Morfitt's Mailshot Issue 24...          Can't see this email properly? View in browser

Morfitt & Turnbull

Issue 24   

Stand By Your Man? D.I.V.O.R.C.E. !

This article obviously has no bearing on Adam’s recent nuptials (see "Staff Matters" below) but with expectation being that close to half of marriages will fail there is a sharper focus on financial settlements and an increase in "prenups".

Some famous names have gone through an expensive parting of the ways, such as...
  • £1.6bn - Alec Wildenstein from Jocelyn Wildenstein in 1999
  • £800m - Bernie Ecclestone from Slavica Ecclestone in 2009
  • £275m - Mel Gibson from Robyn Moore Gibson in 2011
  • £200m - Roman Abramovich from Irina Abramovich in 2007
  • £65m - Tiger Woods from Elin Nordegren in 2010
  • £60m - Madonna from Guy Ritchie in 2008
  • £55m - Harrison Ford from Melissa Mathison in 2001
  • £30m - Paul McCartney from Heather Mills in 2008
  • £16m - Donald Trump from Ivana Trump in 1992
  • £15m - Mick Jagger from Jerry Hall in 1999
All figures are estimates converted into pounds sterling.

Although this has been set out in a slightly tongue in cheek manner, it is genuinely a difficult time for those that are unfortunate to experience divorce (and there are a few M&T employees that can testify to this!) so financial advice may not be paramount (the people listed above may not agree) but it is one burden that can be taken away by a trusted adviser. This can be looking at the settlement position or getting finances back on track after the event... hopefully something that you don’t have to encounter!


Adam's Technical...  Summer In The City!
For the first time since 1996 a Conservative only Budget was delivered. Adam tells us how they certainly took full advantage with the main announcements as follows:
  From April 2016 the tax-free personal allowance will increase by £400 to £11,000. It is then set to increase to £11,200 from April 2017.
  The 20% basic rate limit will increase to £32,000 next April meaning a higher rate of tax will be paid on income over £43,000. It was also announced that the income tax rates of 20%, 40% and 45% will not be changed during this parliament’s tenure.
  A National Living Wage of £7.20 an hour to be introduced in April 2016 for those aged 25+.
  An additional tax-free savings allowance of £5,000 p.a. will be introduced next April. This will be worth £1,000 of interest for 20% taxpayers and £500 for 40% taxpayers. Those paying tax at 45% will not receive this allowance. The practice of deducting 20% savings tax at source will stop from April 2016.
  The way dividends are taxed is also changing from April 2016. A tax-free dividend allowance of £5,000 p.a. will be introduced for all taxpayers. Above this amount the dividend tax rate will be 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers (those paying tax on income at 45%).
  Corporation tax rates will reduce from 20% to 19% from the 1 April 2017.
  For those who rent out residential property the amount of income tax relief available on finance costs will eventually be restricted to the basic rate. This will be phased in gradually between April 2017 and April 2020.
  The date when it will be possible to withdraw monies from a cash ISA then reinvest in the same tax year without it counting as additional used allowance has been pushed back to April 2016. However, it has now been extended to also include stocks & shares ISAs.
  The £325,000 Inheritance Tax (IHT) nil rate band will remain frozen until April 2021. A new "main residence nil rate band" designed to protect the family home from IHT will be introduced in April 2017 on a phased basis. Individuals will receive this new allowance so their home can be passed on to children or grandchildren tax-free on death.

This additional allowance will be £100,000 in April 2017 then increased by £25,000 each tax year to a maximum of £175,000 in April 2020. This allowance will be withdrawn for estates over £2 million. Like the £325,000 IHT nil rate band this new allowance can be passed to a surviving spouse/civil partner on death.
  The total pension fund Lifetime Allowance will reduce to £1m from the start of the next tax year. From April 2018 it will increase in-line with the Consumer Price Index.
  The amount that most individuals can invest in a pension of £40,000 gross p.a. is going to be reduced for those earning more than £150,000 p.a. From April 2016 it will reduce by £1 for every £2 earned above £150,000 but cannot reduce below £10,000.

So for an individual earning £180,000 their new pension amount is £25,000, calculated as (£180,000 - £150,000) / 2 = £15,000, then deduct this from the £40,000. Anyone earning over £210,000 will have an allowance of £10,000 gross p.a.
  A consultation has been launched to reform tax relief on pensions.
  A consultation has been opened on abolishing class 2 national insurance contributions for the self-employed and reforming class 4 contributions.
If you have any queries on the above then please contact your usual Adviser. 

Gareth Says... 

The Tortoise sometimes beats the Hare!
There is some investment news from Gareth below and it could not be more timely given recent volatility in the markets!

"Good news to share for our clients invested in Aviva With Profits - a cautious investment now providing an additional return.
Aviva has announced that the majority of holders of their With Profits funds as at 31 December 2014 will receive an additional bonus when monies are withdrawn. The reasoning behind this is that for security purposes the With Profits fund has to hold a "buffer" of money above that required to make payments to policyholders. As the financial position of the fund has improved an additional surplus is available which is now being shared.

Some cynics have been saying that With Profits are finished - not in our book!"

Staff Matters - Adam’s gone and done it!
From the darkness of the first article we end on a happier, brighter note reporting that Adam’s wedding was the perfect day that Rachel and he had hoped for apart from one minor hiccup with Adam running late and not the beautiful bride!!!
Everyone at M&T wishes them all the best for their very happy future together.


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