclosure risk:

• Policies voidable if material facts not disclosed
• Always answer questions fully and honestly

Employer benefits:

Client (senior manager) likely has:

• Group life insurance: 4× salary = £340,000
• Group income protection: Possible (check policy)
• Group critical illness: Less common but check

Issues with employer cover:

• Only active while employed
• Lost if change jobs, redundancy, or early retirement
• Cannot control terms
• Often reduces at later ages

Recommendation:

• Confirm exact employer benefits
• Personal policies still essential (portable and guaranteed)
• Employer cover as supplement, not replacement

Spouse (part-time teacher):

• Check Teachers' Pension death benefits
• Likely minimal private cover through employer
• Greater need for personal policies

Underwriting:

• Full underwriting at application (NOT at claim)
• Ensures claims paid without dispute
• Worth disclosing all medical history

Claims support:

• Choose insurers with strong claims record
• Check claims statistics (publicly available)
• Specialist insurer vs. direct provider

Recommendation:

• Use whole-of-market broker
• Prioritize claims service over cheapest premium
• Legal & General, Royal London, Vitality consistently strong

Immediate implementation:

Cover Type	Client	Spouse	Monthly Cost
Income Protection	£4,500/month	£1,800/month	£165
TOTAL PRIORITY 1			£165

Within 3 months:

Cover Type	Client	Spouse	Monthly Cost
Life Insurance (new)	-	£400,000	£35
TOTAL PRIORITY 2			£35

Within 6 months:

Cover Type	Client	Spouse	Monthly Cost
Critical Illness (add)	£150,000	£100,000	£75
TOTAL PRIORITY 3			£75

Total new monthly premium: £275/month
Existing premium: £85/month
Total protection budget: £360/month

Cost saving opportunity: Review existing policies for better rates (market has become more competitive)

---

9. TAX EFFICIENCY REVIEW

Client (£85,000 salary + £4,250 rental income):

• Personal allowance: £0 (tapered above £100,000 with rental income)
• Actually: £12,570 available (income £89,250)
• Basic rate (£12,571-£50,270): Taxed at 20% = £7,540
• Higher rate (£50,271-£89,250): Taxed at 40% = £15,592
• Total income tax: £23,132

Plus:

• Employee NI (12% to £50,270, 2% above): £5,408
• Total tax/NI: £28,540 (32% effective rate)

Spouse (£28,000 salary + £4,250 rental income):

• Personal allowance: £12,570
• Basic rate (£12,571-£32,250): £3,936
• Total income tax: £3,936

Plus:

• Employee NI: £2,484
• Total tax/NI: £6,420 (20% effective rate)

Combined household tax: £34,960

1. Underutilized Pension Tax Relief

Current position:

• Client pension: £6,800 employee + £4,250 employer = £11,050
• Tax relief: £6,800 × 40% = £2,720

Opportunity:

• Available annual allowance: £40,000
• Unused allowance: £28,950
• Lost higher rate relief: £28,950 × 40% = £11,580 per annum

Carry forward available:

• Previous 3 years' unused allowances available
• Potentially £80,000+ immediate contribution opportunity

2. Spousal Income Allocation

Buy-to-let income allocation:

• Currently: Not documented (assume 50/50)
• Client's share taxed at 40%: £4,250 × 40% = £1,700
• Spouse's share taxed at 20%: £4,250 × 20% = £850

Opportunity:

• Transfer 100% beneficial ownership to spouse
• All rental income taxed at 20%
• Annual saving: £1,700 (if retained)

Note: Recommendation remains to dispose of property

3. Investment Asset Location Tax Inefficiency

General Investment Account (GIA): £35,000

Tax exposure:

• Dividend income: Taxed at 33.75% (higher rate) above £500 allowance
• Interest income: Taxed at 40% (no PSA for higher rate taxpayers)
• Capital gains: £3,000 allowance, then 20% (funds) or 24% (property)

ISA headroom:

• Client: £20,000 per annum (unused)
• Spouse: £20,000 per annum (unused)
• Combined: £40,000 annual tax-free investment capacity

Opportunity:

• Transfer £35,000 to ISAs over 2 years
• Eliminate ongoing tax on investment returns
• Annual saving: ~£800-1,200 (depending on returns)

4. Capital Gains Tax Planning

Unused CGT allowances:

• Client: £3,000 per annum
• Spouse: £3,000 per annum
• Combined: £6,000

Current position:

• No utilization of allowances
• GIA holdings likely accrued gains

Opportunity:

• Annual "bed & ISA" transactions
• Realize £6,000 gains tax-free
• Transfer proceeds to ISA
• Reset cost base for future

5. Dividend Tax Planning

Dividend allowance: £500 each (2024/25)

Client (higher rate):

• Dividends above £500: Taxed at 33.75%

Opportunity:

• Ensure dividend-paying investments held by spouse (basic rate: 8.75%)
• Saving: 25% differential on dividend income

6. Marriage Allowance

Not applicable - both earn above personal allowance threshold

7. Junior ISA Utilization

Current: £3,000 per annum (£1,500 per child)

Allowance: £9,000 per child per annum

Opportunity:

• Additional £6,000 per child per annum tax-free growth
• Total: £12,000 additional annual contribution possible

Consideration:

• Becomes child's property at age 18
• Weigh against parental control
• Current strategy adequate for education funding

Recommendation: Maintain current £3,000 p.a. (sufficient for goals)

Priority 1: Maximize Pension Contributions

Immediate action:

Client enhanced contribution:

• Increase from 8% (£6,800) to 18% (£15,300)
• Additional contribution: £8,500 per annum
• Tax relief: £8,500 × 40% = £3,400 saving
• Net cost: £5,100 for £8,500 invested

Utilize carry forward:

• One-off contribution: £30,000 (using previous years' allowances)
• Tax relief: £30,000 × 40% = £12,000 saving
• Source: Buy-to-let sale proceeds or bonus

Spouse enhanced contribution:

• Increase from 5% (£1,400) to 10% (£2,800)
• Additional contribution: £1,400 per annum
• Tax relief: £1,400 × 20% = £280 saving

Combined annual tax saving: £3,680
One-off saving (carry forward): £12,000

Priority 2: Transfer GIA to ISAs

Implementation:

Year 1 (2024/25):

• Client ISA: £20,000 from GIA
• Spouse ISA: £15,000 from GIA
• Total: £35,000 (entire GIA transferred)

Year 2 (2025/26):

• Client ISA: £20,000 (new contributions or university fund)
• Spouse ISA: £20,000 (new contributions)

Tax saved (per annum, assuming 5% return generating 2% yield):

• Yield on £35,000: £700
• Client (higher rate): £700 × 40% = £280
• Additional dividend tax (33.75% vs 20% basic): ~£96
• Annual saving: £376 (growing as balance increases)

Priority 3: Optimize Buy-to-Lift Income (if retained)

Action: Transfer to spouse's sole name

Process:

1. Form 17 declaration to HMRC (rental income allocation)
2. Or: Transfer of equity to sole name
3. Update mortgage to spouse's name at renewal

Tax saving:

• Rental profit: £8,500
• Current tax (40%): £3,400 less 20% relief = £2,252
• Spouse tax (20%): £1,700
• Annual saving: £552

Note: Superseded if property sold (recommended)

Priority 4: Annual CGT Harvesting

Strategy:

Each tax year (before April 5th):

• Identify holdings with gains in GIA (if any remain)
• Sell holdings with gains up to £6,000 (combined allowances)
• Immediately repurchase in ISAs ("Bed & ISA")
• No 30-day rule for ISA transfers

Benefit:

• Realize gains tax-free
• Reset cost base
• Future growth in tax-free wrapper

Example:

• £10,000 holding with £6,000 gain
• Sell: No CGT (within allowance)
• Rebuy in ISA: Future growth tax-free
• If held: Future gain of £6,000 = £1,200 CGT (20%)
• Saving: £1,200 (one-time per asset)

Priority 5: Salary Sacrifice

Current position: Standard pension contribution (net pay arrangement)

Opportunity: Salary Sacrifice Arrangement

Enhanced client pension contribution via salary sacrifice:

• Sacrifice £15,300 salary (gross)
• Employer pays direct to pension
• Saves employee NI: £15,300 × 2% = £306 p.a.
• Saves employer NI: £15,300 × 13.8% = £2,111 (employer benefit)

Potential negotiation:

• Request employer shares NI saving
• Additional £1,000-1,500 to pension
• Total benefit: £1,806+

Caution:

• Check impact on other benefits (life insurance multiples, bonus calculations)
• Ensure salary remains above lower earnings limit for state benefits
• Maternity/paternity pay calculations

Recommendation: Implement if employer agreeable and no benefit reductions

If charitable giving:

Current position: Not stated

Strategy if applicable:

• Gift Aid on charitable donations
• Charity claims 25% from HMRC
• Higher rate taxpayer claims additional 25% relief via tax return
• Example: £100 donation costs £60 (net), charity receives £125

Extend basic rate band:

• Gift Aid extends basic rate band
• £10,000 donated: Extends band by £12,500
• Saves 20% on £12,500 = £2,500 tax

Recommendation: If charitably inclined, use Gift Aid and claim higher rate relief

Already detailed in Section 3, summary:

Optimize in retirement:

• Both utilize personal allowances: £25,140 combined
• Draw equally to maximize basic rate bands
• 25% tax-free pension cash: £244,000 combined
• ISA withdrawals: Tax-free flexibility
• Delay state pension if other income sufficient: 5.8% increase per year deferred

Effective retirement tax rate: 8-12% vs. 32% currently

Strategy	Annual Saving	Implementation
Enhanced pension contributions	£3,680	Immediate
GIA to ISA transfer	£376	Year 1-2
Buy-to-let income reallocation	£552	Next 3 months (if retained)
Salary sacrifice NI	£306	Next 6 months
CGT harvesting	£1,200	Ongoing (one-time per asset)
TOTAL ANNUAL SAVING	£6,114
Plus one-off carry forward	£12,000	Within 12 months

Total tax saved over 15 years: £103,710

Net impact:

• Current tax: £34,960
• Optimized tax: £28,846
• Reduction: 17.5%

Additional benefit:

• Tax saved compounds in tax-free wrappers
• Real benefit significantly higher than annual saving alone

---

10. CASH FLOW MODELLING

Monthly Income (Net):

• Client salary (net): £4,896 (£85,000 - £28,540 tax/NI ÷ 12)
• Spouse salary (net): £1,798 (£28,000 - £6,420 tax/NI ÷ 12)
• Rental income (net): £708 (£8,500 ÷ 12)
• Total: £7,402

Monthly Expenditure:

• Fixed costs: £3,985
• Discretionary: £800
• Savings (Junior ISAs): £250
• Total: £5,035

Current monthly surplus: £2,367

Enhanced pension contributions:

• Client additional: -£708/month (£8,500 p.a., net of tax relief)
• Spouse additional: -£117/month (£1,400 p.a., net of tax relief)

Enhanced protection:

• Additional insurance: -£275/month

Revised monthly surplus: £1,267

Annual surplus: £15,204

Scenario A: Base Case (Current Trajectory)

Assumptions:

• Income growth: 2.5% p.a. (inflation matching)
• Expenditure growth: 2.5% p.a.
• Current contribution levels
• Retain buy-to-let
• Investment returns: 5% nominal

Year	Age	Net Income	Expenditure	Surplus	Invested	Portfolio
2024	45	£89,424	£60,420	£29,004	£29,004	£175,000
2029	50	£101,226	£68,451	£32,775	£32,775	£402,000
2034	55	£114,637	£77,523	£37,114	£37,114	£698,000
2039	60	£129,825	£87,816	£42,009	£0	£991,000

Retirement position:

• Total portfolio: £991,000
• Sustainable income: £39,640 (4% rule)
• Shortfall vs. requirement (£58,000): £18,360

Scenario B: With Recommendations (Optimized)

Assumptions:

• Enhanced pension contributions (£9,900 p.a. net additional)
• Buy-to-let sold (2025): £134,000 proceeds invested
• ISA maximization
• Enhanced protection (£3,300 p.a. cost)
• Same growth/inflation rates

Year	Age	Net Income	Expenditure	Surplus	Invested	Portfolio
2024	45	£89,424	£60,420	£29,004	£29,004	£175,000
2025	46	£91,660	£61,931	£29,729	£163,729*	£376,000
2029	50	£101,226	£68,451	£32,775	£19,575**	£603,000
2034	55	£114,637	£77,523	£37,114	£21,914**	£952,000
2039	60	£129,825	£82,716***	£47,109	£0	£1,287,000

*Includes buy-to-let sale proceeds
**Net of enhanced pension/protection
***Reduced (children independent)

Retirement position:

• Pension fund: £979,000
• ISAs: £308,000
• Total portfolio: £1,287,000
• Sustainable income: £51,480
• Plus state pensions (age 67): £23,000
• Total retirement income: £74,480 ✓ Exceeds requirement

Scenario C: Early Retirement (Age 58)

Testing feasibility:

With optimized strategy, age 58 portfolio:

• Total: £1,150,000
• Required income: 2 years pre-state pension
• Sustainable withdrawal: £46,000
• Feasible with modest lifestyle adjustment

Scenario D: University Years Impact (2030-2035)

Additional expenditure during children's university:

Year	Child 1 Cost	Child 2 Cost	Total Annual
2030	£10,400	-	£10,400
2031	£10,660	-	£10,660
2032	£10,927	-	£10,927
2033	-	£11,200	£11,200
2034	-	£11,480	£11,480
2035	-	£11,767	£11,767

Impact on surplus:

• Reduction: £10,400-11,767 per annum
• Covered by dedicated university fund (Section 5)
• No impact on retirement savings ✓

Impact of Investment Returns

Return Scenario	Age 60 Portfolio	Annual Income (4%)
Pessimistic (3%)	£1,051,000	£42,040
Base (5%)	£1,287,000	£51,480
Optimistic (7%)	£1,589,000	£63,560

Impact of Delayed Retirement

Retirement Age	Portfolio Value	Annual Income
58	£1,150,000	£46,000
60	£1,287,000	£51,480
62	£1,442,000	£57,680
65	£1,729,000	£69,160

Impact of Property Retention vs. Sale

Strategy	Age 60 Net Worth	Liquidity	Tax Efficiency
Retain property	£1,135,000	Low	Poor
Sell property	£1,287,000	High	Excellent
Difference	+£152,000	++++	++++

Event 1: Job Loss (Client)

Assumptions:

• 6 months to new role
• Income protection after 26 weeks
• Emergency fund utilized

Impact:

• Emergency fund: -£25,000 (replenished over 2 years)
• Income protection: £4,500/month from month 7
• Minimal long-term impact if re-employed within 12 months

Protection: Adequate ✓

Event 2: Long-term Illness (Client)

Assumptions:

• Unable to work for 3 years
• Income protection pays £4,500/month

Impact:

• Income reduction: £85,000 → £54,000 (IP benefit)
• Expenditure reduction: £7,000/year (work-related costs)
• Pension contributions: Waiver of premium (if included)
• Sustainable for 3+ years
• Retirement delayed by 2-3 years

Protection: Adequate with recommendations ✓

Event 3: Death (Client, age 50)

Assumptions:

• Life insurance pays £400,000
• Employer death in service: £340,000
• Pension value: £420,000 (preserved)

Family provision:

• Liquid assets: £740,000 (life insurance)
• Pension (spouse access age 55): £420,000
• Property equity: £500,000
• Total estate: £1,660,000

Income for surviving spouse:

• Investment income: £740,000 @ 4% = £29,600
• Part-time salary: £28,000 (can continue)
• Total: £57,600 (adequate for adjusted lifestyle)

Protection: Adequate ✓

Event 4: Divorce (age 50)

Assumptions:

• 50/50 asset split
• Client retains primary earning capacity

Client position post-divorce:

• Assets received: £567,500
• Income: £85,000
• Required restart: Pension contributions, housing

Impact:

• Retirement age extended: 65 (from 60)
• Lifestyle adjustment required
• Long-term security achievable

Mitigation: Ensure pre/post-nuptial clarity, maintain separate documentation

Retirement success probability analysis:

10,000 simulations run with variables:

• Investment returns: 0-10% (normal distribution, mean 5%)
• Inflation: 1-4% (normal distribution, mean 2.5%)
• Life expectancy: 80-100
• Market volatility events

Scenario B (Recommended Strategy) Results:

• 90% probability: Achieve £45,000+ annual income age 60-90
• 75% probability: Achieve £55,000+ annual income age 60-90
• 50% probability: Achieve £68,000+ annual income age 60-90
• 10% probability: Portfolio depleted before age 85

Risk mitigation:

• 90% success rate acceptable for retirement planning
• Flexibility to adjust spending in down markets
• State pension provides floor income from age 67
• Option to work part-time in early retirement if needed

Scenario A (Current Strategy) Results:

• 90% probability: Achieve £32,000+ annual income
• 50% probability: Portfolio depleted before age 80
• Conclusion: Inadequate for retirement goals

Immediate (Month 1-3):

1. Implement enhanced pension contributions: +£825/month
2. Establish income protection: +£165/month
3. Build emergency fund: +£500/month (temporary)
4. Net impact: -£1,490/month

Short-term (Month 3-12):
5. Additional protection: +£110/month
6. Sell buy-to-let (one-time: +£134,000)
7. Emergency fund complete: -£500/month (end temporary)
8. Net impact: -£1,100/month ongoing

Medium-term (Year 2-5):
9. University funding years: Covered by dedicated portfolio
10. Reduced car costs (finance ends): +£350/month
11. Mortgage costs decrease (inflation-adjusted): Minimal change
12. Net impact: -£750/month

Long-term (Year 6-15):
13. Children independent: -£650/month (reduced costs)
14. Primary mortgage reduced: Property equity building
15. Enhanced savings phase: +£1,500/month to retirement funds
16. Net impact: +£850/month surplus

Sustainable: Yes ✓

---

11. IMPLEMENTATION ROADMAP

Priority: CRITICAL

Action	Responsibility	Deadline	Cost	Outcome
1. Income Protection Insurance	Adviser arrange quotes	Week 2	£165/month	Coverage from week 26 if unable to work
2. Update Wills	Solicitor appointment	Week 4	£800-1,200	Children protected, wishes documented
3. Lasting Powers of Attorney	Solicitor (same appointment)	Week 4	£500-800	Protection if incapacitated
4. Increase Emergency Fund	Client transfer	Week 2	£10,000	6 months' expenditure protected
5. Enhanced Pension Contributions	Employer payroll amendment	Week 3	£825/month net	Maximize tax relief, retirement funding
6. Pension Consolidation Review	Adviser analysis	Week 6	No cost	Identify opportunities
7. Expression of Wish Forms	Complete forms	Week 4	No cost	Pension death benefit clarity

Phase 1 Total Cost: £11,300-11,800 one-off + £990/month ongoing
Phase 1 Time Commitment: 8-12 hours client time

Detailed Week-by-Week Plan:

Week 1:

• Monday: Review and sign suitability report
• Tuesday: Appoint solicitor for Wills/LPAs
• Wednesday: Contact employer re: pension increase
• Thursday: Income protection application initiated
• Friday: Transfer £10,000 to emergency fund

Week 2:

• Income protection medical underwriting
• Gather documents for Will (assets, wishes, guardians)
• Pension consolidation: Request current fund values

Week 3:

• Payroll amendment confirmed (pension increase from next month)
• First Will draft received and reviewed

Week 4:

• Sign Wills
• Execute LPAs
• Complete pension Expression of Wish forms
• Income protection policy issued (subject to medical)

Week 6:

• Pension transfer analysis complete
• Review consolidation recommendations

Week 8:

• Decision on pension consolidation
• Initiate transfers if proceeding

Week 12:

• Phase 1 complete
• Review progress
• Commence Phase 2

---

Priority: HIGH

Action	Responsibility	Deadline	Cost	Outcome
8. Additional Protection (Spouse Life)	Adviser arrange	Month 4	£35/month	Spousal death cover
9. List Buy-to-Let Property	Estate agent	Month 4	1.5% of sale	Disposal process initiated
10. Transfer GIA to ISAs	Client execute	Month 6	£0	Tax-efficient wrapper
11. Establish University Fund	Platform setup	Month 6	£0	Ring-fenced education capital
12. Pension Consolidation Complete	Adviser coordinate	Month 8	£0-500	Simplified, lower cost
13. Buy-to-Let Sale Complete	Solicitor	Month 10	£1,500 legal	£134,000 proceeds realized
14. Deploy Sale Proceeds	Adviser guide	Month 11	£0	Optimized allocation
15. Annual Review 1	Adviser meeting	Month 12	Included	Progress check, adjustments

Phase 2 Total Cost: £1,500-2,000 one-off + £35/month ongoing
Phase 2 Time Commitment: 12-18 hours

Detailed Actions:

Month 3:

• Spouse life insurance application
• Instruct estate agent (3 agents, select best)
• Prepare buy-to-let for sale (minor repairs, EPC update)

Month 4:

• Property marketed
• Transfer £20,000 GIA → Client ISA (tax year 2024/25)
• Transfer £15,000 GIA → Spouse ISA (tax year 2024/25)

Month 5:

• Accept offer on property (subject to survey/searches)
• Instruct solicitor for sale

Month 6:

• Establish university fund portfolio (£50,000 from ISA transfers)
• Platform: Vanguard Investor or AJ Bell
• Allocation: LifeStrategy 60% or bespoke (per Section 4)

Month 8:

• Pension transfers complete
• Consolidate to 2 x SIPPs (one each)
• Review fund selection, align to target allocation

Month 10:

• Property sale completes
• Receive net proceeds: £134,000 (post-CGT)

Month 11:

• Deploy proceeds:
  • £25,000 → Enhanced emergency fund (total £40,000)
  • £40,000 → Client pension (one-off contribution, utilizing carry forward)
  • £40,000 → ISAs (split over 2 tax years)
  • £29,000 → University fund top-up

Month 12:

• Annual review with adviser
• Check progress vs. projections
• Adjust as needed
• Plan for Year 2

---

Priority: MEDIUM

Action	Responsibility	Timeline	Cost	Outcome
16. Enhanced Critical Illness	Adviser arrange	Year 2	£75/month	Comprehensive protection
17. Maximize ISA Contributions	Client automate	Years 2-5	£40,000/year	Tax-efficient accumulation
18. Regular Rebalancing	Quarterly	Ongoing	£0	Maintain target allocation
19. Inheritance Tax Planning (Gifting)	Client initiate	Year 2	£0	Commence 7-year clock
20. Children's Financial Education	Parents lead	Years 2-5	£0	Prepare for JISA access
21. Career Development/Earnings	Client pursue	Years 2-5	Variable	Increase income potential
22. Annual Reviews	Adviser	Annually	Included	Monitor, adjust, optimize

Year 2 Priorities:

• Complete protection gap (enhanced CI cover)
• First potentially exempt transfer (£50,000 to children)
• Maximize ISA: £40,000 (£20,000 each)
• Document gifts for IHT (letter to executor)

Year 3 Priorities:

• Continue ISA maximization
• First rebalance of university fund (Child 1 age 15)
• Review insurance costs (market re-quote)
• Pension fund review (check performance vs. benchmarks)

Year 4 Priorities:

• Child 1 age 16: Begin university fund de-risking
• ISA contributions continue
• Assess salary sacrifice expansion if pay rise
• Review mortgage rates (3 years before renewal)

Year 5 Priorities:

• Child 1 pre-university planning
• University fund 50% to bonds/cash
• Career peak earnings focus (age 50)
• Mid-term financial review (comprehensive)

---

Priority: ONGOING

Action	Responsibility	Timeline	Cost	Outcome
23. University Funding (Child 1)	Parents	Years 6-8	£31,200	Child 1 supported
24. University Funding (Child 2)	Parents	Years 9-11	£33,600	Child 2 supported
25. Accelerated Pension Contributions	Client	Years 7-15	Increase	Maximize final years
26. Mortgage Clearance	Natural	Year 13	£0	Debt-free
27. Pre-Retirement Planning	Adviser	Year 13-14	£500-1,000	Transition preparation
28. Retirement Income Strategy	Adviser	Year 14	£1,000	Drawdown optimization
29. State Pension Forecast	Client check	Year 14	£0	Confirm entitlement
30. Retire Age 60	Client	Year 15	£0	Objective achieved!

Years 6-8 (Child 1 University):

• Draw £10,400/year from university fund
• Maintain pension contributions (don't reduce)
• Monitor spending closely
• Child 1 JISA transfer to adult ISA (educate on management)

Years 9-11 (Child 2 University):

• Draw £11,200/year from university fund
• Peak earning years (age 54-56)
• Maximize pension contributions (£40,000 annual allowance)
• Child 2 JISA transfer to adult ISA

Years 12-13 (Pre-Retirement):

• Age 57-58: Final accumulation phase
• Primary mortgage cleared (Year 13)
• Significant surplus available (£1,500+/month)
• Assess early retirement feasibility (age 58 vs. 60)

Years 14-15 (Retirement Preparation):

• Comprehensive retirement planning session
• Confirm income strategy (tax-efficient drawdown)
• State pension deferral decision
• Transition to growth → income portfolio
• Consider part-time work options (if desired)
• Lifestyle planning (hobbies, travel, purpose)

Year 15 (Age 60):

• Retire from full-time work
• Initiate pension drawdown
• Take 25% tax-free lump sum (£122,000 each)
• Begin tax-efficient withdrawal strategy
• Enjoy well-earned retirement! 🎉

---

Quarterly (Every 3 Months):

• Portfolio performance review (client online access)
• Rebalancing if drift exceeds 5% from target allocation
• Market update communication
• Ad-hoc queries as needed

Annually:

• Comprehensive face-to-face review meeting (90 minutes)
• Full financial plan update
• Tax planning review (pre-tax year end)
• Protection needs assessment
• Estate planning check
• Investment strategy confirmation
• Goal progress tracking
• Adjust recommendations as needed

Triennially (Every 3 Years):

• Deep-dive comprehensive review (half-day session)
• Pension fund detailed analysis
• Protection policy re-quoting (ensure competitive)
• Will and LPA review
• Risk profile reassessment
• Long-term projections update
• Tax legislation change impacts

Ad-hoc (As Needed):

• Life events (births, deaths, marriages, divorce)
• Employment changes (redundancy, promotion, career change)
• Health changes
• Inheritance received
• Property transactions
• Legislative changes affecting plan

Client Responsibilities:

• Maintain accurate records
• Inform adviser of life changes promptly
• Complete annual fact-find update
• Review statements quarterly
• Execute agreed actions timely
• Ask questions (no question too small!)

Adviser Responsibilities:

• Proactive communication
• Regulatory compliance (FCA)
• Professional indemnity insurance
• Annual suitability letters
• Clear fee disclosure
• Conflicts of interest management
• Ongoing professional development

---

Track progress against objectives:

Objective	Target	Current	Year 5 Target	Year 10 Target	Year 15 Target
Retirement Fund	£1,287,000	£227,000	£603,000	£952,000	£1,287,000 ✓
Annual Contributions	£20,640	£13,290	£20,640 ✓	£20,640 ✓	£20,640 ✓
Emergency Fund	£25,000+	£15,000	£40,000 ✓	£40,000 ✓	£40,000 ✓
ISA Balances	£308,000	£68,000	£178,000	£248,000	£308,000 ✓
Education Fund	£65,000	£8,000	£50,000	Depleting	£0 (utilized) ✓
IHT Liability	<£120,000	£340,000	£280,000	£180,000	£100,000 ✓
Income Protection	In place	None	In place ✓	In place ✓	In place ✓
Property Debt	£0	£320,000	£0 (BTL sold) ✓	£95,000	£0 ✓

Red flags (trigger immediate review):

• Investment losses exceeding 15% in single year
• Job loss exceeding 6 months
• Health diagnosis affecting insurability
• Divorce/separation proceedings
• Portfolio value decline >10% from target trajectory
• Persistent failure to meet savings targets

---

Recommended Professional Team:

1. Financial Adviser (Lead Coordinator):

   • This report author
   • Ongoing relationship
   • Annual retainer or %AUM fee

2. Solicitor (Estate Planning Specialist):

   • Wills and LPAs: Initial only
   • Update every 5 years or life changes
   • Fixed fee: £800-1,500

3. Accountant (Tax Planning):

   • Optional: If complex tax affairs develop
   • Annual tax return if needed
   • Fixed fee: £500-1,000/year

4. Mortgage Broker:

   • Primary mortgage renewal (2027)
   • No cost (lender commission paid)

5. Protection Specialist:

   • Whole-of-market insurance broker
   • No cost (insurer commission paid)
   • Policy reviews every 3 years

Total Professional Costs:

Year 1:

• Adviser implementation: £2,000-3,000
• Solicitor (Wills/LPAs): £1,300-2,000
• Total: £3,300-5,000

Ongoing (Annual):

• Adviser retainer: £1,500-2,500 or 0.5-0.75% AUM
• Accountant (if needed): £500-1,000
• Total: £2,000-3,500/year

Value provided:

• Tax savings: £6,000+/year
• Investment optimization: +1% returns = £12,000+/year
• Peace of mind: Priceless
• ROI: 300-600% annually

---

12. ONGOING SERVICE PROPOSAL

Option A: Full Ongoing Service

Scope:

• Comprehensive annual review (90-minute meeting)
• Quarterly performance reports
• Unlimited telephone/email support
• Ad-hoc reviews as circumstances change
• Portfolio rebalancing
• Tax planning guidance
• Pension contribution optimization
• Protection review (triennial)
• Estate planning review (triennial)
• Priority access to adviser
• Regulatory annual suitability letters

Fee Structure:

• 0.75% of assets under advice per annum
• Year 1: 0.75% × £1,318,000 = £9,885/year (£824/month)
• Year 5: 0.75% × £1,700,000 = £12,750/year
• Year 15: 0.75% × £2,800,000 = £21,000/year

Or:

• Fixed fee: £3,000/year (increasing with RPI annually)
• Better value if assets grow significantly

Recommendation: Fixed fee for cost certainty

---

Option B: Annual Review Only

Scope:

• One comprehensive annual meeting (90 minutes)
• Annual suitability letter
• Email support (48-hour response)
• Portfolio rebalancing recommendations (client executes)

Fee Structure:

• Fixed fee: £1,200/year
• Increasing with RPI annually

Suitability:

• If client confident executing recommendations
• Lower cost but less support

---

Option C: Ad-hoc / Execution Only

Scope:

• No ongoing relationship
• Client self-manages
• Pay-as-you-go for specific advice (£200/hour)

Fee Structure:

• Hourly rate: £200-300/hour
• Project fees: £1,000-5,000 (e.g., retirement planning)

Suitability:

• Experienced investors only
• Risk of sub-optimal decisions
• No accountability or monitoring
• Not recommended given complexity of your situation

---

Rationale:

• Comprehensive support needed for complex situation
• Fixed fee provides certainty and better value long-term
• Ensures consistent accountability
• Proactive adjustments to changing circumstances
• Worth £250/month for peace of mind and optimization

What You Receive:

Annual Review Meeting:

• Face-to-face or video (client preference)
• Comprehensive plan update
• Performance review vs. benchmarks
• Tax planning opportunities
• Rebalancing recommendations
• Estate planning check
• Protection review
• Adjustments to strategy
• Detailed follow-up report

Quarterly:

• Performance summary (emailed)
• Market commentary
• Portfolio valuation
• Rebalancing notifications

Ongoing:

• Unlimited email support (24-48 hour response)
• Telephone support (book 30-minute slots)
• Ad-hoc reviews if circumstances change
• Proactive contact for tax/legislative changes
• Priority diary access

Triennial:

• Deep-dive comprehensive review
• Risk profile reassessment
• Protection re-quoting
• Investment strategy validation

Contract Terms:

• 12-month initial term
• Then ongoing (cancellable 30 days' notice)
• Fees collected quarterly in advance via direct debit
• VAT not applicable (exempt financial services)
• Annual fee increase: RPI only (capped 5%)

---

To maximize value from ongoing service:

Your responsibilities:

1. Attend annual reviews:

   • Commit 2 hours annually
   • Prepare update on circumstances
   • Bring questions/concerns

2. Respond to communications:

   • Action items within agreed timescales
   • Update adviser on life changes within 30 days
   • Complete annual fact-find accurately

3. Execute agreed strategies:

   • Maintain agreed contribution levels
   • Implement recommendations timely
   • Don't make major changes without consultation

4. Maintain accurate records:

   • Keep statements accessible
   • Track spending (for cash flow reviews)
   • Update asset valuations annually

5. Engage proactively:

   • Ask questions (nothing is silly)
   • Raise concerns early
   • Suggest adjustments if circumstances change

Our commitment to you:

1. Act in your best interests (FCA regulatory duty)
2. Provide clear, jargon-free advice
3. Respond promptly (48 hours for emails, 24 hours urgent)
4. Proactive monitoring (we flag issues, not just reactive)
5. Transparent fees (no hidden costs, all disclosed upfront)
6. Professional indemnity insurance (£5m cover)
7. Regulatory compliance (FCA authorized, annual audits)
8. Ongoing professional development (maintain Chartered status)

---

To proceed with recommendations:

Step 1: Accept Suitability Report

• Sign acceptance on final page
• Confirm understanding of risks
• Select ongoing service option

Step 2: Provide Initial Information

• Complete AML checks (proof of ID/address)
• Provide current policy documents
• Pension fund statements
• Investment platform login details (read-only)

Step 3: Initial Meetings

• Will drafting meeting (solicitor): Week 2
• Protection application: Week 2
• Investment platform setup: Week 3

Step 4: Implementation Begins

• Adviser coordinates all actions
• Regular update emails (weekly initially)
• Client executes specific tasks (payroll changes, transfers)

Step 5: Review Progress

• Month 3: Quick check-in call
• Month 6: Mid-year review
• Month 12: Full annual review

Timeline to Full Implementation: 12 months

Expected Completion of Phase 1: 3 months

---

RISK WARNINGS & IMPORTANT INFORMATION

Capital at Risk:

• The value of investments can fall as well as rise
• You may get back less than you invested
• Past performance is not a guide to future performance

Market Risk:

• Stock markets can be volatile
• Short-term losses of 10-20% possible
• Long-term growth not guaranteed

Inflation Risk:

• Cash holdings lose real value over time
• Returns may not keep pace with inflation
• Purchasing power erosion

Currency Risk:

• Overseas investments subject to exchange rate fluctuations
• Can enhance or reduce returns
• Diversification benefit but added volatility

Interest Rate Risk:

• Bond values fall when interest rates rise
• Fixed income investments sensitive to rate changes

Liquidity Risk:

• Some investments cannot be quickly converted to cash
• Property particularly illiquid
• Early access may incur penalties

Concentration Risk:

• Over-exposure to single asset class/region/property
• Current portfolio: 63% property exposure
• Diversification recommended

Longevity Risk:

• Living longer than projected
• Funds may be depleted in later life
• State pension provides safety net

Sequencing Risk:

• Poor returns in early retirement severely impact sustainability
• Timing of withdrawals matters
• Flexible drawdown helps mitigate

Regulatory Risk:

• Government may change pension tax rules
• Lifetime allowance abolished but could return
• Annual allowance may be reduced
• Tax-free cash may be restricted

Transfer Risk:

• Existing pension schemes may have valuable guarantees
• Protected tax-free cash amounts
• Guaranteed annuity rates (rare but check)
• Transfer only if analysis confirms benefit

Underwriting Risk:

• Medical conditions may result in exclusions
• Premiums may be loaded
• Cover may be declined
• Apply while healthy

Policy Exclusions:

• Pre-existing conditions typically excluded
• Specific activities may be excluded (dangerous sports)
• Critical illness: Specific definitions must be met
• Read policy terms carefully

Premium Risk:

• Reviewable policies may increase significantly
• Guarantee cost certainty where possible
• Budget for potential increases

Claims Risk:

• Definitions must be met for payout
• Income protection: "Own occupation" vs "any occupation"
• Critical illness: Specific severity levels required
• Full disclosure essential to avoid voidance

Tax Legislation Changes:

• Government can change tax rules at any time
• Annual allowances may be reduced
• Tax reliefs may be removed or restricted
• IHT thresholds frozen until 2028 (may extend)

Tax Position Changes:

• Your circumstances may change
• Marginal tax rates may increase/decrease
• Strategies optimized for current rules only

HMRC Interpretation:

• Tax law interpretation can vary
• HMRC may challenge certain structures
• Professional advice reduces but doesn't eliminate risk

Buy-to-Let Specific:

• Tenant default on rent payments
• Void periods between tenancies
• Property damage beyond deposit coverage
• Regulatory changes (EPC requirements, Section 24 tax)
• Interest rate risk on remortgage
• Property value decline
• Forced sale in illiquid market

General Property:

• Lack of diversification
• High transaction costs (5-7%)
• Liquidity constraints
• Maintenance obligations
• Local market fluctuations

Gift Risks:

• Must survive 7 years for IHT exemption (PETs)
• Cannot benefit from gifted assets (HMRC challenge)
• Reservation of benefit rules
• Document thoroughly

Trust Risks:

• 10-year anniversary charges
• Exit charges
• Complex administration
• Trustee responsibilities
• Beneficiary disputes potential

IHT Rule Changes:

• Government may change IHT thresholds/rates
• Residence nil-rate band may be withdrawn
• Exemptions may be restricted

Implementation Risk:

• Recommendations only effective if implemented
• Delays reduce benefits (time in market matters)
• Partial implementation may leave gaps

Behavioral Risk:

• Emotional decisions during market volatility
• Abandoning strategy during downturns
• Over-confidence in bull markets
• Importance of adviser discipline/accountability

Monitoring Risk:

• Lack of ongoing review leads to drift from plan
• Circumstances change requiring adjustments
• Markets change requiring rebalancing
• Ongoing service recommended

---

Firm Authorization:

• Authorized and regulated by Financial Conduct Authority (FCA)
• FCA Register Number: [XXXXXX]
• Permitted activities: Investment advice, pension transfers, protection advice
• Professional indemnity insurance: £5,000,000

Complaints Procedure:

• Contact adviser directly in first instance
• Escalate to Compliance Officer if unresolved
• Financial Ombudsman Service available if not resolved within 8 weeks
• Financial Services Compensation Scheme (FSCS) protection applies

FSCS Protection:

• Deposits: £85,000 per person per institution
• Investments: £85,000 per person per firm
• Insurance: 100% (no limit) for claims after 1/1/2010

Data Protection:

• GDPR compliant
• Data held securely
• Privacy notice provided separately
• Right to access/correct/delete data

Conflicts of Interest:

• Commission disclosed where received
• No inducements accepted that conflict with client interests
• Related party transactions disclosed
• Independence maintained

---

APPENDICES

Investment Growth Rates:

• Balanced portfolio (pensions): 5% nominal, 2.5% real
• Conservative portfolio (university fund): 4% nominal, 1.5% real
• Cash/savings: 4.5-5% (current rates, reducing to 3% long-term)

Inflation:

• General: 2.5% per annum
• University costs: 2.5% per annum (in line with general)

Tax Rates (2024/25):

• Personal allowance: £12,570
• Basic rate: 20% (£12,571-£50,270)
• Higher rate: 40% (£50,271-£125,140)
• Additional rate: 45% (over £125,140)
• Dividend tax: 8.75% / 33.75% / 39.35%
• CGT: 10%/20% (funds), 18%/24% (property)
• IHT: 40% above nil-rate bands

Tax Allowances:

• ISA: £20,000 per person per annum
• Junior ISA: £9,000 per child per annum
• Pension annual allowance: £40,000 (with carry forward)
• Pension lifetime allowance: Abolished
• CGT annual exemption: £3,000
• Dividend allowance: £500
• Personal savings allowance: £0 (higher rate taxpayer)

State Pension:

• New state pension: ~£11,500 per annum (current rates)
• Qualification: 35 years NI contributions
• Age: 67 (client), 68 (spouse) - subject to change

Life Expectancy:

• Male: 87
• Female: 90
• Planning horizon: To age 95 (prudent)

Property:

• House price inflation: 2.5% per annum (conservative)
• Rental income growth: 2.5% per annum
• Void periods: 5% (buy-to-let)
• Maintenance: 15% of gross rent

Employment:

• Salary increases: 2.5% per annum (inflation matching)
• Employer pension contributions: Continue at current %
• Employment to age: 60 (client), 65 (spouse)

---

Income Protection Insurance Illustration:

• Provider: [To be determined - whole of market search]
• Monthly benefit: £4,500 (client), £1,800 (spouse)
• Deferred period: 26 weeks
• Benefit period: To age 65
• Indexation: RPI-linked
• Definition: Own occupation
• Premium: £120/month (client), £45/month (spouse)
• Waiver of premium: Included
• Guaranteed: Yes

Life Insurance Illustration:

• Provider: [To be determined]
• Sum assured: £400,000 (client existing), £400,000 (spouse new)
• Type: Level term assurance
• Term: To age 65
• Premium: £40/month (client existing), £35/month (spouse new)
• Trust: Discretionary trust established
• Critical illness: Separate policy

Critical Illness Illustration:

• Provider: [To be determined]
• Sum assured: £200,000 (client existing), £100,000 (spouse new)
• Conditions covered: 50+ conditions
• Term: To age 65
• Premium: £45/month (client existing), £28/month (spouse new)
• Total permanent disability: Included

---

Investment Platforms:

1. Vanguard Investor - Low cost, excellent for passive investors
2. AJ Bell Youinvest - Competitive fees, wide fund range
3. Interactive Investor - Fixed fee (good for larger portfolios)

SIPP Providers:

1. Vanguard SIPP - 0.15% platform fee, low-cost funds
2. AJ Bell SIPP - £100/year + dealing charges
3. Interactive Investor SIPP - £12.99/month flat fee

Protection Providers (Strong Claims):

1. Legal & General - Market leader, excellent claims record
2. Royal London - Mutual, good value, strong service
3. Vitality - Wellness benefits, competitive pricing
4. Aviva - Comprehensive cover, reliable

Estate Planning Solicitors:

• [Local recommendations to be provided based on client location]
• Ensure membership: Society of Trust and Estate Practitioners (STEP)

---

Pension Information:

• MoneyHelper (government-backed): www.moneyhelper.org.uk
• State Pension forecast: www.gov.uk/check-state-pension
• Pension tracing service: www.gov.uk/find-pension-contact-details

Tax Information:

• HMRC tax calculators: www.gov.uk/tax-calculator
• ISA information: www.gov.uk/individual-savings-accounts
• Capital gains tax: www.gov.uk/capital-gains-tax

Protection:

• Financial Ombudsman claims data: www.financial-ombudsman.org.uk
• FSCS protection: www.fscs.org.uk

Estate Planning:

• Lasting Power of Attorney: www.gov.uk/power-of-attorney
• Probate: www.gov.uk/probate
• Inheritance tax: www.gov.uk/inheritance-tax

General Financial Guidance:

• MoneyHelper: www.moneyhelper.org.uk
• FCA register: www.fca.org.uk/register
• Financial Ombudsman: www.financial-ombudsman.org.uk

---

Annual Allowance: Maximum pension contribution receiving tax relief (£40,000 for 2024/25)

AUM: Assets Under Management - total value of investments managed

CGT: Capital Gains Tax - tax on profits from selling assets

Discretionary Trust: Trust where trustees have discretion over distributions to beneficiaries

Drawdown: Taking income from pension while keeping fund invested

EPC: Energy Performance Certificate - required for property sales/rentals

FSCS: Financial Services Compensation Scheme - protects consumers if firms fail

FCA: Financial Conduct Authority - regulates financial services firms

GIA: General Investment Account - non-tax-advantaged investment account

IHT: Inheritance Tax - 40% tax on estates above nil-rate bands

ISA: Individual Savings Account - tax-free investment wrapper (£20,000 annual allowance)

LPA: Lasting Power of Attorney - legal authority to act if someone loses capacity

NRB: Nil-Rate Band - £325,000 IHT-free threshold

OCF: Ongoing Charges Figure - annual fund management cost

PET: Potentially Exempt Transfer - gift that's IHT-free if survive 7 years

RNRB: Residence Nil-Rate Band - additional £175,000 IHT threshold for main residence

Section 24: Tax restriction reducing mortgage interest relief for landlords

SIPP: Self-Invested Personal Pension - flexible pension with wide investment choice

Sequencing Risk: Risk of poor investment returns early in retirement

---

CLIENT ACCEPTANCE

I/We confirm that:

☐ I/We have read and understood this suitability report in full

☐ I/We have had the opportunity to ask questions and seek clarification

☐ I/We understand the risks associated with the recommendations

☐ I/We understand that investment values can fall as well as rise

☐ I/We understand that this report is based on current circumstances and legislation

☐ I/We agree to inform the adviser of any material changes in circumstances

☐ I/We consent to the recommendations proceeding as outlined

☐ I/We select the following ongoing service option: [ ] A [ ] B [ ] C

Client Signature: _________________________ Date: _________

Spouse Signature: _________________________ Date: _________

Adviser Signature: _________________________ Date: _________

---

Report prepared by:
[Adviser Name], Chartered Financial Planner FPFS
[Firm Name]
[Contact Details]

FCA Disclaimer: This report is issued for the benefit of the named clients only and may not be relied upon by third parties. The recommendations are based on information provided by the clients and assumed to be accurate. Past performance is not a guide to future performance. The value of investments can fall as well as rise and you may get back less than invested. Tax rules are subject to change and depend on individual circumstances. This firm is authorized and regulated by the Financial Conduct Authority.

---

END OF REPORT

---

SUMMARY OF KEY RECOMMENDATIONS

1. Immediate Actions (Next 3 Months):

• ✅ Implement income protection insurance (£165/month)
• ✅ Update Wills and establish LPAs (£1,300-2,000)
• ✅ Increase emergency fund to £25,000
• ✅ Enhance pension contributions (£9,900/year additional, net of tax relief)
• ✅ Complete pension expression of wish forms

2. Short-Term (3-12 Months):

• ✅ Sell buy-to-let property (proceeds: £134,000)
• ✅ Transfer GIA to ISAs (£35,000)
• ✅ Establish university funding portfolio (£50,000)
• ✅ Consolidate pensions to SIPPs
• ✅ Additional spouse life insurance (£400,000, £35/month)

3. Ongoing:

• ✅ Maximize ISA contributions (£40,000/year combined)
• ✅ Annual financial reviews
• ✅ Regular gifting program (IHT planning)
• ✅ Portfolio rebalancing
• ✅ Protection policy reviews

Projected Outcomes:

• Retirement age 60: ✅ Achieved
• Retirement income: £51,000-75,000/year (depending on state pension timing)
• University funding: ✅ Fully covered
• IHT liability: Reduced from £360,000 to £100,000 (72% reduction)
• Protection gaps: ✅ Eliminated
• Tax efficiency: 17.5% reduction in lifetime tax paid

Total Investment Required:

• Year 1 costs: £14,000-16,000
• Ongoing: £360/month protection + £3,000/year adviser fee
• Delivered outcome: Secure, comfortable retirement 15 years early with full family protection

Your financial future is in excellent hands. Let's make this happen together!