Tax and the Wealth Cycle

Jenny Akirgg, Director, Equiom Tax Services, discusses the four-stage ‘lifecycle’ to wealth; from initial wealth generation to legacy planning - highlighting the relevance of tax at every stage. 

Stage 1 - Wealth Generation: from owning a business, inheritance or perhaps an unexpected windfall. 
Tax considerations can include: company tax, VAT compliance, employer tax, profit extraction, and personal tax compliance.

Stage 2 - Asset Protection: from external factors such as family, divorce, and other creditors. 
Tax considerations can include: capital gains tax, income tax, restructuring tax implications, inheritance tax, and VAT.  Being compliant with tax legislation protects from unnecessary penalties and interest on top of the tax liabilities, which erode wealth.

Stage 3 - Succession Planning: how to pass on wealth to future generations, perhaps via a trust, or transferring business to successors.
Tax considerations can include: inheritance tax, income tax, capital gains tax, trust tax, profit extraction from wealth generation company, company tax, VAT.

Stage 4 – Legacy: philanthropic giving or providing for communities. 
Tax considerations can include: personal tax implications e.g. reliefs to be gained from.

The stages above are simplistic and don’t necessarily follow in the order given and so there is additional tax complexity when considering the interaction of the different stages at the same time.  In addition, wherever there are cross-jurisdictional considerations, the tax complexity increases again.

Whatever stage an individual is in, tax obligations must remain top of mind. For further information and advice, contact Jenny Akrigg at jennyakrigg@equiomgroup.com.

This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The article cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Equiom to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.