Morfitt's Mailshot Issue 10...          Can't see this email properly? View in browser

Morfitt & Turnbull

Issue 10   

Mulligan's Musings...
So after ten years of being regulated by the much maligned Financial Services Authority (FSA) it has been abolished and replaced by three shiny new bodies – a prudential regulator for the banks, insurance companies and the like – a financial policy committee at the Bank of England to give large scale industry oversight – and the Financial Conduct Authority (FCA) who will now be the new sheriff in Dodge City!
What does the change mean then?.... Well not too much of a difference to start with as the FCA take over from where the FSA ceased but they will have greater powers and will look at integrity and consumer protection (which sort of sounds familiar)... As we know, time will tell how this will all shape up! Here's a timeline to show how we have been regulated over the years M&T have been in existence:          FCA Logo
1971- 1986: Regulation is patchy with very little in place until The Gower Report of 1984 proposes a new regime of investor protection and financial regulation
1986: SIB (Securities & Investments Board) created with several self-regulating organisations under it including FIMBRA (for advisers) and LAUTRO (for insurance companies)
1997: Chancellor Gordon Brown announces plans to replace SIB with the FSA (Financial Services Authority)
1998: Banking supervision passes to the FSA
2001: FSA powers and responsibilities are made an act of law
2004: Mortgage business is FSA regulated alongside banking, insurance companies and financial advisers
2006: FSA launches the Retail Distribution Review (RDR) to "enhance consumer confidence in the retail investment market"
2010: Chancellor George Osborne announces FSA replacement plans
2012: RDR becomes effective at the end of the year
2013: FCA (Financial Conduct Authority), PRA (Prudential Regulation Authority) and FPC Financial Policy Committee) come into effect to replace the FSA
This means that of course you are safe in the hands of M&T knowing that regulation is top notch... ahem, well you've always know you've been in safe hands with us anyway really!


Adam’s Technical...  IHT to pay? I would rather not!
In previous issues Adam has been good enough to give a bit of techie background as to how we can plan to ease any potential Inheritance Tax (IHT) burden... It's always useful to have a practical example to demonstrate this, which is what he has kindly done for us right here...

One item from the recent budget is that the threshold a person's estate has to reach before it is liable for IHT is remaining at £325,000 (or £650,000 for a married couple) until at least April 2019. This means an increasing amount of people will leave a tax bill on death. The tax rate is 40% on assets above the threshold.
Take Mr & Mrs Adams who have a total estate of £1,000,000 made up of their £500,000 home and £500,000 on easy access. If they were both to pass away tomorrow the total IHT bill would be £140,000. This is calculated as £650,000 IHT free and the remaining £350,000 taxed at a rate of 40%.

As we have seen in previous issues, one way of reducing the IHT bill can be solved by giving money away to family and friends by using a Discounted Gift Trust (DGT). Let's see how this works with Mr & Mrs Adams...

Of the £500,000 in easy access assets they decide to put £200,000 into a DGT, part of which is immediately out of the estate (known as the "discount") and the remainder has to wait seven years (known as the "gift"). So how do you calculate the discount, I hear you ask???

Mr & Mrs Adams will make withdrawals from the DGT of 4½% (£9,000) per annum, which has a capital value calculated by the insurance company based on their age and health. In this example we have assumed they calculate it to be £90,000. This is the discount.

This means that the balance of £110,000 has to wait for seven years to fall out of the estate. This is the gift.

So, for the purposes of this example, let us assume that they both pass away fifteen years after the DGT was set-up. The tax bill if no action is taken would be £140,000, as detailed earlier. To keep it simple I will assume the figures are the same at the time of death, although any growth is outside of the estate for IHT as well. The estate is now valued at £800,000 (£1,000,000 minus the £200,000 in the DGT) and tax bill is £60,000 – a reduction in IHT payable on their estate of £80,000.

This simple example is to illustrate how one area of planning can reduce IHT. There are other options available and if you would like to discuss in more detail, please contact your usual Adviser.

Gareth Says... 
Starting early gives greater potential - the new ISA season!
A new tax year means a fresh opportunity to shelter savings into ISAs, as Gareth highlights here...
"Markets have moved in a positive way over the last few months with the FTSE100 growing by 15% since the end of November last year. The tax efficient growth within an ISA can be magnified further by investing earlier in the tax year to give a longer growth timespan. As always M&T look for strong areas to invest in and at present would highlight Japan as the market with huge potential. Their market peaked at 40,000 in 1989 and is currently at 13,800 after being 9,000 in October! It will not suit everyone but all investments will continue to be monitored the M&T way and you should contact us to discuss where to invest that is correct for yourself."

Staff Matters - M&T goes international!!!

We like to keep you up to date a little bit on what the busy bees within the office get up to so you may be interested to know that throughout 2013 we will be recharging our batteries in the following locations...

  • Caribbean islands
  • Portugal
  • Cyprus
  • Jamaica
  • Lake District, UK
  • Menorca
  • Majorca
  • Orlando, USA
  • Benidorm
  • Las Vegas, USA
  • Tenerife
  • South Africa
  • Paris, France well as Gareth's golfing jaunts to Ireland and Scotland of course!!!


No. 1 Booths Park, Chelford Road, Knutsford, WA16 8GS
Tel: 01565 624 370   Email: 

Morfitt and Turnbull (Management Services) Limited 
Authorised and Regulated by the Financial Conduct Authority.
Registered Number 740613 England

This email was sent on behalf of Morfitt & Turnbull by 2ndimpression. If you do not want to receive email updates in the future, please send an email to