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How to spend £100,000 per annum and pay 2% tax

By David Norton - June 17, 2021

Are you thinking of repatriating to the UK at some point?

You’re one of many.

However, structuring your finances now is key to making the most of your offshore wealth later.

Many leave this too late and end up giving away a large portion of their wealth to the tax man.

Something that’s easily avoided, given time and proper planning.

We have 1000s of clients who live and work overseas.

They spend years, even decades, building their wealth offshore to enjoy back home when they retire.

Typically our clients are with us for about ten years which allows us to help them build and preserve their wealth.

While ensuring they’re properly set up to enjoy that wealth when they need it.

To illustrate this, here’s a case study.

Clive and Clara are repatriating to the UK after several years of living in the Middle East.

Clive is 52 and works in the Oil & Gas industry.

He intends to continue working and hopes to retire at the age of 65.

His current salary is £130,000 per annum.

Clara is 51, a housewife and unlikely to return to employment.

They are unsure of what their expenses will be when they reach retirement but want to ensure their offshore wealth remains tax efficient.

They have accumulated £350,000 in an offshore banking and investment platform.

When they came to us, their main concern was how to structure their finances in the most tax-efficient way possible to provide a retirement income.

Considering the range of tax wrappers which could be used, we recommended the following:

Existing Banking & Investment Platform

  • Prior to returning to the UK, sell down all investments to cash.


  • Each open an individual stocks & shares ISA.
  • Contribute £20,000 each to their respective ISAs (annual allowance 2021/22) and each year thereafter until retirement.
  • Invest using a portfolio which is aligned with their attitude to investment risk and longer-term financial objectives.

Pension Contributions

  • As Clive earns over £100,000, if his adjusted net income is over £100,000 his Personal Allowance will be reduced by £1 for every £2 earned over £100,000.
  • Clive should make contributions to pensions up to the annual allowance of £40,000, or relevant earnings, whichever is lower. Since he has had a UK pension for some time, he is able to carry forward unused allowance from previous years. This allows him to contribute more to his pension and obtain income tax relief which can: 
    • Effectively reduce his adjusted net income.
    • Reduce income to under £125,000 enabling him to reclaim part of his allowance.
    • Enable him to reclaim the full personal allowance where adjusted net income is reduced to £100,00 or less.
  • Pension contributions should also be considered for Clara. Up to the £3,600 per year can be contributed on behalf of non-workers and low-income earners.

General Investment Account (GIA)

  • Open a General Investment Account, on a joint basis.
  • Invest using a portfolio which is aligned with their attitude to investment risk and longer-term financial objectives.
  • Utilise their £2,000 per person dividend allowances and £1,000 savings allowance (this is reduced to £500 for higher rate taxpayers), each per annum.
  • Use the GIA to fund the ISA each year until retirement, making use of the £12,300 each, capital gains allowances.


Growing their assets by contributing to ISAs and pensions on their return and until retirement, means that income and gains from the ISAs can be withdrawn tax-free.

Income from other assets such as property and pensions could be realised up to the personal allowance, meaning they would not be liable to income tax up to £12,570 (in the tax year 2021/22).

So £25,140 as a couple, could be drawn each year with no liability to tax.

In addition, by setting up the General Investment Account, gains could be realised up to the annual exempt amount for capital gains tax.

This could produce £12,300 each - £24,600 without a tax liability.

Plus, an additional £2,000 each in dividends within the dividend exemption, and a further £1,000 each (or £500 for a higher rate taxpayer) of interest, gives a further tax-free income of £6,000 (or £5,500).

Interest-producing assets could also be used within the GIA, allowing the starting rate for savings of £5,000 to be utilised.

The starting rate for savings is available to those whose non-saving income and savings income, added together, is less than their personal allowance, plus £5,000.

For example, assuming you qualify for the full personal allowance of £12,500, you could benefit from the starting rate for savings, if your total taxable income is less than £17,500.  

This means, the income of £65,740, plus income from an ISA, could be generated without a liability to tax.

Additionally, if you were to utilise a General Investment Account you could potentially draw gains above your capital gains allowances and only be subject to 10% capital gains tax (for a basic rate taxpayer), rather than taking income from a pension and being taxed at your marginal rate.

It’s important to note that unless the investments are held within a pension or a trust, they will form part of your estate for inheritance tax purposes.

Other considerations

Entitlement to certain state benefits and the amount received depends on your National Insurance Contribution (NICs) record. In some cases, it depends on your spouse’s or civil partner’s contributions.

Usually, you will start paying National Insurance again if you work in the UK. If you did not pay it while you were abroad, via voluntary contributions, you can check your record by visiting www.gov.uk/check-national-insurance-record.

Structuring your wealth to be as tax-efficient as possible, not only requires an in-depth understanding of the financial landscape in the UK but also a lot of time.

That’s time I’m sure you do not have as a senior international executive.

Or, time you’d rather spend doing something you actually enjoy.

By having a financial planner manage this for you, you could save thousands of pounds.

Not to mention, it can save you from the stress and overwhelming anxiety of trying to do this yourself.

After all your years of hard work and sacrifice to get and keep the life you want…

You owe it to yourself to make sure your wealth remains your own.

You don’t want to be a deer in the headlights when the taxman knocks on your door back home.

We fit broken portfolios - Sam (blue)