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Craig Hilton

Continuing a year of fantastic achievements from our staff, Associate Director and Financial Adviser Craig Hilton has recently gained both Chartered Financial Planner status and Fellowship of the PFS.

In order to achieve both of these, Craig has passed 19 exams requiring around 1,450 hours of study. He also has to demonstrate a commitment to continuous professional development as well as upholding the technical and ethical standards of the CII.

Craig, speaking about his study, says “Developing my knowledge and skills over many years has enabled me to offer better outcomes and help more clients achieve their financial plans and objectives. The PFS Fellowship and Chartered status are challenging, sacrificing many hours to study, but ultimately show a commitment to provide the highest quality of trusted advice and service to my clients. ”

Gibbs Denley Financial Services Ltd now have six members of staff who hold individual Chartered status, and two holding Fellowship.

investment market review and outlook

The unwelcome volatility at the beginning of the year was succeeded by a period of good stock market progress, though pockets of uncertainty were evident at times.

Investors warmed to the ideas that spooked them earlier in the year as inflation worries subsided and were replaced by fears of escalating ‘trade wars’, fuelled by the US’s tariffs on many countries, including some of its allies. Another interest rate rise from the US was accepted by markets without much fuss and most developed market bonds ended up broadly flat after yields on the 10-year US Treasury moved up to 3%, a level which seems to deter further selling. [click to continue…]

To help you understand how you can manage your savings and investments in a tax efficient manner, we have put together a hypothetical case to walk you through it. Of course, everyone’s personal circumstances are different, so it’s best to talk to your adviser before making any changes.

At the beginning of May 2018 we were contacted by Jeff and Michelle, a married couple in their late 50s who have recently inherited £600,000 from Michelle’s mother and wanted advice on the best way to invest the money for future income, without incurring a large tax bill.

Both Jeff and Michelle are in good health, and they own their main residence outright, with no outstanding debts or liabilities. The couple had modest combined income needs in the region of £15,000 per annum and wanted to consider ceasing employment and taking early retirement, provided the income needs could be met from the inherited capital.

It should be noted that they retained suitable emergency cash funds and a Stocks & Shares ISA each in addition to the inherited capital, so they were happy to tie up the £600,000 in longer term investments to ensure their income needs can be met both now and in the future.

Despite having a combined Inheritance Tax allowance of £900,000 (£325,000 Nil Rate band each, plus £125,000 each Residence Nil Rate band, as they will leave their residence to their children) there will be an IHT liability on their estate following the inheritance from Michelle’s mother. However, a review with their adviser comes to the conclusion that it was not important at the current stage given their immediate retirement wishes. They will continue to review this at future meetings to ensure that it does not become an issue.

Having reviewed Jeff and Michelle’s circumstances the adviser provided the following recommendation a week later in May 2018:

  • Invest £20,000 into Michelle’s existing Stocks & Shares ISA for the current tax year (2018/19) as this allowance had not already been utilised (however, Jeff’s had been).
  • Invest £280,000 into a General Investment Account (GIA) held in joint names alongside the ISA. This can then be used to fund both Jeff and Michelle’s Stocks & Shares ISAs each year as the annual allowances become available on the 6th
  • Invest £300,000 into an Offshore Investment Bond held in joint names.

Topping up Michelle’s existing Stocks & Shares ISA will increase the funds held within the ISA wrapper, which removes the underlying assets from Income Tax and Capital Gains Tax (CGT), ensuring no tax will be due on future income or withdrawals. Please note ISAs do form part of the estate for IHT.

Opening a GIA alongside the ISA allows for the funds to be invested in line with Jeff and Michelle’s attitude to risk and provides a ready source of capital to maximise the ISA allowance each tax year (currently £20,000 for the 2018/19 tax year). Gains within the GIA are potentially subject to CGT on encashment. As each individual has an annual CGT allowance (currently £11,700 for the 2018/19 tax year) any gains realised on the account should be covered by this. Gains in excess of the annual allowance will be subject to tax.

Using the Offshore Investment Bond will provide Jeff and Michelle with a tax deferred income of up to 5% of the investment amount for the first 20 years. This is treated as a return of the original capital invested and based on an investment of £300,000 will provide a withdrawal of £15,000 per annum, which covers their annual income requirements. (Please note the level of income drawn may be reduced by charges if these are not covered externally from the Bond).

The Offshore Investment Bond allows for them to take control over the timing and amount of tax paid. While invested in the Bond, tax will not normally be paid on any growth. Tax is instead paid when withdrawals are made and is based on their circumstances at that time. An Offshore Bond was recommended in Jeff and Michelle’s circumstances as they would both be non-taxpayers once retired allowing for maximum flexibility for future withdrawals and tax. They will also both have their personal savings allowance of £5,000 which can be used to provide further tax efficiency.

Using three different investment structures allows for all of Jeff and Michelle’s investments to be held in a tax efficient manner and still provide them with the required annual income, without compromising both of their tax positions. If they were to fully invest the £600,000 into an Investment Bond the tax free ISA allowance each year would be left unused. Holding the funds in a GIA to ‘feed’ their ISAs also makes use of part of their annual CGT allowances. Jeff and Michelle retain maximum flexibility and access to both income and lump sums in the future.

This is a hypothetical situation to help you understand how a financial adviser might help you and it does not constitute specific financial advice or guidance. Taxation treatment depends on the individual circumstances of a client and is subject to change in the future.

If you would like more information please contact one of our highly qualified financial advisers. For more information on the subjects covered in this post, please see our Guide to Tax Efficient Savings and Investments.

Julie Mallett, Chartered Financial PlannerJulie Mallett APFS
Client Manager (Advisory)
Chartered Financial Planner

Sean Pledger, Financial Adviser

After spending nearly a decade in high street banking, Sean became more attracted to the one-to-one relationship with clients that financial planning offers, and decided to develop his career in that direction. This has enabled him to deal with individuals over the long term and be able to help them achieve their aspirations.

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Investment Market Review & Outlook

The first quarter of 2018 finished in a very different fashion to the one it started in.  Recent moves have highlighted uncertainty and brought back volatility that was missing for most of last year.

While these stock market movements were arguably overdue, we believe that they will also be short-lived and that, while elevated levels of movement may be more frequent this year, they will not be here for good.  Bond markets also fell over the quarter but many regained their losses by the end of March and the fears over interest rate increases in the US subsided, though these are likely to re-emerge as we move into the summer.

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Tom Sparke, GDIM Investment Manager

Stock market indices have fallen over the last 24 hours on the widely expected introduction of trade tariffs by the US, mainly directed at China, to come into effect in around a month’s time (after a ‘comment period’), meaning that the uncertainty caused by these moves may be prolonged.

From the details that have emerged, the tariffs will likely affect $50bn worth of imported goods and the proposed tariff level will be 25%, which the White House believe will be sufficient to block trade in the affected areas. The list of specific goods to be targeted will be released early next week but will include aerospace, information communication technology, and machinery. The tariffs themselves will not have a fundamental impact on China (initial estimates show this would affect around 0.25% of China’s GDP), but the larger worry is over the potential escalation of these measures and a descent into a ‘trade war’.

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Spring Stateement 2018

Download our summary of Philip Hammond’s Spring Statement, delivered in March 2018 here:

Spring Statement March 2018

Siobhan Cordery Fellow of PFS

We are absolutely thrilled to be able to congratulate Siobhan Cordery on the distinction of achieving Fellowship, the highest qualification awarded by the Chartered Insurance Institute (CII). She is the first member of Gibbs Denley Financial Services staff to reach Fellowship level. [click to continue…]

Tom Sparke, GDIM Investment Manager

As you may have observed there were significant downward movements in US equities yesterday and markets have opened negatively this morning in most regions.  As we have alluded to in recent communications, the threat of a pull-back in stock markets has been hovering over us for some time and the catalyst was one that we had been watching closely.  The initial source of worry was the stronger-than-expected US employment and wage growth data at the end of last week.  While this sparked concerns of higher inflation and, consequently, more interest rate increases than anticipated, the driver of much of the volatility in markets was largely due to the increased volume of trading in Exchange Traded Funds (ETF) and by high-frequency traders, which exacerbate severe market movements.  As ETFs make up nearly 20% of US trading volumes markets can move very quickly on these sort of unusual movements.

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CPSL Mind and Suffolk Mind

Each year, the directors of Gibbs Denley Financial Services invite the staff to nominate a shortlist of charities, and then vote for the charity they wish to support for the year.

We are delighted to announce that for 2018 we will be supporting two Local Mind charities: CPSL Mind (Cambridgeshire, Peterborough and South Lincolnshire) and Suffolk Mind.

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