HELPING OUR CLIENTS BECOME MORE SUCCESSFUL
but wisdom listens.”
Old Mill as investment coach
Discover the TRUE value of a good adviser
The latest and best opportunities for
growing your wealth
The need for advice has
never been greater
Mapping the route to your financial goals
300 mile charity cycle ride
£7,000 raised for local charity
Paris to Yeovil charity cycle ride
Pension contribution tax relief set to fall again – act now
Old Mill gain top industry qualification
Guest Spot: Mogers Drewett Contentious probate – challenging a will and more
Where did you go on holiday?
Stamp Duty Land Tax Changes – what took them so long?
The gift of giving
Showtime for Old Mill
The mortality clock – a losing battle or once in a lifetime opportunity?
Four year delay to nursing care cost cap
Old Mill as investment coach
Guest Spot: Barnard Fitness Healthy, as well as wealthy and wise
Investor fire drill
The need for advice has never been greater
Welcome to the Winter
edition of Wisdom and a new
look and feel for the magazine
I’m not sure about you but the
amount of information I am
surrounded with is staggering. Many
of us are now connected to a vast
knowledge bank – out and about
on our phones, at work and at home
on our laptops and computers.
But does it make decisions any
easier? I’m not sure it always does.
You can find knowledge about the
advice areas we look at: taxes, your
finances, investments, pensions,
planning but as knowledge often
deals with the subject matter in
isolation it doesn’t answer the
important question: “What’s the
right choice for me?”.
We think a better way is wisdom.
In the dictionary this is defined as
“The quality of having experience,
knowledge, and good judgement”
and I like to think this starts to
describe what we do for you. So
that’s why we changed the title of
our publication as while it does talk
about knowledge it tries to go
beyond this to look at the points
that are important to you.
Of course as clients of Old Mill you
will be receiving bespoke advice but
we hope that the articles we write
are complementary and reinforce
your individual advice.
We will be sending Wisdom to you
twice a year through the post but
if you want updates more regularly
there are timely articles and
commentary on our website and
you can sign up there to our
monthly email newsletters or email
provide your email address and we’ll
put you on the distribution list.
We hope that you find the articles
of interest and like the new format.
Do let us know if there are any
topics you would like covered in
future editions or if you have any
comments about the publication.
Would you like to know more?
Contact Paula Hodge
on 01935 709328 or email
Increase in tax on dividends
The dividend tax regime is to be
fundamentally reformed from April
2016. Dividend tax credits are to be
abolished and will be replaced with
a £5,000 Dividend Tax Allowance.
The new rates of tax on dividend
income above the allowance will be
7.5% for basic rate taxpayers, 32.5%
for higher rate taxpayers and 38.1%
for additional rate taxpayers.
While these rates have risen they
remain below the main rates of
income tax. A good time to review
your situation if you receive high
levels of dividends.
Old Mill’s 300 mile cycle raises
£7,000 for School In A Bag
The thirteen strong team at Old Mill used
pedal power to raise more than £7,000 for
Yeovil charity School in a Bag. They took
part in a Paris to Yeovil (P2Y) 300 mile
cycle ride from the Eiffel Tower to their
offices at Maltravers House in Yeovil.
The money raised will help School in a
Bag (SIAB) deliver rucksacks filled with
stationery, learning resources and
eating utensils to poor, orphan,
vulnerable and disaster affected
children. The challenge was
organised by David Rice based
in the Yeovil office but staff from
all the offices participated, with
some riders literally taking up
cycling to do the challenge.
Starting under the Eiffel Tower, the group
rode more than 100 miles on the first day to reach
Bernay, spending nearly 11 hours in the saddle. The
second day saw them cover 77 miles from Bernay to
Bayeaux while on the the third day they rode 71 miles
to Cherbourg. The final day was back in the UK cycling
the 51 miles from a wet and very busy Poole to Yeovil.
Simon Pearson a SIAB volunteer and Luke Simon the
founder of SIAB joined Old Mill on the ride, Luke said:
“They made it really good fun. We had a really great
cross section from across the company, some quite
junior staff right up to one of the firm founders. It was
just amazing that we had this group of people that just
gelled so unbelievably well.”
Paris to Yeovil is the second cycling challenge organised
by David; last July, 19 staff took part in the Old Mill
Office Cycle Challenge, where staff aimed to raise
£5,000 for School in a Bag by cycling the 140 miles
between each of Old Mill’s five offices (Melksham, Wells,
Yeovil, Dorchester and Exeter) in two days.
They more than tripled their target then, raising
£15,500, and David says he is delighted to have been
able to organise another successful challenge again this
year. He said: “The challenge was exhilarating, and
great fun, the comradery was fantastic. The French
countryside and roads were really enjoyable, everyone
was so encouraging towards each other, and we also
received fantastic support from friends, family and
colleagues as well as lots of Old Mill’s customers.
Massive thanks must go to our support crew, who were
invaluable providing much needed drinks and
refreshments, as well as Luke and Simon from SIAB for
their fabulous co-ordination for the event”.
We are delighted to have raised around £7,000, but the
sponsorship is still coming and we are very grateful to
those who have donated so far.
Team P2Y, Ready for the long road ahead.
Arrival in Cherbourg
Still going strong (somewhere in France)...
“It was just amazing that we had this group of
people that just gelled so unbelievably well.”
Luke Simon, founder of SIAB
Pension contribution tax relief
set to fall again – act now
No sooner have the pension rules changed
and they are potentially set to change
again. We have already looked at the
availability of tax relief for high earners as
this will be severely reduced for those
earning over £150,000 in April 2016.
But there is also a strong possibility of further changes
to pension tax relief for all in the near future. The cost of
pension tax relief is currently £34 billion and with
ongoing austerity this is an area the Government may
wish to target for future savings.
Pension rules consultation
In the Summer Budget the chancellor opened a
consultation looking at pension tax relief and considers
some big changes, including the removal of pension
contribution tax relief altogether. Although we don’t
expect the change to be this radical it is widely
expected that the rate of tax relief will fall.
The most likely outcome will be the removal of higher
rate tax relief, possibly with a flat rate of tax relief for all
and a rate of 30% has been mentioned in the past
(which will be good news for basic rate taxpayers).
The consultation closes in September and with an
Autumn Statement by the Chancellor scheduled for
November 25th there is the possibility that any change
could be announced then (And effective immediately).
We don’t have a crystal ball unfortunately but if you are
a high earner or higher rate taxpayer and intend to
make a pension contribution this tax year anyway we
think you should consider doing this now given the risk
of potentially losing out on significant tax relief.
Fall in the lifetime allowance
It has already been announced that the overall amount
you can have in a pension fund without incurring tax
charges is set to fall to £1m (currently £1.25m) from
April 2016. There is scope now if you are near or over
that limit to top up ahead of this change and then claim
the latest protection for your fund.
Possible to make larger contributions
It may also be possible to carry forward unused pension
allowances from previous years to make a larger
contribution either personally or through your
company and this ability will continue in 2016/17.
This includes the ability to carry forward up to £40,000
from the period from 6th April 2015 to 8th July 2015.
So even if you have already made a contribution in this
tax year it may be possible to pay more in.
If you want to discuss your individual circumstances
please speak to your usual Old Mill contact.
See page 15 for advice on
making gifts to your family
Old Mill gain top industry
Old Mill has become one of only a handful of firms in the UK
to meet internationally recognised standards in the provision
of financial advice.
As part of our commitment to offer
you an exceptional client
experience in the provision of
financial planning services, Old Mill
has completed the certification
programme for BS 8577 – a
framework for financial advice and
planning services set out by the
British Standards Institute.
BS 8577 provides a framework to
increase client confidence by
specifying established best practice
and processes. It is the only
professional quality standard within
the UK’s financial services industry
to focus solely on the following key
areas of business practice:
objectives and policies,
management, recruitment, training,
development and ongoing
competence and control of
documents and records.
BS 8577 was developed in
conjunction with industry and
professional experts, consumer
representatives including Which?
and Standards International. Old
Mill is one of only 19 firms in the UK
to have gained the certification.
Paula Hodge, Head of Private Client
at Old Mill says the whole team
worked really hard to gain BS 8577.
This will now give potential clients
seeking financial advice the
confidence that Old Mill is an
organisation that can be trusted to
provide such advice safe in the
knowledge that it does so in line
with the highest industry standards.
Founder and Director of Standards
International Ltd Michelle Hoskin,
said Old Mill’s achievement is proof
of the firm’s ongoing commitment
to ensuring it delivers the best
possible financial planning
experience to its clients.
“It has been an absolute pleasure
working with Paula, Duncan, Sally
and the whole team at Old Mill,” she
said. “Their programme started off
with an in-depth training workshop,
which was an opportunity for the
firm to really understand their
business in all areas and identify a
number of improvements that
would benefit them and, most
importantly, their clients.”
Michelle continues, “From there, a
great deal of care and effort went
into their achieving BS 8577 as a
multi-site firm. Certification is the
outcome of a rigorous process in
which setting standards of
excellence has been fully embraced
by everyone at Old Mill.
Congratulations and exceptionally
Paula concludes: “BS 8577 gives us
the peace of mind that comes with
having put together and
implemented robust business
systems and processes, while it
gives clients the confidence that a
firm operating to the standard will
be a cut above the rest”.
On 1st June the maximum amount
of Premium Bonds you can buy
increased from £40,000 to £50,000.
“A prudent question is
one half of wisdom.”
The average prize rate is 1.35% and
this is tax free. Remember, over the
longer term this level of return could
see the value fall against inflation.
But cash based investments are a
cornerstone of your financial plan.
If you’ve never checked the
premium bonds you already hold
there are £49 million in unclaimed
prizes and there is no time limit on
making your claim.
OLD MILL GUEST SPOT
Contentious probate –
challenging a will and more
Challenging, or indeed defending a Will,
is a serious matter that can often leave
families scarred. But for those who feel
they have not been adequately provided
for, there are several
options for action,
as Howard Lee at
Challenging a will or making
a claim against the estate of
the deceased is a complex,
and often emotionally
draining undertaking. But for those who feel they have
not been adequately provided for, there are several
courses of action that can be pursued.
It is important to remember that a person is generally
free to make their Will in whatever way they wish.
However, even if the Will is valid, this can result in a
claim being made under the Inheritance (Provision for
Family and Dependents) Act 1975 (or if there is no Will
to challenge the distribution under the Intestacy Rules)
if the applicant feels they have not been left reasonable
The Will document itself can be challenged if it can be
proved to have been made by forgery, fraud, or lack of
due execution. This can arise particularly in DIY Wills
that have not been made with professional advice.
A challenge can also me made based on the grounds
that relate to the testator’s mental capacity or
knowledge of their Will. For example, alleging undue
influence by a third party against the testator. This is
a common allegation but difficult to prove. There needs
to be clear evidence of actual coercion.
A cynical ingratiation by a family member or friend
in anticipation of a greater gain in the Will, will not be
enough however, distasteful that conduct might be.
Alleging that the testator lacked the mental capacity
to make a Will seeks to prove that they did not satisfy
the test for mental capacity that is recognised by the
courts. The applicant might have grounds to allege the
Will was not made with the testator’s knowledge and
approval. This challenge can succeed even if the court
determines that the testator did have mental capacity.
There can often be clear signs of concern when the Will
is made, so a Will maker must take care to make sure
a Will is valid.
There is another alternative route to make a claim
before or after death, using the equitable remedy of
proprietary estoppel. When someone makes a promise
to another that the second person relies upon and acts
to their detriment, the court can, in certain circumstances
uphold that promise and make a proportionate award
to do justice.
Claims can be complex, expensive and extremely
emotional, particularly as they often involve close
family members. Any claim will require a detailed
analysis of the facts and an understanding of the legal
position by a specialist adviser. Suspicion and
dissatisfaction will not be enough, and allegations are
often made that cannot be proved. Therefore it is
important that anyone who feels they have a claim,
or has to defend a claim, should seek specialist advice
at the earliest opportunity.
For further information or advice on this subject please
visit www.md-solicitors.co.uk or call 01749 342 323
Where did you go on holiday?
Where did you go on your summer holiday? Did you plan it? For some,
there will be a lot of time and effort that goes into planning where to
go, getting a good price and then ensuring everything is in place for
a successful trip – clothes, airport parking and travel insurance – the
list is endless.
Holidays can be seen as a snapshot of
what life may be like when you retire
– time spent abroad, visiting family or
for favoured hobbies or pastimes.
Do you have a picture of what you
will do in retirement? Do you
spend much time planning how
you’re going to pay for this or
when you might have accumulated
It’s important to be sensible to
ensure that your goals can be
obtained but remember that people
often underestimate what can be
achieved in the longer term.
At Old Mill we are able to help you
forecast your future income and
assets into and beyond retirement
to see whether those retirement
dreams are feasible and could
become reality. Below are some
simple steps that can help you in
thinking about your future plans.
Consider your existing
What costs will you save in
retirement and what additional
costs will you create when you finish
work. Will you have to replace your
company car? Will you want to
holiday more frequently? What will
provide your income once you stop
What happens if you can’t retire
when you wish to, for example due
to ill health? This is often leads to
a light bulb moment for our clients,
the realisation that they may have
enough to retire now if they wish,
or understanding there is a shortfall
between objectives and reality.
This is also the first step in thinking
about others too. Many of our
clients will have sufficient to fund
their lifestyles and want to consider
helping their children or even
charitable giving. People can be put
off doing this if they are unsure if
they have enough wealth.
We can work with you to develop
a strategy to reach these objectives,
have a ‘Plan B’ in place and assist on
your journey to a happy retirement.
Would you like to know more?
Contact Sally Harrison
on 01935 709362 or email
The fact that each individual has
their own personal allowance and
their own starting and basic rate tax
bands means that tax savings are
available where income can be
legitimately shifted from a higher or
additional rate taxpaying spouse to
a non, starting or basic rate
This is especially so in regard to
income that falls between £100,000 –
£121,200 which causes the removal
of some or all of the personal
allowance and an effective tax rate
of 60% for non-dividend income.
Stamp Duty Land Tax Changes
– what took them so long?
The Stamp Duty Land Tax (SDLT) legislation has long been
held to distort the residential property market, with the
so-called “slab system”.
This system meant that the full sales price of a property
was subject to a fixed percentage, depending which
price bracket the property fell into. For example a
£250,000 property would be subject to a SDLT charge of
1%, being £2,500. However a £250,001 property would
be subject to a SDLT charge of 3%, being £7,500. The
price difference of £1 led to an increased Stamp Duty
Land Tax liability of £5,000!
The thresholds were for sales prices of up to £125,000
(0%), £250,000 (1%), £500,000 (3%), £1,000,000 (4%),
£2,000,000 (5%) and above £2,000,000 (7%). The
difference becomes even more pronounced at the
higher end of the market, with the difference
between a £2,000,000 and a £2,000,001 property
being £40,000 of SDLT.
This resulted in two behavioural changes:
Firstly, it took a significant increase in the housing
market for properties to leap up into the next SDLT
bracket. Given the £5,000 increase in SDLT at £250,001
just for paying a £1 more, very few house sales took
place between £250,000 and £260,000, so that £250,000
proved a barrier to price increases, and a similar pattern
was seen with the other thresholds.
Secondly, a practice grew up between allocating the
purchase price where it was just over a threshold
between the property itself and chattels (moveable
items such as carpets and furniture) within it, as chattels
were not subject to SDLT.
In the Autumn Statement on 3 December 2014, a new
system was introduced for residential properties with
effect from 4 December to eliminate this distortion.
Non-residential and mixed use properties still follow the
old slab system.
The new system operates as follows:
n 0% on any amount up to £125,000
n 2% on any amount over £125,000 up to £250,000
n 5% on any amount over £250,000 up to £925,000
n 10% on any amount over £925,000 up to £1,500,000
n 12% on any amount over £1,500,000
This new system is anticipated to result in 98% of
purchasers paying less in SDLT than under the
previous system, with houses selling below £937,500
attracting the same or less in the way of SDLT
liability. It is the higher value properties that bear
the brunt of the reductions at the lower end. The
graph below gives examples of the difference made
by the new rules at different house prices. These
changes mean that SDLT will no longer prove an
artificial barrier to house price increases at certain
levels, and we applaud the Government for the
changes – well overdue and much needed!
Would you like to know more?
Contact Nicola Allen
on 01935 709382 or email
Of course SDLT is only one tax affecting property
purchases, as Income Tax, Capital Gains Tax, VAT and
Inheritance Tax may also have an impact,
depending on the future use of the property. The
best time to consider whether the purchase is being
made in the most tax efficient manner is BEFORE
exchange of contracts. Do speak to your usual Old
Mill contact if you would like advice regarding
property transactions you may be considering.
See page 24 for advice on
planning your pension
The gift of giving
For those willing and able to make them, gifts can be extremely
powerful, and many parents and grandparents want and intend
to gift as a way of helping family.
Whilst it is not for everyone, gifting
can leave a financial legacy either
during your lifetime or afterwards.
For those who are thinking of
gifting, lifetime gifts can give a great
sense of satisfaction in order that
you can witness the recipient
receive and use the funds that you
Gifting is also an extremely useful
way of Inheritance tax (IHT)
planning. However, it is apparent
that despite a lot of knowledge on
the ‘7 year clock’ that applies to
Potentially Exempt Transfers (PETs)
there is sometimes confusion on
other gifts that you are able to make.
There are a number of lifetime gifts
that are available which are listed
Annual gifts of up to £3,000 can be
made and are instantly outside of
your estate. If the previous year’s gift
was not (fully) used it can be carried
As the name suggests, gifts of up to
£250 can be made to any number
of people in the same tax year.
Gifts in consideration
of marriage or civil
Gifts can be made in relation to any
one marriage as follows:
n Each parent can gift £5,000
n Each grandparent can gift £2,500
n Any other person can give £1,000
Normal expenditure out
Gifts can be made out of income
as part of your normal expenditure
as long as the following three
conditions are met:
n It must be out of income, not out
n It must be a regular gift
n It must not reduce the standard of
living of the donor (the person
who has made the gift)
Naturally this requires more thought
and planning than some of the other
gifts listed in this article, but this can
be highly effective.
You can of course make gifts of
greater value than those shown
above, and these would typically be
classified as a Potentially Exempt
Transfer (PET). These gifts are called
potentially exempt transfers as you
have to survive seven years from
making the gift for it to fall outside
of your estate.
If you were making gifts in this
manner we strongly advise that full
records should be written down in
order that your estate can be
effectively managed, and to provide
Whilst the above covers lifetime
gifts, there are other gifts on death
or during lifetime that can avoid IHT.
n Gifts between spouses (and civil
n Gifts to charity
n Gifts to political parties
n Gifts for national purpose i.e. gifts
to a museum or the National Trust
Gifts and planning
Whilst the above gives some
guidance on gifts that can be made,
there are important considerations
that mean advice in these areas is
n Can you afford to gift now?
n Will you have sufficient capital to
last your lifetime after the gift?
n Are there capital gains tax (CGT)
considerations on making gifts
of your assets?
n Is gifting the right strategy or
should you look at other means
of reducing your IHT liability?
Finally, gifts may not always be
monetary and many of our clients
give their time to look after
grandchildren or take their families
away on holiday.
At Old Mill we are uniquely placed
to give advice on these areas, with
specialists in tax and financial
planning matters. Please call us if
you would like a review of your
Inheritance Tax position.
Would you like to know more?
Contact Michael Bagg
on 01935 709338 or email
Showtime for Old Mill
What a great season of country shows at Old Mill this year, starting
with the North Somerset Show in May. We have had a mixture of
weather but on the whole it has been a great year.
At the end of May we had
the Royal Bath & West Show
which went superbly; we saw
so many clients, friends and
family over the four days.
Apart from a slightly washed
out Ladies Day, we were
delighted that Pam Norris
dressed appropriately for the
weather and won best
dressed at this year’s Ladies
Day competition before we
embarked on afternoon tea
in the members marquee.
We were delighted to have upgraded our show unit this
year, and we now have excellent facilities to offer
refreshments and drinks throughout the day in quality
surroundings. This is a huge improvement for us and
really makes a significant impact for us at shows, with
new branding and increased inside space for clients as
well as our catering needs.
The following week we had another wonderful three
days at the Royal Cornwall Show in Wadebridge and
then the fantastic launch of our new show unit at the
Mid Devon Show in July which took us into the
one day shows ending with Frome on the
Cider judging at the Royal Bath and West Show
The Old Mill members marquee at the Royal Bath and West Show
Important changes to
protection for cash deposits
Following the credit crunch most
savers will be acutely aware of the
Financial Services Compensation
Scheme (FSCS). The scheme protects
deposits up to a set limit, in the event
that a bank or building society fails.
The amount of protection is set by
an EU directive at €100,000 and due
to the falling Euro the amount is set
to fall to from £85,000 to £75,000.
At four of the shows we also held a joint breakfast with
Porter Dodson and the CLA with some great local
speakers from a selection of local food and drink
businesses including, Copse House Cider, Cheeky Cow
Cheese, Somerset Cider Brandy, Furleigh Wine Estates,
Styles Ice Cream, Dorset Game Larder and Langham
Wine Estates. These gave a great opportunity to enjoy a
delicious breakfast whilst listening to some inspirational
talks before heading around the show.
The change does not come into
effect until 1st January 2016, however
you may need to start planning now
and to consider the following:
n Do you have more than £75,000
(£150,000 for married couples/
civil partners) with one institution?
n Do you know which banks/
building societies share a credit
n Do you need to plan any maturing
fixed interest accounts to ensure
you don’t roll over a sum greater
than the reduced allowance?
The mortality clock –
a losing battle or once
in a lifetime opportunity?
How often do we look back at a period of time and wonder how
or why it went so quickly? I am sure we have all uttered the phrases
that go along the lines of “where did the time go” or “I wish I had
more time” on various occasions whether it is with reference
to a weekend, holiday or day at work.
Also does it sometimes feel that
when you would like as much time
as possible the faster it goes –
a good example perhaps being a
holiday or time spent with
Should we really be surprised
though; time goes quickly because
it should – it is diminishing by its
very nature. Whilst we may not like
to think about it too much we all
have a limited amount of time in our
days, weeks, months, years and, dare
I say it, lives. We can sometimes forget
that once a certain period of time has
gone you can never change it or get
it back again.
I think deep down we all understand
that time is a precious commodity
but do we still take it for granted?
How many times do we put
something off because we can “leave
it for another day” or “worry about it
later”? Delaying some things in life is
not going to cause problems; how
many of us have left the washing up
for the next day without any dire
However, and in all seriousness,
have there been moments in life
when you look back and think “I
wish I had...”. For most people the
biggest regrets can sadly be the
ones that hurt the most. For
example, at some point most of us
Would you like to know more?
Contact Jon Orchard
on 01225 701217 or email
will come to grips with losing a
loved family member or friend;
sometimes it can be expected, other
times very tragically not.
When these individuals are gone
from your life, how do you
remember them? I would suggest
that we remember them from the
moments we spent with them. So in
this context, how important looking
back is it that we try to spend as
much time with our loved ones as
possible, bearing in mind that
memories are simply “moments in
time”. If you do not take the time to
create these “moments” then what
memories could you be left with?
Do we often forget about these core
values in the hectic day to day lives
that we lead?
So why do we still take time for
granted? The answer I believe is
because we do not like facing up to
our own mortality.
Four year delay to
nursing care cost cap
After weeks of rumour and speculation,
the Government has confirmed that
implementation of Phase 2 of the Care
Act 2014, including the £72,000 ‘cap’ on
personal contributions towards care,
will be delayed until 2020.
This announcement represents a significant
change and the announced delays and the care
needs assessment system still mean there is a
post code lottery for care. It is important for
clients who wish to have choice and control to
retain sufficient wealth to be able to compete in a
progressively competitive care market where
money talks and gives massive advantage.
Care costs are rising significantly faster than
inflation and certainly faster than house prices, so,
planning ahead and considering the potential
need for care is prudent. The need for high
quality, specialist financial advice will be even
greater as people look to ensure that they do not
run out of money and can make the best use of
their assets when making care choices.
Let me put it this way, if someone
were to tell you in exact days,
months and years how much longer
you would live (a mortality time clock
perhaps?) would you view life
differently – would you change
anything? Maybe not immediately
but I am sure as the number of days,
months and years gradually reduced
down you would start to prioritise
certain things i.e. time with family,
friends, completing things you
always wanted to do etc.
I am also sure you would not work
right up until the numbers turned to
zero. Wouldn’t life be so much
easier if we all had a form of
mortality time clock? You would
have little regrets as you could plan
everything around the known time
you had left and you would also
know how much time you had with
other people until their clock
turned to zero.
The fact though is that many of us
cannot accept that we do all have
some form of diminishing clock
attached to our individual lives, the
only difference from the example
above is that we cannot see the
numbers. We sometimes stubbornly
believe that there will always be
enough time, even though the exact
opposite is true. This is the real
reason why people take time for
granted; simply because they are
unrealistic about how much they
This may all seem a bit depressing,
but it shouldn’t be; far from it – the
fact of the matter is that if you are
reading this you still have numbers
on the clock. The main consideration
is whether you are going to spend
them wisely before they run out?
If you want to discuss the changes in your
individual circumstances or for a family member
please speak to your usual Old Mill contact.
Would you like to know more?
Contact Chris Tweedie on 01225 701217 or email
See page 21 to find out about
investing for the future
Old Mill as investment coach
It is always tempting to judge the value of Old Mill as an adviser on the
recent performance of your investment portfolio. That is unfair as it
fails to understand both the true value that a good adviser delivers
with respect to investments and the fact that no manager can control
the returns that the market delivers.
A good adviser can earn their ongoing annual fee
several times over, simply by helping you to have
patience, fortitude and discipline in your investing.
As the founder of Vanguard and legendary US investor,
John Bogle points out: “If I have learned anything from
my 52 years in this marvellous field, it is that, for a given
individual or institution, the emotions of investing have
destroyed far more potential investment returns than
the economics of investing have ever dreamed of
When it comes to investing, there are five key areas that
we provide significant value:
n Structure: The starting and critical step is getting your
portfolio structure right for you. This must be based
on your emotional and financial tolerance for, and
need to take, risk. It involves selecting sensible risks to
take and using high quality, low cost funds to capture
the rewards that your earn for doing so.
n Governance: Making sure that your portfolio
strategy and the funds that you own continue to
deliver you with the greatest chance of a successful
outcome and that you avoid fads and too-good-tobe-true
products is important, yet much of this is
behind the scenes and you may not see the work
being done on your behalf.
n Hand-holding: The hardest part of investing is having
the confidence and emotional fortitude to stick with
the programme through thick and thin. When markets
are either going up or down with great magnitude,
as they inevitably do from time to time, an investor’s
emotions will kick in either in the form of greed or
fear often resulting in the destruction of wealth
through a ‘buy high, sell low’ strategy.
n Rebalancing: Over time, portfolios drift in terms of
their structure due to market movements resulting
in either too much risk (equities have increased as
part of the portfolio) or too little risk. Rebalancing
seeks to ensure that the risk level of the portfolio
remains where it was specifically designed to be.
It takes discipline to do this.
n Doing the boring stuff: The fifth level of value that
an adviser delivers is undertaking some of the menial,
yet highly valuable, administrative functions such as
ensuring that ISA allocations are made use of and that
capital gains are taken in a controlled manner, avoiding
as little time out of the market as possible. We all hate
paperwork, so let someone else take care of it!
Buy-high, sell-low strategy – favoured by
As an example of the hand-holding role of an advisor,
take a look at the eye-opening chart opposite, which
compares the flow of money into and out of equity
mutual funds in the US to the year-on-year
performance of the global equity markets.
Investors load up on equities at the top of the market
and sell when the markets crash, time and time again.
The largest ever inflows into equity funds occurred
almost exactly at the top of the tech boom in early
2000. The biggest outflows occurred at the lowest
point of both the ‘Tech Wreck’ and the ‘Credit Crisis.’
In short, positive market returns result in investors
buying equities and negative market returns result
in investors selling equities!
Would you like to know more?
Contact Kevin Whitmarsh
on 01749 335051 or email
Page 26 features guidance on the
unpredictability of investments
Research by Morningstar(1), reveals that the average
difference on an annual basis between the returns of
a fund and those that the average investor receives is
-2.5% per annum to the detriment of investors, on
account of their poor entry and exit timing.
Given that most advisors charge 1% as an ongoing fee,
which should also include comprehensive financial
planning and regular goal tracking, it is easy to see the
value of employing a steady hand to guide an investor
through choppy waters.
So next time you look at a portfolio valuation, spare
a little time to consider the broader, longer-term role
we are playing. What you are looking at is market noise,
which risks tempting you into bad, emotional choices.
We are here to provide perspective, stop you from
owning investments that should be avoided, help you
to keep faith in the programme and make you
rebalance, just when you don’t want to! That’s what
we are paid to do.
Figure 1: US investors – net new cash flows vs. equity market returns (1998 to 2013).
Source: Investment Company Institute. Copyright. All rights reserved 2013.
(1) Mind the Gap 2014 by Russell Kinnel, Morningstar
Pension tax relief to fall for
As promised in the Conservative
Manifesto the amount people with
an income of more than £150,000
can pay tax-free into a pension will
Currently people can contribute up to
£40,000 a year to their pension taxfree.
From April 2016, this amount will
be reduced for individuals with
incomes of over £150,000, including
There was the fear that this would
be imposed immediately but the
date of change offers a window of
opportunity for those affected to
make a larger contribution. Speak to
your usual contact if you want advice
or visit our website for a factsheet.
The new pension reforms since April open up new opportunities and
below we have looked at some of the ways our clients have been using
pensions in their wider financial planning.
Inheritance Tax planning
Many of the articles in the press
have been talking about taking
money out of pensions but our tax
and financial planning experts are
seeing much more opportunity in
the ability to pass money to the
next generation tax-efficiently by
keeping pensions invested.
For some, the most important
strategy for Inheritance Tax (IHT)
planning is ensuring their affairs are
structured to benefit from attractive
Agricultural and/or Business
Property Relief (APR and BPR) in
respect of business assets.
The business can then be passed on
Inheritance Tax-free without falling
into the estate, and the pension
(which is outside of your estate) can
be passed over as well, minimising
any assets that will then potentially
be at risk of creating an IHT liability.
Land or business premises
You have long been able to
purchase farmland and commercial
premises within your Self-Invested
Personal Pension (SIPP) or Small
Self-Administered Scheme (SSAS).
Farmland in pensions is often not
advisable due to the attractive
Agricultural Property Relief benefits
they receive when held outside a
pension fund but existing
commercial property or constructing
new buildings within your pension
scheme has a number of benefits.
This strategy has been used by
many of our clients to good effect
with a gross rent going into the
pension from the business and
allowing commercial property to be
purchased from funds already
accumulated within one’s pension
(rather than funding from other
sources or loans). There is also the
benefit from rising values in a taxfree
pension environment without
Capital Gains Tax to worry about.
However, the major drawback of this
strategy has been the issue regarding
what to do with the buildings when
you come to draw pension benefits.
Often the rental income is not
sufficient to cover the income you
may need from the pension and your
children inheriting the business may
not be able to afford to buy out the
assets from the pension.
Would you like to know more?
Contact Steve Woodham
on 01749 335027 or email
In the past if the property remained
in the pension fund on death the
land may have had to be sold to a
third party to cover a 55% death tax.
Fortunately, this very high tax
charge has now been removed.
Now that the pension funds can
potentially be passed on free of tax,
this last point disappears.
As such, a building held within a
pension fund could in theory be
passed down through the
generations, allowing it to stay in
the family and ensuring that the
business can continue to operate as
before. This represents a significant
improvement over the previous
more restrictive situation.
Succession planning and
equalising an estate
The new pension rules will
effectively allow wealth
accumulated in pensions to be
passed through generations,
creating further opportunities.
For example, it is sometimes difficult
to ‘compensate’ children who do not
inherit the main business with other
assets. The ability to pass your
pension to these children can help
your estate planning be more
equitable as the pension fund will
no longer suffer a tax charge when
it initially passes to the family.
OLD MILL GUEST SPOT
Healthy, as well as wealthy
Starting or maintaining a regular exercise routine can be a challenge as you get
older. The pressures of home and family life, as well as big life events can make it
feel like there's little time to exercise, as well as the increase of technology which
has made life even easier to avoid it.
For those who haven’t exercised
before, you may not know where to
begin. Or perhaps you think you're
too old or that exercise is boring or
simply not for you.
The NHS state that “to stay
healthy, adults should try to be
active daily and aim to achieve at
least 150 minutes of physical
activity over a week through a
variety of activities.”
If you break this down it is only 20
minutes a day and there are so
many things that you can do to
achieve this. Whether you are a
regular at your local gym, go for
daily walks, swim regularly or even
everyday tasks like cleaning the
house; all these things can count
towards this. By keeping physically
active it not only improves your
health and quality of life but it can
also help you to live longer.
What are the benefits of exercise?
Aside from weight loss, there is a
lot to gain from exercise and it can
make a huge difference to staying
healthy and diminishing stress,
here are some of the benefits;
1. A healthy heart
Reducing heart disease and high
blood pressure. Exercise means a
healthier heart because it
reduces several cardiovascular
risks, people who exercise have a
lower risk of heart disease, high
blood pressure, type 2 diabetes
and many other chronic diseases.
2. Good mental health
Helping you to manage stress,
anxiety and depression. Studies
show that mental decline is not
an inevitable part of ageing.
People who lead intellectually
stimulating lives are more likely
to be free of dementia conditions
It is possible to keep your brain in
shape and to cope with changes in
your mental ability by exercising
3. Boost self-esteem, mood, sleep
quality and energy levels.
Exercise releases endorphins,
powerful chemicals in your brain
that can make you feel good. By
doing regular physical activity
this can help increase those
levels, increasing your energy
levels as well as taking your
mind of any anxious thoughts/
stresses that you may have.
4. Help achieve and maintain your
ideal weight, reducing the risk of
Making sure you exercise
regularly and keeping an eye on
what you eat is of real
importance, by watching sugar
and fat intakes this can also help
deter that extra weight gain.
After you turn 50 a major reason
for age-related weight gain is
that the rate at which you
burn calories in food and
drink, known as your
metabolic rate, slows
Get fit, have fun, achieve your goals
down with age. The extra calories
will turn into surplus body fat over
time if you don’t adjust your diet or
5. To strengthen your bones and
prevent osteoporosis by doing
By exercising you don’t just build
muscle and endurance but it is
also important for building and
maintaining bone density.
Weight bearing exercises such as
cycling, walking, and swimming
are great for this, as well as
resistance work, using light
weights and flexibility training
such as yoga or pilates.
These all help to improve
balance and co-ordination and
help to prevent osteoporosis as
you get older.
So how do you start introducing
exercising into your life?
It is never too late to start exercising
and by having the support of friends,
family or a fitness professional, this
can give you the confidence and
guidance to start. Always check with
your GP before embarking on a new
fitness regime but you will soon
notice the difference and the
benefits of exercise.
For more information or advice
please contact Allan Barnard on
07828 452029 or email
Investor fire drill
As part of the Financial Planning service
we encourage our clients to discuss the
unpredictability of investments and
what they will do in a stockmarket fall,
an “investors fire drill” if you will.
We all experienced fire drills at school as children
and at work as adults. The purpose, of course, was
to learn what to do in the event of a real fire.
It wasn’t for an expected fire but was intended
to teach us how to survive and avoid serious
injury if, by chance, there was a fire.
Think about how you felt when the market was
headed down with no end in sight in the financial
crisis of 2008. Prepare yourself for the “this time it’s
different” feelings you will experience if the
market does head south. This “talk” should in no
way be considered a forecast, just as a fire drill is
not a forecast of a coming fire. But having this talk
today is so much better than having it when the
market has fallen 30%.
We know that you can greatly improve your overall
financial experience by setting the right expectations
before a market decline and maintaining discipline
during a decline. The stress of a collapsing stock
market fundamentally changes how people make
financial decisions and these can have a negative
effect on your wealth. Market declines happen
regularly – approximately three years in ten in the
past have seen annual falls in stockmarkets but
global markets have always recovered.
At the moment a broadly diversified investment
strategy provides a strong foundation for an
investment plan; this has made sense in the past
and will continue to make sense in the future.
Speak to your Old Mill Financial Planner if you want
to discuss this in your individual circumstances.
Would you like to know more?
Contact Gavin Jones on 01749 335038 or email
The need for advice has
never been greater
It feels recently as if there is an accelerating pace of change and
many constants we have had in the past – pensions, trusts, tax are
changing dramatically with a new Conservative government and,
dare I say, assertion of political philosophy.
Almost everyone worries about
money, what the future may hold,
and the decisions and choices that
they will face along the way and
people are looking for someone to
make sense out of this complexity.
For those that work with us the
benefits of good advice are often
received in the far-off future. It is
often easy to appreciate the value
received in the first year, and easy to
forget to appreciate the value on an
ongoing basis. The financial
planning relationship can be broken
down into three key phases of value.
Sorting out the mess and
building the plan
New clients often arrive with a
proverbial suitcase of bits and
pieces collected over the years, such
as a number of pension plans, withprofits
bonds, endowment policies,
life insurance and a stock broker or
IFA managed portfolio. This
collection of ‘stuff’ often has little
structure and rarely provides
comfort that the future will be
bright. That’s a stressful place to be.
The first and most vital step is to
help clients to set out their vision for
the future, both in terms of lifestyle
goals and the money needed to
fund them. Next comes the
analytical work, which may involve
using cash flow modelling tools, to
help empower clients to make
sensible strategic choices.
The resulting ‘plan for the future’
becomes a joint effort between
client and planner. Once sorted and
implemented, the client is then back
in control of their future and their
finances. The value is easy to see.
Progressing the plan
Financial planning is not a ‘set-andforget’
process, far from it, in fact.
Regular review meetings help to
provide clients with an insight into
how things are going relative to the
plan. What is more important is the
future and how the plan needs to
progress from this point forward.
Some issues and consequent
decisions faced may relate to
events in the client’s life, or may
be more technical or market issues
that sit in the financial planner’s
bailiwick. Clients have better things
to be doing with their time than
trying to understand and tackle
these issues alone!
Some years may be quite
uneventful, while others are
momentous. In the former, not
much may appear to happen, but
that does not diminish the value
of the financial planner, who is –
behind the scenes – constantly
on the lookout for issue that may
threaten the successful outcome
of the plan, or ways in which it can
be refined. At times of crisis,
understanding the issues faced,
finding a solution that makes sense,
facilitating decisions that need to be
made and having the fortitude to
execute under pressure, is where
great financial planners come into
Long life, death and
There are also some more subtle
areas of the value of a long-term
relationship with a trusted financial
planner. For many people, living
longer is a two-edged sword.
On the upside, we can all now
expect to live materially longer than
our grandparents’ generation. On
the downside, we also know that
with longevity comes attendant
health and financial challenges. For
example, long-term health care
costs are rising rapidly and simply
knowing that they can be met is a
great comfort to many. A financial
planner, who knows the family and
their financial circumstances well, is
well-placed to provide advice,
support and to facilitate the
financial consequences of the new
change in circumstance, when
it is needed.
“Life is very simple, but
we insist on making
Many clients, often one of a couple
who takes more interest in the
finances than the other, worry about
what will happen to their partner on
their death. Having a trusted
financial planner (and an up-to-date
plan), allows them to be confident
that, in the event of their death,
their partner will be well cared for
financially and that their affairs are
in order. Probate too, is a far easier
process when everything is
Most people would like to feel that
they will, in some way, leave behind
a lasting legacy. For some, that can
mean spending time and money
supporting their philanthropic works
and for others it may mean passing
on wealth from one generation to
the next. The proposed 2015
legislation has created an
opportunity to pass on wealth to
future generations in a tax effective
manner, for example. Again, financial
planners can play an important role
in helping clients to make decisions
surrounding such issues.
Would you like to know more?
Contact Simon Cole
on 01935 709364 or email
It is easy to forget when you meet
with your financial planner for your
annual review meeting that the
scope and value of the relationship
is far deeper and more important
than worrying about the 12-month
market noise that has resulted in
your portfolio going up and down,
or the fact that neither your
portfolio nor the plan has
Meeting your goals, feeling
confident in the future and having
the time to enjoy the opportunities
that your money provides you, your
family and your community are
what really matter. Delivering ‘peace
of mind’ may sound a bit trite, but
that is the goal, consequence and
value of great financial planning.
Leeward House, Fitzroy Road,
Exeter Business Park,
Exeter, Devon EX1 3LJ
Tel: 01392 214635
Fax: 01392 214690
Wessex House, Challeymead Business
Park, Bradford Road, Melksham,
Wiltshire SN12 8BU
Tel: 01225 701210
Fax: 01225 709817
Bishopbrook House, Cathedral Avenue,
Wells, Somerset BA5 1FD
Tel: 01749 343366
Fax: 01749 344986
Maltravers House, Petters Way,
Yeovil, Somerset BA20 1SH
Tel: 01935 426181
Fax: 01935 431852
Old Mill Financial Planning LLP is authorised and
regulated by the Financial Conduct Authority (FCA).
The FCA does not regulate taxation.