Portfolio Management
Case Study 1
Mr X, originally from the UK, has been an expat for the past seven years has a portfolio worth GBP 340,000. This was managed by a well known, international wealth management firm and is currently invested in individual stocks in the UK and US.
Mr X is planning on returning to the UK in two years time and is concerned about the tax liability he may incur when he becomes a UK resident. In addition, when we factor in his property and other worldwide assets his estate is well over GBP 1m (although he is not aware of the IHT implications yet).
Mr X is currently paying a 2.5% per annum for the management of his portfolio, in addition to any dealing and custodian charges. The shares are currently held in a nominee account in London. The first issue he should consider is that he has passed the five year deadline whereby he is no longer liable to CGT when he repatriates. Therefore when he becomes a UK resident, any changes that are made within the portfolio would be assessable under UK capital gains/income tax.
Secondly, the portfolio he holds is heavily concentrated in the UK and US and this is not really what we would call 'diversified'. As such, MONTPELIER would regard this as a fairly aggressive portfolio.
Thirdly, his IHT problem will not go away. With some simple planning this can be significantly reduced, if not mitigated entirely.
By contacting MONTPELIER, we were able to restructure his entire portfolio in such a manner that allowed him to retain some of the existing holdings in an offshore wrapper. This wrapper will allow any changes made to the portfolio to be done so with no liability to tax . The portfolio was spread across a diversified global equity portfolio, encompassing our 'core satellite approach'.
In addition, Mr X has no future need for the funds and he has significant assets elsewhere. For a small administration charge, we were able to arrange the wrapper in such a manner that allowed the entire amount to be removed from his estate over the course of the next seven years, saving GBP 136,000 in Inheritance tax.
