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In order to generate £6k min per month, what would you suggest in terms of diversifying the £2m fund into various asset classes to obtain £6k or so per month?

24 June 2022

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Question by Abs

40 years of age and I want to retire in 2 years ideally pursuing other things in my life. If I liquidate my LTD I beleive I can pay 10% entrepreneurs tax and pull the money into my personal name. This will amount to £2m. I need circa £6k a month for my lifestyle including mortgage, children etc. In order to generate £6k min per month, what would you suggest in terms of diversifying the £2m fund into various asset classes to obtain £6k or so per month.


Answered by Jamie Flook

Hi Abs

As long as it's not a non-trading, or a holding company of a trading group and you've owned the business for 2 years, then yes you should be able to claim Business Asset Disposal Relief (formerly known as Entrepreneur's Relief) .

It is important to know that the relief is limited to £1m of gains made, so you may not be able to claim a 10% rate on all of the proceeds. You can read more info here: https://www.which.co.uk/money/tax/capital-gains-tax/capital-gains-tax-if-you-sell-a-business-actbb5t83jnb

If you have an accountant I would suggest letting them know ahead of time, so that they can help you fully understand how you can claim any additional reliefs/add in any investments you've made into the business to ensure the overall gain isn't overblown and therefore taxed at a higher rate over entrepreneur's relief.

A sustainable £6k per month income should be very achievable from a portfolio of investments, as long as you are prepared to take some risk. How much risk is based on a combination of how you feel about taking risk, how much you can afford to risk and how much you need to risk.

For *most* people an investment portfolio with around half, or a little more, in a portfolio of globally diversified shares with the remainder in lower risk assets like bonds/property/infrastructure investments should be suitable.

However, this is about as simplified as I can put it without giving you personalised advice. Given the amounts you are talking about and you now being in position to set yourself up for the rest of your life, getting personal financial planning and advice would likely be a very good investment for you to make.

If you'd like further help with this, I'd be happy to have a chat

Best wishes

Jamie

Answered by

Jamie Flook

Financial Planner

I am a financial planner at Magenta Financial Planning and you can usually find me dividing my time between my home in a village called Claverham, just outside of Bristol, and Bridgend, where the Magenta office is based.