Will cashing in your annuity lead to a better pension?
The chancellor George Osborn has announce that he plans to allow pensioners to cash in their annuities.
Before the pension reforms….
Individuals saved into a pension during their working life and so built up a pension pot.
At some point during the first years of retirement, they used the money to buy an annuity from an insurance company.
This is a transaction that occurs once, and only once.
An annuity is an annual retirement income that is paid to them for the rest of their life.
From April 2016 the proposal is to allow pensioners to swap an annuity for a fixed lump sum.
But will pensioners be able to find investments which are better than the annuity they currently have?
steve@bicknells.net
It’s a small world
Small businesses are the mainstay of the UK economy. Forget the large companies – small businesses are where it is at!
The UK is a nation of entrepreneurs and we brits are great at taking the plunge into business ownership – whether it is a self employed professionals or as small business owners employing staff.
However, for many entrepreneurs taking the plunge is not the hardest part – it is running a successful company in the longer term that provides the stress.
The problem here is that the prospective entrepreneur has often not done their homework.
In particular:
- They have an idea they are sure is going to work, but have not done a full business plan to explore whether it can be converted into a successful business.
- They have not consulted appropriate professionals to ensure their company is set up in the best way.
- They don’t align their personal and business goals. They soon find their business running their lives rather than them running their businesses.
- They don’t finance their business sufficiently from the outset, which means they can never afford to do jobs properly. Marketing in particular often suffers in this scenario.
- Because they haven’t planned properly they don’t fully appreciate the risks involved in setting up their business until it is too late.
Starting your own business is a BIG step. If it fails you may not just lose your livelihood but also your house (and your family if you have had to work very long hours).
It makes sense to give your business the best possible chance of succeeding.
To help I have written a guide on starting your own business which can be downloaded for free from my website www.fionabevanfinancialmanagement.co.uk
I have tried to cover all the issues you will need to think about before taking the plunge as well as some of the things which might trip you up.
Enjoy!
Fiona 🙂
Free Auto Enrolment Checklist to Maximise Profits
For years, accountants and bureaus have been offering payroll services, taking a massive burden off the hands of their clients. However, the payroll profession has changed dramatically over recent years with the introduction of Auto Enrolment. A significant 1.2 million small and micro businesses are set to start staging between June 2015 and the beginning of 2018. The Pensions Regulator defines small businesses as employers with 5 to 40 workers and micro businesses as having one to four workers.
The thought of choosing the right payroll provider has exasperated with the new AE employer duties that need to be completed. Some software providers are avoiding auto enrolment completely, while others are offering AE features with limited functionality or at a high extra cost. If you have payroll clients they may have an expectation that you will handle the AE setup and ongoing duties for them. For bureaus, it will be…
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What if you change a dividend to salary
Let’s look at the case of Richard and Julie Jones v HMRC [2014] UKFTT 1082 (5 December 2014).
They took a small salary and regular dividends from their recruitment company which was absolutely fine until the company got into financial trouble!
Their accountant (unethically but in an attempt to help their client) suggested they should re-write history and change the dividends to salary so that the liquidator couldn’t recall the dividends.
HMRC then decided to demand PAYE and NI and pursued Richard and Julie personally.
HMRC was refused the right to collect PAYE tax and NI due on the salary, not because the law didn’t allow it, but because it wasn’t possible for Richard & Julie to reclassify the dividends. They had been properly paid and the correct procedure followed. History couldn’t be rewritten and the dividends should have been changed to loans if the dividends were illegal.
steve@bicknells.net
Who cares what you think?
Are testimonials worth anything?
Many websites include “testimonials” from “customers”, but do they have any worth? If you want to attract new business it is good to be able to publish positive feedback, which helps demonstrate the value that other customers find in your service. The problem is that if reviews are obviously edited and self-selected they are not obviously representative of the views of your customers. Single line reviews taken out of context can be particularly misleading!
Use external review sites
One of the best-known review sites is tripadvisor. The greatest strength of these reviews is that hotels and restaurants etc have no control over the reviews. They have the opportunity to respond to criticism, but can’t cherry-pick the best reviews to give a false impression. The Pensions Regulator website is keen to point out that “private sector organisations we link to are not endorsed by Government and are provided for information only”; however it is worth noting that they include a link to VouchedFor on their advice page for individuals and in their guide to finding an advisor for Pension Auto Enrolment.
VouchedFor
If you are looking for a hotel you would probably prefer to check tripadvisor rather than lot of different websites for reviews. VouchedFor works along similar lines to tripadvisor, but for Accountants, Financial Advisors and Solicitors. Professionals who have a listing on the site must confirm that they recognise the name / email address of any reviewer before the review is posted online. Just like tripadvisor the professionals can’t read the review until is online so they can’t edit out any negative feedback and poor scores.
Tim Alter appeared in the guide in The Sunday Telegraph on March 29th. You can also read all his great client reviews on his VouchedFor profile!
Auto Enrolment
Many small businesses will need professional advice to help them set up a pension scheme to comply with Auto Enrolment regulations. If you are an employer and still need to prepare for your staging date, you can use an Accountant or Financial Adviser to guide you through the process. For help with setting up your payroll and preparing for your staging date, please contact Alterledger.
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New ‘Starter Homes’ scheme gives 20% discount!
The 20% discount is achieved by waiving local authority fees for homebuilders of at least £45,000 per dwelling on brownfield sites.
At the heart of the Starter Homes initiative is a change to the planning system. This will allow house builders to develop under-used or unviable brownfield land and free them from planning costs and levies. In return, they will be able to offer homes at a minimum 20% discount exclusively to first time buyers, under the age of forty. Under the proposals, developers offering Starter Homes would be exempt from those Section 106 charges and Community Infrastructure Levy charges. The homes could then not be re-sold at market value for a fixed period – making sure that the savings are passed onto homebuyers.Gov.uk
To qualify first time buyers must be under the age of 40 and living in England
steve@bicknells.net
Don’t be an April Fool!
Over the years I have met business owners who offer a great product or service but are really struggling with their cash control.
One of the reasons is exemplified by a conversation I had the other day with just such a business owner. They have no problems finding the right customer and do a fantastic job for these customers.
However, the business owner has a real stumbling block when it comes to invoicing and debt collection. Firstly, they hate the process of invoicing itself – it is a chore they put off as long as possible. Secondly, once the invoices have gone out they are very reluctant to chase for the money owing to them.
In my opinion they are being an April (and every other month of the year) fool.
They are working hard but because they are not following through, and collecting the money owing to them in a timely fashion, they are struggling to pay their bills.
What makes the situation worse is that they have employees they MUST pay every month irrespective of whether the business is paid or not.
There is a clear lesson to learn here – if you are unable, or unwilling, to deal with the discipline of invoicing and debt collection you must find another way of getting these jobs done. If you don’t, you may lose your business.
So what are the alternative approaches you can take?
Firstly, many bookkeepers are more than willing, and able, to take on the invoicing and debt collection roles for you. The benefits of delegation will way out-weigh the costs.
Secondly, you may already have a member of staff on your team who can take on these jobs.
Thirdly, if you really have to do these jobs yourself, you must change the way in which you approach them. Have a very clear procedure detailing exactly how often invoicing should be done (at least once a week would be my recommendation), block out time in your diary every week devoted to invoicing and debt collection, and understand that any work you do for clients is worthless unless you are paid for it!
For extra help with invoicing and debt collection please download the ‘Getting Paid’ guide on my website http://www.fionabevanfinancialmanagement.co.uk/guides.php
Good luck
Fiona 🙂
New Tax Break for Couples – Register Now
A new tax break will start from 6 April 2015, which will be eligible to more than 4 million married couples and 15,000 civil partnerships.
The Allowance means a spouse or civil partner who doesn’t pay tax – therefore is not earning at all or is earning below the basic rate threshold (£10,600) – can transfer up to £1,060 of their personal tax-free allowance to a spouse or civil partner – as long as the recipient of the transfer doesn’t pay more than the basic rate of income tax.
Applying online is straightforward. Couples can register their interest to receive the Allowance now at gov.uk/marriageallowance.
The maximum saving is 20% x £1,060 = £212
However, the partner giving up the allowance must not be earning and the partner getting the allowance must not be a higher rate tax payer.
steve@bicknells.net
A Positive Plan?
I regularly write about how many people start the new year with a set of new goals, or resolutions. By the end of March many of these goals are a dim and distant memory.
The reason for this is that January is often not a very positive time of year. With its dark days and long nights, contrasting with the gaiety surrounding Christmas, January can also be the darkest month of the year physiologically. Not the time to create new plans and start to change your outlook.
Three months on it’s a completely different story.
The clocks have just changed so we have longer evenings. The sun is shining, the buds are appearing and the world seems fresh and new.
What a fab time to be thinking about the future.
In my opinion creative juices flow better when we have the opportunity to get out of our offices and enjoy the sunshine. We are more positive and open to opportunity. We are less likely to dismiss ideas out of hand or procrastinate.
Others must be thinking this too as over the last month or so four owners have come to me for assistance in putting together plans for their businesses. One is for a completely new business, but the other three are established businesses looking for a change in direction.
So if you need to change your business plan or set goals for yourself and your business, NOW IS THE TIME TO DO IT!
Fiona 🙂
Is my website a fixed asset?
HMRC use the Analogy of a shop window….
The cost of a web site is analogous to that of a shop window. The cost of constructing the window is capital; the cost of changing the display from time to time is revenue. (BIM35870)
UITF Abstract 29
Set out 4 key areas of cost:
- Planning – P&L
- Application and infrastructure development – Tangible Fixed Asset
- Design costs – P&L
- Content costs – P&L
HMRC also have some useful information on software in CA23410
CAA01/S71
Computer software qualifies for PMAs if it is not already plant.
Computer software is not defined in the capital allowance legislation. You should treat computer programs of any type and data of any kind as computer software. Computer programs range from operating systems like Windows to games like Solitaire. There may be no physical asset because software is sometimes transferred by electronic means, for example it may be downloaded over the Internet. Software acquired that way is also plant.
A person may acquire a right to use or otherwise deal with computer software. If so, the right and the software to which it relates are plant. Treat the person as owning the plant while the person is entitled to the right.
Capital Allowances and the Annual Investment Allowance can be claimed against Plant including software.
steve@bicknells.net
Business Accountant 