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OF INTEREST 2 BUDGET 2009 High net worth individuals were heavily targeted in this year’s Budget with higher taxes, reduced personal allowances and restricted pension relief. Francesca Lagerberg and Lindsey Wicks of Grant Thornton investigate the details: ■ CHANCELLOR ALISTAIR Darling exceeded expectations by introducing a‘super-tax’ rate of 50% for earnings over £150,000, to come into effect from 6April 2010. This was both higher and sooner than predicted, and, incorporating national insurance contribution increases scheduled from April 2011, the tax rate will be 51.5% for employees on income over £150,000. ■ APRILNEXTYEAR will also see atapering away of personal allowances for anyone with asix-figure income. At an income of £112,950 you will have no personal allowance (currently £6,475). There are likely to be PAYE operational problems for many and to add to the confusion, those with incomes falling between £100,000 and £112,950 will pay an effective tax rate of 60%. Those with income of £110,000 could theoretically see their total tax bill rising by 5% in three years. In the case of earners of £180,000, the increase could be nearly 9%! ■ IN TWOYEARS’ time the amount of tax relief available for pension savings will be down from 50% to 20% for those earning between £150,000 and £180,000. Incomes above this will only qualify for relief at the basic rate. There is an anti-forestalling provision in place to prevent pension alterations before then, atax charge of 20% of ‘additional’ contributions in excess of the special annual allowance of £20,000. Regular 51.5% The tax rate on income over £150,000 for employees as of April 2011 ongoing pension savings in place before 22 April 2009 are unaffected. ■ ALSO FROM 6APRIL 2010 there will be three rates of tax on dividend income. Where income falls within the basic rate band, the 10% tax credit will extinguish any liability, as before. The equivalent rate for 40% taxpayers remains at 32.5% but anew rate of 42.5% will be introduced where income will be taxed at the new super-tax rate of 50%. Trusts of course are not left alone. From the same date the additional rate of tax for trusts will also rise to 50%, with anew higher trust rate of tax on dividends of 42.5%. ■ THEONLYREALGOOD news for savers is that the ISA limit is raised from £7,200 to £10,200; however,those under 50 will have to wait until 2010 for this benefit. CREDIT CRUNCH HITS DIVORCE ‘The financial carve-up that follows adivorce settlement will be at the forefront of a couple’s mind.’ AGRANTTHORNTON survey among 70 leading matrimonial lawyers reveals that nearly half expect the credit crunch to result in fewer divorces reaching the courts. While money trouble is a well-documented cause of tension between spouses, it could be that some couples stay together because of their financial situation. Robert Kerr,partner at Grant Thornton’s Forensic and Investigation Services practice, says: ‘The financial carve-up that follows adivorce settlement will be at the forefront of acouple’smind.’ He cites the prominent case of the hedge fund manager Brian Myerson, who agreed to give his wife a£9.5 million divorce settlement only to see his personal wealth suddenly fall dramatically.Many other individuals of high net worth could find themselves similarly vulnerable. Clean break settlements (also known as ‘lump sum financial agreements’) are likely to decline, with acorresponding increase in maintenance-based divorces, according to 65% of lawyers. This is not surprising, says Kerr,given that ‘individuals’ assets will be falling in value in the current economic climate, thus reducing the pot of wealth for the parties to share’. 52% of responding lawyers predict that there will be an increase in pre- and post-nuptial agreements due to the economic slowdown. ‘Pre-nups have become increasingly more popular as people are looking to secure the wealth that they have accumulated prior to their marriage,’ says Kerr.‘Therefore, it is no surprise in an economic climate where individuals’ income levels will be fluctuating that they would like more guarantees over their finances. The recent case of German heiress Katrin Radmacher taking her husband Nicolas Granatino to court to uphold apre-nuptial agreement so that she could protect her wealth is afurther example of the uncertainty around pre-nups and the call by many to make them legally binding.’ MORE NEW THINKING For more research and insights from our experts go to www.grant-thornton.co.uk/thinking www.grant-thornton.co.uk
welcome This is the first issue of Bespoke,the magazine produced by Grant Thornton for our private clients. It follows on from our previous publications to highlight issues we hope will be of interest to you, to introduce afew of our clients and showcase some of our thinking. In this issue we offer our insights on tax havens, personal finance and the Budget, divorce, family-run businesses, and some pertinent historical episodes that cast illuminating light on current events in financial markets. Inheritance has been aripe topic for literature for hundreds of years, and it is fascinating to discover that Charles Dickens based his novel Bleak House on areal contemporary case; the story is coupled with some up-to-date advice on how to best look after your family’s future. Our main interview this issue is with the inimitable Philip Mould, who runs aleading London gallery and is ahighly regarded specialist in British portraiture. Is it possible that more traditional artworks are currently holding their value better than experimental pieces? We hope you enjoy the conversation and find it of use. COVER TERRY JONES BY STUART PEARSON WRIGHT ©PHILIP MOULD LTD contents 2 Of interest 4 First person 8 Family Limited Partnerships 9 Devil’s advocate 10 National treasure 4 14 South Sea Bubble 18 Bleak house 22 Need to know 24 Viewpoint 26 Sir Alex Ferguson 14 26
Page 1: Bespoke FOR PRIVATE CLIENTS ISSUE 1
Page 5 and 6: ‘Each is different. Some are more
Page 7 and 8: PEOPLE AND PLACES ‘Mechanical eng
Page 9 and 10: DEVIL’S ADVOCATE NO PLACE TO HIDE
Page 11 and 12: FINE ART Art has much to offer the
Page 13 and 14: FINE ART The Hon John Tufton, by Si
Page 15 and 16: INVESTMENT King George Ibecame the
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Page 19 and 20: PROTECT YOUR WEALTH SPARE ATHOUGHT
Page 21 and 22: PROTECT YOUR WEALTH The case for aw
Page 23 and 24: NEED TO KNOW the very helpful Entre
Page 25 and 26: LATEST THINKING What to do with cas
Page 27 and 28: ‘All Iask is a chance to prove th

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Bespoke â Grant Thornton