General guidance - Intelligent Money Private Clients

[Intelligent Money]

Understanding your investment options and how an ISA, Pension or GIA work is only part of the story.

To complete the story you need to understand how these financial tools (together with other options, such as mortgage overpayments) can work to help you achieve what you want to achieve and support your lifestyle and future life plans.

To help you with this we offer full financial and tax guidance. This provides you with all the support you need to fully understand your financial options and make informed decisions about the best solutions for you.

We aim to remove jargon and speak in plain English so you can be confident in the decisions you make.

We will also use our professional expertise and experience to make sure you are aware of tax considerations and the vagaries of the financial world that you may not be aware you should consider.

With the help of our Private Client service we hope that you will be confident and happy to make your own informed decisions about the right way forward for you, which may or may not include IM investment solutions.

This thread is wholly related to answering any questions you may have about financial & tax guidance and the information and guidance that goes behind this.

If your post is not related to general financial guidance, we have four other threads:

• General investments
• Individual Saving Accounts (ISAs)
• Pensions & SIPPs
• Tax (including IHT) Planning

Intelligent Money

[Jockman]

Ok guys, what impact will Corp tax increasing to 25% in 2023 have on the current dividend v salary equation for owner managed companies?

Will it be better to extract money via salary at this point?

[Jockman]

PS the first post was obviously written by Nik. The only thread introduction without spelling errors. Can we please keep Julian away from writing blurb

[JulianPH]

Jockman said:

PS the first post was obviously written by Nik. The only thread introduction without spelling errors. Can we please keep Julian away from writing blurb

You cheeky git.

[JulianPH]

Jockman said:

Ok guys, what impact will Corp tax increasing to 25% in 2023 have on the current dividend v salary equation for owner managed companies?

Will it be better to extract money via salary at this point?

By my calculations divs are still ahead of salary. Nik will be along with a fuller answer.

[JulianPH]

I posted this earlier on the main Vol 2 thread, but thought it might be of interest here:


PH Recovery (PHR) Update

Everyone invested will shortly receive an email from us informing you that we have now sold down 4 more stocks in PHR:


Carnival - Return since launch 87.71%

Meggit - Return since launch 54.79%

Redrow - Return since launch 45.23%

Taylor Wimpey - Return since launch 29.69%


PHR was established to benefit from short term CV19 opportunities. We consider that with just shy of a 60% return since launch 9 months ago (57.55% with no cash reinvestments, to be precise) PHR has fulfilled it's objective in delivering high rewards over a very short investment time period.

With only 4 stocks now remaining and a significant change in the investment landscape since launch, we believe that the opportunity to continue at this pace is heavily diminishing as time passes and the potential for equivalent investment returns going forward are now available within other portfolios.

We basically consider that after the twists and turns since launch we have now hit a sweet spot and PHR investment objectives have been met.

To this extent we are closing PRH to any new investments/reinvestments whilst we put in place a full return of remaining capital to all investors.

Any requests made to date will still be actioned unless you instruct us otherwise.

Cheers

Julian

[Jockman]

JulianPH said:

Jockman said:

Ok guys, what impact will Corp tax increasing to 25% in 2023 have on the current dividend v salary equation for owner managed companies?

Will it be better to extract money via salary at this point?

By my calculations divs are still ahead of salary. Nik will be along with a fuller answer.

Would be useful to get a perspective from Nik.

I would normally add the Corp tax rate to the dividend tax rate before comparing.

[Intelligent Money]

Jockman said:

Would be useful to get a perspective from Nik.

I would normally add the Corp tax rate to the dividend tax rate before comparing.

Hi Jockman

It will defiantly require closer attention following the new Corporation Tax rate in 2023.

Assuming that Income Tax, NI and Dividend Tax rates are as they are now or remain in proportion it will be very heavily dependent in the income that you draw.

Income with the basic rate band:
Taken as Income effective tax rate : 45.80%
Taken as Dividend effective tax rate : 32.50%
Income with the higher rate band:
Taken as Income effective tax rate : 55.80%
Taken as Dividend effective tax rate : 57.50%

Income with the additional rate band:
Taken as Income effective tax rate : 60.80%
Taken as Dividend effective tax rate : 63.10%


The other consideration is who pays the tax, in the case of drawings taken as income the business obviously carries the cost while in the case of dividend income the business will pay the Corporation Tax while the Individual carries the liability for the tax on dividends.
There are instances where the business may prefer to carry the costs and others where the individual may prefer to carry the Tax liability.

A typical financial answer of “it depends” I guess but the new rate will defiantly mean it’s worth reviewing the way you take income from your business

Cheers

Nik

[cloud_dog]

JulianPH said:

I posted this earlier on the main Vol 2 thread, but thought it might be of interest here:


PH Recovery (PHR) Update

Everyone invested will shortly receive an email from us informing you that we have now sold down 4 more stocks in PHR:


Carnival - Return since launch 87.71%

Meggit - Return since launch 54.79%

Redrow - Return since launch 45.23%

Taylor Wimpey - Return since launch 29.69%


PHR was established to benefit from short term CV19 opportunities. We consider that with just shy of a 60% return since launch 9 months ago (57.55% with no cash reinvestments, to be precise) PHR has fulfilled it's objective in delivering high rewards over a very short investment time period.

With only 4 stocks now remaining and a significant change in the investment landscape since launch, we believe that the opportunity to continue at this pace is heavily diminishing as time passes and the potential for equivalent investment returns going forward are now available within other portfolios.

We basically consider that after the twists and turns since launch we have now hit a sweet spot and PHR investment objectives have been met.

To this extent we are closing PRH to any new investments/reinvestments whilst we put in place a full return of remaining capital to all investors.

Any requests made to date will still be actioned unless you instruct us otherwise.

Cheers

Julian

So, this isn't a thread for "General financial guidance" then? I am a little confused, is it for general guidance or is it a sales channel for IM?

I think even IM would agree that it would be fair and reasonable to rename the thread more appropriately if it is going to be used as a sales channel, in order that people have some transparency and know where to appropriately post their queries.

[Simpo Two]

JulianPH said:

Stuff about PHR

cloud_dog said:

So, this isn't a thread for "General financial guidance" then? I am a little confused, is it for general guidance or is it a sales channel for IM?

I think even IM would agree that it would be fair and reasonable to rename the thread more appropriately if it is going to be used as a sales channel, in order that people have some transparency and know where to appropriately post their queries.

PHR can't be 'sold', it's closed!

As for transparency, it would also assist PHers to know who is an IFA. Any IFAs here?

[cloud_dog]

Simpo Two said:

PHR can't be 'sold', it's closed!

As for transparency, it would also assist PHers to know who is an IFA. Any IFAs here?

Seriously, that is what you take away from my post? Oh dear.

I can't help you with your IFA query I'm afraid, I don't know any but, if I come across any I will let you know.

I truly believe in transparency and would like to think IM would also. I have no concerns around them using this thread as they see fit (within the rules), and if all that is required is a renaming of the thread then I'm unsure of the issue TBH.

[markiii]

give it a rest fella

[tighnamara]

cloud_dog said:

Simpo Two said:

PHR can't be 'sold', it's closed!

As for transparency, it would also assist PHers to know who is an IFA. Any IFAs here?

Seriously, that is what you take away from my post? Oh dear.

I can't help you with your IFA query I'm afraid, I don't know any but, if I come across any I will let you know.

I truly believe in transparency and would like to think IM would also. I have no concerns around them using this thread as they see fit (within the rules), and if all that is required is a renaming of the thread then I'm unsure of the issue TBH.

Going by your posts on PH and knowledge on finance /investing in all areas I may come to you rather than an IFA. Great financial knowledge.

[pingu393]

To be fair, clouddog makes a valid point. Perhaps a new thread related to just IM stuff would help, and leave this thread for just general guidance.

I suspect that an IM-specific thread might be against the rules, but it might be worth considering.

[Jockman]

Intelligent Money said:

Hi Jockman

It will defiantly require closer attention following the new Corporation Tax rate in 2023.

Assuming that Income Tax, NI and Dividend Tax rates are as they are now or remain in proportion it will be very heavily dependent in the income that you draw.

Income with the basic rate band:
Taken as Income effective tax rate : 45.80%
Taken as Dividend effective tax rate : 32.50%
Income with the higher rate band:
Taken as Income effective tax rate : 55.80%
Taken as Dividend effective tax rate : 57.50%

Income with the additional rate band:
Taken as Income effective tax rate : 60.80%
Taken as Dividend effective tax rate : 63.10%


The other consideration is who pays the tax, in the case of drawings taken as income the business obviously carries the cost while in the case of dividend income the business will pay the Corporation Tax while the Individual carries the liability for the tax on dividends.
There are instances where the business may prefer to carry the costs and others where the individual may prefer to carry the Tax liability.

A typical financial answer of “it depends” I guess but the new rate will defiantly mean it’s worth reviewing the way you take income from your business

Cheers

Nik

Thanks Nik. I agree that there are still some variables at play here but I just wanted confirmation that the decision to increase Corp tax rates is going to pose challenging questions to those of us who have simply taken it for granted that dividends were the optimum route.

[SpunkyGlory]

I have been thinking about seeking out an FA for financial guidance, primarily around investments and pensions and ensuring I'm maximising opportunities and tax breaks etc. But my minimum investment is significantly(!) less than £100k, is this guidance that I would still be able to get from IM?

[Mr Pointy]

SpunkyGlory said:

I have been thinking about seeking out an FA for financial guidance, primarily around investments and pensions and ensuring I'm maximising opportunities and tax breaks etc. But my minimum investment is significantly(!) less than £100k, is this guidance that I would still be able to get from IM?

Yes, you don't have to be a PH client in order to have a chat with Nik. If you do decide to invest with IM the £100k minimum is waived for PH members.

[Intelligent Money]

SpunkyGlory said:

I have been thinking about seeking out an FA for financial guidance, primarily around investments and pensions and ensuring I'm maximising opportunities and tax breaks etc. But my minimum investment is significantly(!) less than £100k, is this guidance that I would still be able to get from IM?

Hi,

As Mr P has said very happy to help if we can, wether you become a client or not, and there is not minimum for PH'rs.

Drop me an e-mail at [e-mail] if you want to get in touch

Cheers

Nik

[dingg]

Just did a quick calculation as its a year since we transferred pensions and most isas to IM.

Quite pleased to see total assets under management have increased by 22.2% over the year :-)

[Simpo Two]

Regular readers will be aware of the Modified Dietz Method of calculating growth, and know that it regularly wins the award for Most Nonsensical Figure.

Today however it has been firmly knocked into second place by my bank's sharedealing page, which states that my RDSB shares have grown by a whopping 20,755,300%!