Turbulent markets


You’ll have seen in the news that the Price of FTSE 100 index (which is commonly used as a barometer for“the markets”) had a particularly difficult week, falling 2.3% on Wednesday, 3.4% on Thursday and 2.7% on Friday. For the week as a whole the FTSE 100 fell by 9.8%*.

Scarey but this might be a good time to take a medium to long term view and look and investing in this market.  Fortune favours the brave as they say, but if you have spare funds that you can afford to be speculative with it might be worth having a chat.

How to avoid the new 50 per cent tax rate

The Bad News

The income tax rise for high earners commences next month so time is running out if you are planning to mitigate the effects of this increase. From April 6 2010 income over £150,000 have been subject to income tax of 50 per cent, while the upper rate for dividends will move from 32.5 per cent to 42.5 per cent. This increase will place the UK’s top rate among the highest in the larger western economies and far higher than the EU average.


The Good News

There is still time to act to restructure your client’s investment strategy. My company has a number of solutions on offer to help, including their new CGT Allowance Maximiser. The Solution Your focus is on tax effective investment planning and seeking returns that are taxed as capital gains rather than income. We also make use of the nil rate band CGT allowances which can be an advantageous way of drawing tax free capital from an investment portfolio.

The differential between tax rates for income and capital is now 32 per cent (50 per cent on income and 18 per cent on capital gains). In addition, capital gains tax has a relatively generous annual exemption of £10,100. There are compnaies that specialise in developing fixed term portfolios that are taxed as capital gains and deliver high levels of capital protection. Targeted at low risk investors the portfolios use real assets and have no gearing.

The assets invest into with profit funds from the UK’s most established life companies and have accumulated bonuses that are guaranteed by the life company to deliver the capital protection. Further security is provided through diversification within the portfolio, FSCS protection and liquidity guarantees.

•Strong performance with low risk

•Target returns of 5-7%

•Asset backed capital protection

•Transparent with low fees

•FSCS protection (90% of claim with no upper limit) 

CGT Planning Investors are able to structure portfolio investments to align projected gains to fall within an annual allowance of £10,100. The investment amounts vary depending on the portfolio term and start from as little as £25,000. Returns on the CGT portfolios are structured to achieve an IRR of 5%, therefore a comparable investment that is subject to the new 50% income tax will need to achieve a 10% IRR (8.33% if 40% tax payer) to deliver the same net benefit.


The CGT Allowance Maximiser is designed for High Net Worth clients looking to utilise their CGT allowance on an annual basis. A selection of portfolios can be used to pay out an annual gain of £10,100 (over 8 years) and then return the capital on exit. This can be achieved by a lump sum investment of approximately £200,000.

The annual gains are tax free within a CGT allowance and, as the investment return is a repayment of the original capital, no tax is applicable on this element either. For more information on this product please contact myoffice to arrange an appointment.

Time to Invest?

With interest rates at a historic low and returns on deposit accounts providing little or no gains given inflation, the combination of capital security, potential for returns and preferential tax treatment makes these portfolios an attractive investment that should not be overlooked. 

Where can I get more information?

Please contact Mark J Morsley & Assocoiates on 01206 392255 or email info@markjmorsley.com