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Morfitt & Turnbull
 

Issue 16   

M&T - Money & Tax???
As we have just passed the latest Budget announcement (see Adam’s bit below for more of the detail) it’s fair to say that the Chancellor tends to focus on tax and when it comes to looking at this, most people initially seem to look at Income Tax, as it is the income we have that keeps us in the lifestyles we become accustomed to... so I thought it would be interesting to look at some of the history of Income Tax in the UK and how we currently compare to overseas tax rates.

When I arrived in the world back in 1973 the highest rate of Income Tax in the UK was 75% and below shows how that top rate has changed over the intervening years:
Years applying   Top rate of Income Tax
1973 - 1974    75%
1974 - 1979   83%
1979 - 1988   60%
1988 - 2010   40%
2010 - 2013   50%
2013 to date   45%
        
At present, the tax rates in force show that there are 17 countries or tax jurisdictions around the world that have a higher top rate than the UK and here they are to the right (because I know you will want to know!!!):

There's Australia, China, France and Germany that share our 45% top rate too! Some interesting stats there I think you'll agree!

Martyn
            59%      Aruba
    57%   Sweden
    56%   USA
    55%   Belgium
    54%   Portugal
    52%   Israel, Netherlands and Spain
    51%   Denmark and Finland
    50%   Austria, Canada, Cuba, Japan and Senegal
    48%   Norway
    46%   Iceland
       
        

How's Your Tax Planning? 
  So with the above in mind, it's always worth making sure income is being received in the most tax efficient manner and that starts with where the money is invested in the first place – the main considerations are ISAs, Investment Bonds and Pensions, all of which have their tax advantages.

It's always worth thinking about where you putting in and how you are taking it out – if you aren't sure whether you're doing this in the most tax-savvy way then speak to your usual Adviser here at M&T.

Adam's Technical...  
Now the dust has settled, here’s our take on The Budget!
 
There were a few shock announcements for the finance folk in the latest budget. I’ll highlight these first along with a couple of other points I feel noteworthy.
  
  The New Individual Savings Account, which in honour of financial acronyms will be termed the “NISA”, will have an investment limit of £15,000 from July until the end of the 2014/15 tax year. The limit until July is £11,880 up from £11,520.

From July the full amount can be allocated to cash (this used to be 50% of the limit) and transfers can take place back and forth between cash & equities.
  The Budget proposed that from April 2015 pension funds invested in defined contribution plans will be accessible from age 55, with no restrictions on how the monies are taken. It will be possible to take the maximum tax-free lump sum with the remainder taxed as earned income. This proposal is being consulted on now so whether it becomes legislation only time will tell.
 
 
  The following changes have been made to pension legislation from April 2014:
  - Anyone over 60 with total pension funds valued at less than £30,000 can take the fund as a lump sum subject to tax.
  - The "small pot rule", allowing individuals over 60 to take two pension funds valued under £2,000 as a taxable lump sum, has been increased to three valued under £10,000.
  - For those considering “flexible drawdown”, the minimum guaranteed income needed before the remaining fund can be taken as a taxable lump sum has been reduced from £20,000 to £12,000 gross per tax year.
  - For individuals taking an income from their pension through “capped drawdown” the maximum income limit has increased from 120% to 150% of the basis amount.
  The NS&I Premium Bond limit will increase from £30,000 to £40,000 from August 2014. From April 2015 a further increase to £50,000 will come into effect. There will now be two monthly prizes of £1 million.
  It was announced that in January 2015 the government (through NS&I) will launch a range of fixed rate bonds for the over 65s. The rates & terms will be finalised in the Autumn statement.
  From April 2015 an individual will be able to transfer £1,050 - 10% of their income tax personal allowance to a spouse or civil partner provided neither person pays tax above the basic rate.
          
 
If you have any queries on the above then please contact your usual Adviser. 

Gareth Says... 
Is it time to follow Neil Woodford?



     
Neil is arguably Britain’s best known fund manager. He managed both the Invesco Perpetual Income and Invesco Perpetual High Income funds, the latter for over 26 years. He earned a cult status by turning an investment of £10,000 into £232,650 in just over 20 years.

He has recently left Invesco Perpetual and set up Woodford Investment Management (WIM) where he will shortly launch his new income funds subject to FCA approval.
  
His track record for ‘making the right call’ is well documented. He famously avoided technology stocks in the late 1990’s and sold bank stocks before 2008 thus avoiding the financial carnage that followed. For the reasons stated he will be placed on the ‘M&T Gold List’.     
 
 
 
Will he continue to perform? We do not know. However, I am sure, as this is a new venture, he will want to do as well as possible, as early as possible and as he aims to achieve superior returns over the longer term, if this suits your time horizons then it may be for you.

To register your interest, with no commitment, please send an email to adam@morfittandturnbull.com with your chosen option as follows:

Option 1 - New monies to use this year’s ISA allowance
Option 2 - New monies to invest in non-ISA
Option 3 - New monies to invest in a pension
Option 4 - Switch existing ISA monies if possible
Option 5 - Switch existing bond monies if possible
Option 6 - Switch existing pension monies if possible

We will detail full terms and suitability to you before any investment takes place.
  

 
Staff Matters...
Stuart is the Daddy of us all!


M&T’s stalwart, Stuart, reached a landmark birthday just yesterday and although he has not disclosed his precise age we do know that as a child he knew Father Christmas as Baby Christmas...

All the best Stu!!!
    
   

 

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