Morfitt's Mailshot Issue 36...          Can't see this email properly? View in browser

Morfitt & Turnbull
 

Issue 36   

HOW MUCH?!?!
I can’t remember how many times I heard people say the above when the transfer of the footballer, Neymar, from Barcelona to Paris St. Germain (PSG) was announced for around £200M.
So fitting in with the M&T fantasy football league, now up and running, and with the transfer window about to slam shut, I thought that we’d have a look at how much the prize assets of football clubs, their players, have increased in value over time, as obviously we are very interested in how much assets increase here at M&T!!

Looking at the British Market the 1st recorded transfer was in 1893 when Willie Groves was bought by West Bromwich Albion from Aston Villa for £100. As these 2 clubs are local rivals I can imagine that this also didn’t go down too well with the fans of Aston Villa!
  Neymar
The next landmark transfers where another digit was added or a milestone was reached are as follows:
1905 Alf Common - Sunderland to Newcastle £1,000  
1928  David Jack - Bolton to Arsenal £10,890  
1962  Dennis Law - Torino to Manchester United £115,000  
1979 David Mills - Middlesbrough to WBA £516,000  
1979 Trevor Francis - Birmingham to Nottingham Forest £1.18M  
1991 David Platt - Aston Villa to Bari £5.5M  
1996 Alan Shearer - Blackburn to Newcastle £15M  
2009 Cristiano Ronaldo - Manchester United to Real Madrid £80M  
Significant selected world record transfers are even more surprising!
1973 Johan Cruyff – Ajax to Barcelona £922,000  
1976 Paolo Rossi – Juventus to Vicenza £1.75M  
1984 Diego Maradona – Barcelona to Napoli £5M  
1990 Roberto Baggio – Fiorentina to Juventus £8M  
1996 Ronaldo (1st one) – PSV to Barcelona £13.2M  
2000 Luis Figo – Barcelona to Real Madrid £37M  
2001 Zinedine Zidane – Juventus to Real Madrid £46.6M  
2009 Cristiano Ronaldo – Manchester United to Real Madrid £80M  
2013 Gareth Bale – Tottenham to Real Madrid £86M  
2016 Paul Pogba – Juventus to Manchester United £89M  
2017 Neymar – Barcelona to PSG £200M  
The Italian clubs dominated the transfer market from the mid 70’s to the mid 90’s being overtaken by the big 2 in Spain up until last year, so where does that leave the direction of the transfer market in the future? After the events of this summer anyone’s guess could be correct!!

At the other end of the spectrum, to put this into perspective the fee paid for Neymar could probably buy the whole of the playing staff, the stadium and the training ground of my club Wigan Athletic and there’d still be some change left!! In comparison the record transfer fees for Wigan are a £7M purchase of Charles N’Zogbia and the sale of Antonio Valencia to Manchester United for £16M, not bad business there though seeing as he was bought for around £2M so 700% profit!

Good luck to all of your teams for the rest of season and if you still want to join our Fantasy League it isn’t too late, just let us know.

Craig

 


 
Adam's Technical...  Trust Taxation
 
Amendments to the tax treatment of trusts were made through the 2006 Finance Act which came into force on the 22 March 2006. These changes are applicable to trusts set-up from this date with a range of beneficiaries the trustees can select from to receive monies.

A charge to Inheritance Tax may occur when monies are placed in trust, on each ten year anniversary after the trust was set-up and when monies exit the trust. Whether there is a charge depends upon the amounts involved.
 
With regard to the 10-year periodic charge, it is calculated by deducting any chargeable lifetime transfers made in the last 10 years from the nil rate band (currently £325,000) then deducting this figure from the amount held in the trust. The current lifetime rate of 20% is applied to this figure, which is then divided by the amount held in the trust and multiplied by 100. The resulting percentage is then multiplied by 30% and this amount applied to the total amount held in the trust to calculate the charge.

I have provided an example below:

Background: a discretionary trust for £500,000 was set-up on the 1 August 2007 (10th anniversary just passed) and a chargeable lifetime transfer of £50,000 was made on the 1 May 2014.
  Taxes & Trusts
  
Step Calculation
 One  £325,000 - £50,000 = £275,000
 Two  £500,000 - £275,000 = £225,000
  Three  £225,000 x 20% = £45,000
 Four  (£45,000/£500,000) x 100 = 9%
 Five  9% x 30% = 2.7%
 Six  £500,000 x 2.7% = £13,500
 
The 10-year periodic charge in the above example is therefore £13,500. The maximum periodic charge that can be applied is 6%.

If you have monies in trust and want to discuss the above or wish to consider investing monies within a trust to potentially reduce your Inheritance Tax liability, please contact your usual M&T adviser in the first instance.
 
            

Gareth Says... 



   
Our April Newsletter touched on the technical changes to the dividend allowance and money purchase annual allowance that were temporarily suspended due to the general election. We can now confirm that these changes have been implemented as the government originally planned as a reminder the detail is below.

The allowance of £5,000 where no tax is payable on dividend income which was introduced for the 2016/17 tax year is reducing to £2,000 from 6 April 2018. It remains at £5,000 this tax year. Trusts do not receive this nil rate band.
 
    Piggy Bank
   
The money purchase annual allowance relating to pension contributions has been reduced from £10,000 to £4,000 per tax year from the 06/04/2017. This restriction from the usual £40,000 currently allowed only applies to individuals who have accessed their pension benefits flexibly and have received income.

Should you have any further queries regarding either of these please do not hesitate to contact your usual adviser.
 
 

 
Staff Matters
The latest staff outing was a GINcident cruise in Manchester, sailing from Castlefield to Media City and back again, whilst sampling a number of differing Gin’s and being educated in the History of Gin, thrown in with a few games, notably Gin Face!!

We all thoroughly enjoyed it as you can see from one of the many photos!!
  Gin
   

 

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