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Case Study 3 – Tax efficient income:

Douglas used to work at a large fund management company. When he left retained a substantial number of shares with the company – which produced dividends of approximately £32,000 per annum.

He also had a large SIPP worth over £9 million, property worth £2million and non-pension assets (OEICS and ISAs) worth £2.7m.

Douglas’ wife has no income in her own name.

Douglas wanted to take income from his SIPP but did not want to pay the 60% effective income tax rate that wold apply if he took income between £100,000 and £122,000 – nor did he want to pay 45% income tax if he took income over £150,000.

So – we advised them to:

  • Switch the shares to Sheila’s name- where she would pay tax at 7.5% (this would be 32.5% if Douglas retained the dividend income)

  • Douglas to withdraw only to a maximum of £100,000 from his SIPP thus retaining his personal allowance and paying an effective rate of tax of 29.7%.

Any additional income could be generated from non-pension assets making use of capital gains tax and ISAs.  Sheila would pay capital gains tax at 10% and Douglas at 20% - both currently lower than income tax.

In addition to saving income tax – Douglas is preserving his pension fund which will create a substantial legacy (potentially £9m) for his family which can be paid with no inheritance tax.

Douglas is aware that the property and non-pension assets could give rise to a substantial IHT bill if left to his family.


Taking regular expert financial advice has allowed Douglas and Sheila to provide themselves with a very tax efficient income and also to create a substantial legacy for their family – of which potentially £9m will be free of IHT.

The purpose of this case study is to provide technical and generic guidance and should not be interpreted as a personal recommendation or advice. Any tax treatment depends on the individual circumstances of each client, Tax Planning is not regulated by the FCA. You may not get back the full amount of your investment.

Please note:

Rates of tax and the legislation that governs them are subject to change, and this information was only accurate at the time of writing.

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“The moment my husband and I met Douglas we knew he and his team were the right advisory firm for us. 336FM are extremely professional. We are always confident in the decisions we make as a result of the practical, easy to understand advice they give that’s personal to our circumstances. When we leave their office we feel happy about the actions we’ve taken and our financial future. We’ve been pleased to recommend them to our family and friends.”


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