Growing wealth outside the business

Growing wealth outside the business

All businesses are unique and demand a particular set of skills. But a very different set of skills is needed to grow and manage wealth outside the business.

Changes in dividend tax

For business owners, the recent hike in personal income tax rates on dividends may be the trigger to start building and positively managing non-business wealth.

Many successful privately owned businesses have distributed surplus liquidity from the business to the owners, typically through dividends.

Although this may have helped to meet personal living expenditure, it has always - because of the leakage of higher rate income taxes - been an inefficient route for accumulating investible non-business wealth.

Family investment companies

These vehicles can provide an alternative route to extract surplus liquidity from the business without incurring income tax, with value remaining in a company shell. 

Helpfully, they can support a family’s personal and non-business financial objectives and are relevant to property and portfolio investment, cash management or indeed almost any activity. They can also be structured to meet specific aims for different family members.

Such separation of business and non-business wealth means new skills and advisers can deal with personal finances without disturbing the main business adviser. Meanwhile, the business pursues its own agenda for development, succession or sale.  

Such family investment structures, and other non-business wealth arrangements including OEICs, private unit trusts and personal trusts are worth consideration; we have assisted many families with them.

Being dedicated to owners and their business entities, we have experience in all aspects of private wealth management, yet equally, we understand the importance of strong relationships through understanding personal and family objectives.

John Hodgson, partner, Smith & Williamson
T: 0121 710 5200
E: john.hodgson@smith.williamson.co.uk
W: www.smith.williamson.co.uk

Smith & Williamson LLP Regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. A member of Nexia International

Disclaimer

By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing. The tax treatment depends on the individual circumstances of each client and may be subject to change in future.

The word partner is used to refer to a member of Smith & Williamson LLP.