Making Financial Sense

Financial Q&A with Brompton Private Wealth

Morning Coffee
2 March 2023
We caught up with the team at Brompton Private Wealth (Principal Partner Practice of St. James’s Place) and we asked them about reasons for renting rather than buying property in your later years, as well as the benefits of private wealth management. 

Why do many people in the UK primarily consider buying rather than renting a new home, even when they are ‘downsizing’ in their later years? 

Quite understandably, home ownership has for many years and for several generations been a family objective and preference in the UK and therefore as an asset class, family wealth is often largely tied up in property. But if you are thinking about selling your home, there are now some alternative options when considering estate planning, which allow you to hand on as much wealth as possible to future generations. Renting is one of these options which, importantly, allows you to retain financial security and a comfortable standard of living. 

Can renting an apartment through a development such as Auriens help reduce exposure to taxation and in particular, to Inheritance tax? 

Whilst everyone’s circumstances are different, releasing capital by selling a property and then renting can provide tax effective access to ‘income’, whilst also potentially reducing exposure to Inheritance tax (which is currently at a tax rate of 40%). This option presents a number of attractive opportunities in a variety of ways for a family as a whole. 

Can you give us an example? 

If your home has a value of say £5million, your estate may see an Inheritance tax / IHT liability equating to approximately £2million after having taken into account the available IHT allowances. However, through re-investing this capital in diversified and tax effective structures, you may be able to enjoy a tax effective ‘income’, a significant potential reduction in IHT exposure and increased capital values. This would then in turn benefit future generations of your family. 

By way of example, if one were to invest £5million, it could provide a ‘income’ of around £200,000 per annum (i.e. at a rate of 4%) - and importantly, this would not erode the capital base, where annualised investment returns exceed 4%. Then by benefitting from the aforementioned tax effective structures, one could also significantly reduce exposure to Inheritance tax and thus increase the actual value of one’s estate. 

Why should people consider a ‘rental model’ such as Auriens Chelsea? 

It is worth considering Auriens in the context of both looking for an effective way of utilizing one’s wealth whilst also ensuring that you are able to enjoy your later life in a beautiful social environment with the peace of mind that we all aspire to. Auriens represents a wonderful balance between genuine independence and being able to share a social life with like-minded people in a caring, managed community. 

What are the benefits that clients can receive through private wealth management advice? 

Working with a private wealth manager can offer many different benefits including: 

  • helping to maintain financial security and to pass on wealth to loved ones 
  • minimizing administration 
  • creating a financial plan that enables access to tax effective income and capital 
  • reducing exposure to Inheritance tax 
  • providing risk management through genuine diversification in terms investment management approach 

In order to receive a complimentary guide covering, wealth management, retirement planning or Inheritance tax planning, contact Jolyon Hankinson at Brompton Private Wealth by telephoning 020 8042 0055 or emailing 

Auriens will be organising a number of events for residents, families and friends with Brompton Private Wealth (Principal Partner Practice of St. James’s Place). To register your interest or to receive further information, please email or telephone 020 4549 8000. 

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