Getting an income from your investments
Invest now to retire early
Keen to invest for his future, Ben has used part of his savings and some inheritance money to build up an investment portfolio. Recently, the income he’s made on these investments has pushed him into a higher tax bracket.
As Ben plans to retire early at 55, he wants his investments to become more tax-efficient and pay him a regular income until he receives his pension at 67.
Tax-efficient investing
Ben discusses his options with an adviser and decides to move a large part of his portfolio into our Premiere Account. As it’s an international investment bond, any growth on his investments will be tax-efficient because his adviser makes sure that he invests in funds which mean he won’t need to pay any UK income or capital gains tax whilst the money is invested.
Plugging a shortfall in income
As planned, Ben finishes work at 55. To boost his income, he takes advantage of an allowance which lets him withdraw 5% of his original investment each year without having to pay any immediate income tax. These withdrawals are treated as a return of capital which means they’re not taxed as income.
This flexible, tax-efficient way of withdrawing money means Ben can top up his income as and when he needs, until he receives his pension at 67.
What are the risks?
The value of your investment can go down as well as up and you may get back less than you invest. The way investments performed in the past is not a guide to how they’ll perform in the future.
Tax rules depend on individual circumstances and may change. Speak to an adviser, if you need more information on tax.
