Stephen doesn’t exist. But if he did this would be his story of how we helped him achieve a tax free income of £35,000 per annum..When we first met Stephen everything was great. Having just turned 55 he was looking forward to his final 10 years working for the Government. His final salary pension at 65 was going to take care of all his living costs. His state pension at 66 was going to fund the nice things in life – like the international travelling he’d always wanted to do.Then he was made redundant. Just like that. With a financial plan a little over 6 months old we needed re-assess and re-build Stephen’s financial future. Stephen was very concerned about what the future looked like. The worry was beginning to make him unwell.Fortunately we were able to help.Stephen had been a conscientious saver and investor over the years and built up a healthy level of assets. He had a £200,000 personal pension, an Isa portfolio of £150,000 (with a 2% yield), share portfolio of £100,000 (with a yield of 5%). His redundancy payment, along with existing savings left him with £100,000 in cash deposits (paying 1% interest). He had invested £100,000 into an investment bond 16 years ago which was now worth £200,000 and from which he had not taken any withdrawals.We sat down with him and established that he needed a net income of £35,000 per annum for the next 10 years. At 66 until his significant final salary pension and state pension commence at 66. He has no other income.Withdrawals and income from his pensions, ISAs, collective investments, dividends, bank deposits and investment bonds can all be structured so that they work together to deliver significant tax efficient income.We suggested Stephen phases his pension benefits over 10 years. By crystallising £20,000 of pension each year he would receive £5,000 from tax free cash each year. In addition, he also agreed to take income withdrawals from his pension of £11,000 per annum to use up his personal allowance.We amended his ISAs on to pay out the income received. This would provide £3,000 tax free income. ISAs are free of income tax on income payments out and free of capital gains tax when capital is withdrawn.His share portfolio was paying dividends of £5,000 per annum. The good news was that dividends from these holdings were now being paid gross and the 10% tax credit (having been abolished on 5th April 2016) had been replaced by a £5,000 dividend allowance.From 6th April 2016, Stephen’s interest from his bank deposits was paid gross. Additionally, non-tax payers and basic rate tax payers have an additional £1,000 personal allowance for their interest. Stephens bank interest would give him additional tax free income. This is allowance would be reduced to £500 if his income strayed above the higher rate tax threshold.Stephen was entitled to withdraw 5% per annum of the original investment from his investment bond. This unused withdrawal entitlement had “rolled up” meaning Stephen could withdraw £80,000 (5% of £100,000 x 16 years) without a tax penalty. We decided to phase it over the next 10 years taking 10% per annum to generate £10,000 per annum.This was really good news for Stephen. This is what his annual income looks like:Pension tax free cash£5,000free of taxPension withdrawal£11,000within personal allowanceISA income£3,000ISA withdrawal free of income taxDividends£5,000within dividend allowanceInterest£1,000within interest personal allowanceInvestment Bond£10,000 within 5% withdrawalTotal £35,000Stephen was delighted. More importantly the peace of mind of knowing he has 10 years tax free income in place has given him a new lease of life. He’s planning on going to college to do an IT course to update his skills with a view to volunteering at the Citizens Advice Bureau.Helping Stephen wasn’t just about tax. Once disaster had struck it was our application of financial planning principles coupled with our understanding of tax treatment of Stephen’s financial products that enabled us to create a great solution – and a brilliant outcome – for Stephen.