Morfitt's Mailshot Issue 11...          Can't see this email properly? View in browser

Morfitt & Turnbull

Issue 11   

Mulligan's Mental Maths!!!
So summer is finally here and just in time for Wimbledon - and instead of listening to facts such as the last British winner of the men's singles, how about the fact that the poor old tennis players are getting taxed on their prize money based on their worldwide income?! This made me think of how the tax laws are different around the world and got me looking into some strange ones past and present... Yes we all remember the proposed pasty tax from just last year!

Here are a few to ponder - and may make you think the ones we have aren't so strange after all...
  In Ancient Egypt, cooking oil was taxed – and you had to buy it from the Pharoah!
  Ancient Rome allowed slaves to pay a fee for their freedom - but the government taxed the fee!
  Beard Tax was introduced by King Henry VIII in 1533 for everyone with a beard - even though he had one himself!
  Another one from England is window tax from 1696 which was based on numbers of windows in a house - the financial advisers of the time advised tax planning by building houses with less windows - genius!!!
  In France, the introduction of a salt tax was a contributing factor to the French Revolution!
  Canada created a Chinese Head Tax placed on the entry of Chinese immigrants – this was removed in 1923 when the law changed to ban Chinese people entering Canada altogether!
These are a few historical taxes and I haven't even touched on America yet - I think this is something we will no doubt come back to in future issues including a look at ones that still apply today...


Adam’s Technical...  Spousal By-Pass!
Now I know this sounds like some sort of "marriage lobotomy" but of course that is not what Adam means at all - it's another look at tax savings, particularly when it's a large pension fund or death in service payout that could be subject to Inheritance Tax (IHT). Please read on...
If a person dies before taking their pension then the entire fund is normally paid out to beneficiaries free of IHT. A nomination form shows who the person wants the lump sum to go to, however the trustees retain absolute discretion and it is this discretion that allows the lump sum to be paid free of IHT. It is very common for the payout to go to a surviving spouse but this causes an issue for that spouse in that their total estate increases and could therefore lead to an IHT liability on second death.        

The obvious answer is to nominate an alternative beneficiary other than the spouse but what if that spouse needs access to some of the payout?

The answer is to set up a trust, called a Spousal Bypass Trust, and nominate it as the beneficiary. The lump sum is paid into the Trust which protects it from IHT as it does not form part of the surviving spouse's estate. If it is set up as a discretionary trust then it allows for a wide range of beneficiaries and the spouse may be loaned money from the Trust interest free. This is then repaid to the Trust on death which has the effect of reducing their estate further for IHT purposes!
         Let's look at an example...
William and Kate have joint assets, including their home, valued at £600,000. William has a pension fund of £200,000 in addition, which is paid as a lump sum on death. Remember there is no IHT paid on first death when the estate goes from spouse to spouse and both of their allowances (£325,000 each – and this is fixed until April 2019) can be used on second death.
So if William falls off his polo horse and comes to an early demise then all assets go to Kate, which are the £600,000 joint assets PLUS the £200,000 pension fund. If Kate is then unfortunately suffocated by a falling Beefeater hat then her total estate is £800,000. The figures below show what happens with and without a Spousal Bypass Trust:
  No trust Spousal Bypass Trust
Estate value £800,000 £600,000
Trust value nil £200,000
Total value for IHT £800,000 £600,000
 -IHT allowance - £650,000 -£650,000
IHT due on this amount £150,000 nil
IHT payable £60,000 nil
There is a potential saving of £60,000 with a bit of planning! Of course the higher the pension value, the greater the IHT saving. As mentioned above, this is also available for death in service benefits such as those where a lump sum of 4 x salary is paid.

To discuss this further please contact your usual Adviser.

Gareth Says... 
Come and have a go if you think you're good enough!!!
It's that time of year again when the new football season approaches and as you know there is the
M&T Fantasy
Football League

Please join in as this is a bit of fun, no cost, some prizes and try to stop me winning it 3 years running!!!

As an added incentive, this year there are two prizes - £100 for first place and £50 for second - so get involved!!!

If you wish to participate then please email and you will receive easy to understand instructions on how to join - good luck everyone!

Staff Matters - Grey Matter

The longevity of M&T is the cornerstone of the firm, which gives client such assurances that we will be there for the long term.

Another factor has to be the depth of knowledge. So that you know, the experience for the Advisers in the firm totals a staggering 87 years of industry experience - and before you think half of that is Gareth, here is the breakdown...

  • Gareth - 31 years
  • Stuart - 24 years
  • Martyn - 20 years
  • Adam - 12 years

 It just goes to show that with all those years, perhaps we know a thing or two!...



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