Name: Martin Smyth

Age: 35

Occupation: Manager at a firm of City analysts

The problem: Martin has been in this position for five years and earns pounds 70,000 a year. He owns a property outright, for which he has just received an offer to buy for pounds 150,000. He has savings of just pounds 2,000 after using spare cash to pay off his mortgage.

Martin has no dependents. His father died some years ago and his mother is considering nursing care, but she will be able to meet the cost from her own funds.

Despite his employer offering a contributory pension scheme, Martin has chosen not to be a member because he has become disillusioned with working in the City. He would like to leave his job and move to another part of the UK, running a small management consultancy on a part-time basis.

However, he fears this ambition cannot be achieved, since he does not have sufficient assets.

He contacted his mother's solicitors and accountants to help his adviser sift through his father's papers to see whether he was left anything in the will.

The adviser: Philippa Gee, a partner at Gee & Co, fee-based financial planners at Forester's Hall, 1a Wyle Cop, Shrewsbury, tel 01743 236982.

The advice: Your financial position is far more positive than you thought at first. This reversal in fortune centres around the fact that your father left a series of substantial shareholdings to you.

The holdings, with their present values, are as follows: Shell, 12,300 shares worth pounds 55,400; Cadbury, 9,563 shares worth pounds 54,600; Boots, 9,879 shares worth pounds 81,400; SmithKline Beecham, 11,220 shares worth pounds 62,300; and ICI, 2,059 shares worth pounds 21,300. The shares are worth a total of pounds 275,000.

In addition to the shareholdings, there are two sources of cash. The first relates to your shareholdings. Regular dividends have been paid and your mother's solicitors arranged for the amount to be paid into a bank account in your name.

Fortunately your accountants have always been notified and have provided the relevant information to the Inland Revenue on each tax return so there are no immediate income tax concerns. There is a cash sum in excess of pounds 75,000. The second potential source is your home in London for which you have received an offer of pounds 150,000. You intend to pursue this offer.

Although the cost of living will be lower than in the South of England, and you plan to downsize, an annual income of pounds 15,000 net of tax is not unrealistic.

This should also take account of the fact that for the current tax year you will be a higher-rate taxpayer. As for your management consultancy, you only want this to be on part-time basis, supplementing investment income rather than replacing it.

The effect is that you will need a higher level of income for at least the short to medium term which may then reduce as your self-employed earnings increase. However, the income produced in the meantime must be flexible so that it can continue for longer if required, or be re-invested.

By taking the sum from the sale of the property and the unused dividend account, there is a total of pounds 225,000 for immediate investment.

The pounds 225,000 should be moved to a more competitive account. The funds in the dividend account are available immediately and the property funds can follow upon completion of the sale. Alliance & Leicester offers a competitive monthly interest account, paying variable gross interest of 7.25 per cent on balances above pounds 100,000.

Your shares yield about pounds 6,000 per annum net. It would be easy to keep them: they have performed well in the past. On the negative side, the income could be greater, recent tax changes to dividends will have an effect and the shares are entirely UK-based in large blue-chip companies, therefore not providing you with spread and diversification.

If the shares are sold, any gain made is subject to Capital Gains Tax (CGT). In each tax year you have an allowance so that the first pounds 6,500 chargeable gain is free of tax. This means that for any gain made in the current year over the allowance, you will pay tax at 40 per cent. However in the next tax year, when it is possible that your income will fall into basic rate tax, at least a portion of the gain would be taxed at 23 per cent.

One way of dealing with a portion of the shareholding now would be to take part in a Share Exchange Scheme. This is where you exchange a portion of your shares for an alternative holding such as unit trusts.

While this would not avoid CGT, you would pay no transaction charges on the sale. We have negotiated a deal with a company which would take your shares, sell them on your behalf and invest the proceeds in unit trusts. The company has agreed to make a lower initial charge on the unit trusts, which together with the fact that we would take no commission, means the initial charge is reduced from 5 per cent to 0.5 per cent.

There is another option called Re-Investment Relief. This allows you to re-invest the gain in a suitable company and so defer the CGT liability.

Long-term pension planning is another area for consideration. This is something that will need to be discussed as soon as you know what your next career step is likely to be.

If you want to have a free financial makeover, write to: Nic Cicutti, Free Financial Makeover, The Independent, One Canada Square, Canary Wharf, London E14 5DL. You must be prepared for your name and photo to be used in these pages.