Helping a successful entrepreneur transition his wealth into a diversified, long-term portfolio

Background

Our client, 46, is a technology entrepreneur. He and his wife have been resident in London for the past 7 years and have two young children who were born and attend school in the UK. They are Australian citizens, deemed “non-domiciled” UK residents for tax purposes. Following the sale of a business several years ago, the client has a shareholding of over £5 million in a UK-listed company. He now invests in and advises early stage technology companies. The couple own a house, mortgage-free, in London. Other assets, including pensions and taxable savings and investments are worth circa £1 million. 

Client need

The client was increasingly concerned that so much of his family’s wealth was tied up in a business over which he had no control. He was looking to reduce his shareholding in order to fund new technology investments, while also building a diversified, long-term investment portfolio to provide income in later life. He intended to retain his UK residency status for the foreseeable future and wanted to ensure that his investments are held in the most tax-efficient manner.

Our solution

We developed a strategy to reduce the client’s exposure to the listed business, taking into account available tax reliefs and likely capital gains tax liabilities. We arranged for the transfer of the client’s shareholding into our custody in order to execute the strategy in a market-sensitive fashion.

Approximately half of the disposal proceeds were invested in a long-term growth portfolio comprising direct equities and collective investment funds. We also transitioned existing savings and investments, including the pensions, into the new investment strategy. 

We worked closely with tax advisors in both Australia and the UK to ensure that the client’s assets were structured to ensure tax efficiency, keep costs down and respect investment restrictions. The portfolio was held in custody with our Channel Islands’ subsidiary, allowing the client to protect the tax and planning flexibility of his “non-dom” status.

 

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This strategy was based on our understanding of prevailing tax legislation at the time and should be reviewed on a regular basis in light of changes in legislation and personal circumstances.

This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. 

Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.

This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.

All data contained within this document is sourced from Cazenove Capital unless otherwise stated.