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Welcome to MKC Wealth’s 5 Minutes Monthly

In this month’s newsletter, we are taking another look at Inheritance Tax mitigation with a practical case study. We also share a research piece from MKC Invest where we delve into the fascinating world of artificial intelligence and robots. 

And finally, we update you up on what's been happening at MKC. From our charity trek up Snowdon to Eddie Teddie's visits to local schools, it has been a busy few weeks and we are delighted to share some of the highlights with you.

Let’s get started.

The Challenge

A retired client wanted to help their grandchildren financially while also reviewing their inheritance tax (IHT) position.

They had three key objectives:

Just as importantly, they wanted to retain control over how and when money was gifted.

Exploring the Options

Several commonly used strategies were considered.
Making outright gifts to family members or increasing Junior ISA contributions was discussed, but these options were discounted because the client would lose control of the funds once gifted.
A whole of life assurance policy was also explored as a way of meeting a future inheritance tax bill. However, previous underwriting issues meant this was not considered suitable.

The Solution

After reviewing the client's circumstances, an Excess Income Trust was recommended.
This approach enabled the client to continue supporting their grandchildren while retaining control over the timing and amount of contributions as well as how and when the money is eventually distributed to the beneficiaries.

The arrangement began with a £5,000 investment into an investment bond held within the trust. This initial lump sum gift is treated as a Chargeable Lifetime Transfer (CLT). As this amount was within annual gifting allowances, this means there is no immediate inheritance tax charge, and if the client survives seven years from making the gift, the amount usually falls outside their estate for inheritance tax purposes.

To provide ongoing funding, the client's existing ISA portfolio was adjusted to an income-focused investment strategy. The natural income generated by the investments could then be paid into the trust on a regular basis.

Provided certain conditions are met, these payments can qualify as gifts out of surplus income, meaning they are immediately outside the estate for inheritance tax purposes.

The key requirements are:

The trust beneficiaries were the client's grandchildren, allowing funds to build up for their future benefit, whilst also allowing the client (or other Trustees they may want to appoint) to choose when they feel it most appropriate to pass on to their grandchildren.

The Outcome

Keeping the Arrangement on Track

As with any inheritance tax planning strategy, good record-keeping is essential.
Each contribution to the trust is recorded, including the date and source of funds. Income and expenditure records are maintained in line with HMRC's expectations for gifts from surplus income, ensuring evidence is readily available if ever required.

The arrangement is also reviewed annually to confirm that gifts remain affordable and continue to meet the client's objectives.

This case study is for illustrative purposes only. Tax treatment depends on individual circumstances and may be subject to change. Estate planning should always be considered as part of a wider financial planning review.

We were more interested in whether they belong in a portfolio.

You've probably seen the videos – robots walking, dancing, doing backflips and, occasionally, falling flat on their faces. While the internet debates whether they're impressive or terrifying, we asked a different question: are they investable?

Our team spent a month digging into the robotics industry, looking beyond the flashy humanoids to uncover where the real long-term opportunities may lie. The answer wasn't quite what we expected, and it certainly wasn't "buy every company with a robot."

From hidden suppliers to surprising risks, our research revealed a far more interesting story than the headlines suggest.

Read the full article to see what we discovered before the robots learn to read it themselves.

Quilter is improving its online login security

If you have a Quilter Account please be aware that they will soon be introducing a more secure way for customers to access their online Customer Centre and mobile app.

While your existing login details will continue to work as normal, you may notice a new-look login page and be given the option to use passkeys. Passkeys allow you to sign in using your device's built-in security features, such as Face ID, Touch ID or your device PIN, making logging in both simpler and more secure.

Quilter will be contacting customers directly over the coming weeks with more information, so there's no need to take any action at this stage.

If you have any questions about the changes or need a helping hand setting up the new login options, please don't hesitate to get in touch with your client support team member. We're always happy to help.

MKC Wealth take on Mount Snowdon!

This year, the team swapped their quarterly team day out for a team charity hike in aid of our 3 partnered charities, The Just Finance Foundation, Spark Youth and St. Mark's Debt Advice.

They laced up up their hiking boots and climbed the summit in support of organisations that help people build financial resilience and overcome some of life's toughest challenges. Shame the view was foggy but they got there!

We intend to close the page on Monday 3rd August so if you'd like to sponsor the climb the MKC Wealth team did, your donation will help provide financial education, mental health and enterprise support, and debt advice for people who need it most.

And he loved it!

This summer, Eddie visited three schools across the UK, where he read his acclaimed book, Eddie and the Bees. As well as enjoying the story, the children took part in colouring activities and planted wildflower seeds to help support bees. They are now excitedly watching their flowers grow.

Don't forget.. we offer these books out exclusively to our clients. You can request them below. Alternatively, they are also available to buy on Amazon with all proceeds going to Just Finance Foundation.

That’s our 5 minutes up this month.

If you need to get in touch with us at any point about anything you have seen above, please feel free to call us on 0207 702 4488.

As a reminder, many of our new clients come to us through recommendations from existing clients, and we’re incredibly grateful for your continued support. As a thank you, we’ll send you a £100 gift voucher of your choice for every successful referral. You can find all the details, along with your personal referral link, via MKC Client Connections.

Dom Rose

CEO at MKC Wealth

Disclaimer
The value of your investments and the income from them may go down as well as up and neither is guaranteed. Changes in exchange rates may have an adverse effect on the value of an investment. Changes in interest rates may also impact the value of fixed income investments. The value of your investment may be impacted if the issuers of underlying fixed income holdings default, or market perceptions of their credit risk change. There are additional risks associated with investments in emerging or developing markets

Investors could get back less capital than they invested. Past performance is not a reliable indicator of future results.

MKC Wealth Ltd does not provide taxation advice. Taxation advice is not regulated by the Financial Conduct Authority.

Important Information
MKC Wealth Ltd is registered in England with Company No. 05016078 and is authorised and regulated by the Financial Conduct Authority with firm reference number 428734. All companies are wholly owned subsidiaries of MKC Wealth Holdings Limited a company registered in England with Company No. 12743231at Walsingham House, 35 Seething Lane, London, EC3N 4AH.  Group VAT registration number 415 7849 70.

MKC Wealth advises on Pensions, Investments and Life Assurance from the whole of the market. The value and income from your investments can rise as well as fall. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested. Past performance is not a guide to future returns.


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