The Importance of Protection

We all hope to live a long and healthy life, but have you stopped to think what if everything did not go to plan?

According to research from Unbiased.co.uk, 30% of UK adults are uninsured in some of the most important aspects of their lives that include income protection, life insurance and critical illness.

The recent case of Fabrice Muamba, a young and fit footballer who collapsed during a match, demonstrates our vulnerability. 

What if you became too ill to work or died?

Who would support your family? Who would pay the school fees and/or help your children through university? Who would pay the mortgage?

If you do not have a family or a mortgage, who would pay the bills and basic living expenses if you could not work?

There are a number of different policies that can help in these situations.

An Income Protection (IP) policy is used to replace earnings lost if you are unable to work because of long-term illness or injury.

A Critical Illness Cover (CIC) policy pays out a lump sum you are diagnosed as having one of the specified critical illnesses.

Instead of a policy that pays out a lump sum on your death, it is possible to have a policy that will pay out a tax-free income over a specific term. Premiums for this type of policy can be very cost effective.

A Whole of Life (WOL) policy will pay out a lump sum to your dependents following your death. This could potentially help pay some or all of an inheritance tax bill.

At Ward Williams Financial Services, we can help you to find the right type and level of protection suitable to your circumstances in order to give you and your family peace of mind.

Please call us on 01932 830664 to find out more or to book an appointment with one of our highly qualified financial planners.

BUDGET 2012 – Granny Tax and Pasties

George Osborne delivered his third budget on 21 March 2012.  The contents of the budget were so well rehearsed by politicians, pundits and papers that the real thing threatened to be an anti-climax.  There were no major surprises but some interesting announcements for businesses and individuals alike and the usual controversial headlines.

Business Highlights

For businesses the focus was on moving towards making the UK a more competitive place to do business.  The main changes included a further 1% cut in corporation tax which means that the large company rate will be 24% from 1 April 2012, falling to 23% in 2012 and 22% in 2014. 

The Chancellor confirmed details of the new ‘Patent Box’ regime which will mean reduced rates of corporation tax on qualifying Patent profits from 1 April 2013 and an eventual rate of 10% by 2018. 
An ‘above the line’ credit for Research and Development will be introduced from April 2013.  Loss-making companies will be able to claim a payable credit.  As previously announced, from 1 April 2012, the rate of R&D tax credits for Small and Medium sized Enterprises will increase from 200% to 225%.

Corporation tax reliefs for the creative sector were announced including the video games, animations and high-end television sector.  These will be introduced from April 2013, subject to EU State aid approval.

Small businesses (with turnover of less than £77,000) will welcome the proposed voluntary cash basis for calculating tax which will be introduced from April 2013, subject to consultation.  There will also be consultation on a simplified expenses system and on proposals to introduce a disincorporation relief.  These measures are all designed to improve the administration of the tax system for small businesses.

Stamp Duty Land Tax and VAT

A new Stamp Duty Land Tax rate of 7% for residential property purchases with a value of £2m was introduced with immediate effect. In addition, a higher rate of 15% will apply to residential properties purchased by companies and certain other ‘non-natural’ persons, subject to exemptions for property developers.

For VAT the main announcement was the launch of a consultation to correct VAT anomalies and close loopholes, including those in relation to the supply of hot take-away food.  The Chancellor’s intention is to ensure that all hot food is taxed at the standard rate of 20%.  Since the Chancellor’s budget speech there have been a number of headlines relating to ‘pasty tax’ and increasing pressure on the Chancellor to reconsider his proposals.

Personal Highlights

On the personal tax side the main headline was the reduction in the tax rate of income tax from 50% to 45% from 6 April 2013.  This follows growing criticism of its effectiveness to raise revenue and suggestions that it is a risk to UK growth.

The announcement of the gradual phasing out of the age-related personal allowance was not well received by the media and tax-payers alike.  Branded by the media as ‘granny-tax’ there will be no increase in the age-related personal allowances from 2013/14 until alignment with the standard personal allowance is achieved.
For 2013/14 the standard personal allowance will rise to £9,205, moving nearer to the Chancellors target of £10,000.  The basic rate band will be reduced from £34,370 to £32,245.  This will mean that the higher rate threshold will reduce from £42,475 to £41,450.

Child benefit will be withdrawn for some taxpayers by an income tax charge with effect from 7 January 2013.  The charge will apply to households (regardless of marital status) where a parent or partner has an ‘adjusted net income’ of over £50,000 a year. 

As well as making several changes to the existing Enterprise Investment Scheme regime, the previously announced Seed EIS (SEIS) was introduced.  The SEIS will give 50% income tax relief for investments in qualifying companies of up to £100,000 and a CGT reinvestment exemption.

The 2012 Budget presents a variety of challenges and opportunities.  For more information and advice on how you will be affected personally please contact Ward Williams at enquiries@wardwilliams.co.uk or on 01932 830664.

SMEs warned of £7 billion tax waste

According to a survey by a consumer advice site, small and medium sized businesses (SMEs) will waste more than £7 billion in unnecessary payments to the taxman this year.

This is because SMEs are not making better use of available tax allowances and business arrangements.

The three main areas where tax reliefs were being wasted were found to be:

1.      Incorporation

The number one area of tax wastage for SMEs is incorporation, which stands at more than £4.22 billion alone. Changing from a sole trader or partnership and becoming a company can save tax and NIC. For instance in tax year 2011/12 the saving on profits of £50,000 is £4,257.

2.      Use of self employed sub-contractors

The survey suggests that £2.05 Billion in tax and National Insurance contributions is overpaid because sub contractors are incorrectly treated as employees

For both 1. and 2. above, advice from a qualified accountant must be obtained to ensure all aspects are considered before a change is made.

3.      Not claiming Research and development allowances.

Total extra tax paid under this heading is estimated to be less than the others mentioned above, but from 1^st April 2012 the relief is set to rise to 225% of relevant spending. (i.e. for a small company at least 45% tax relief). SMEs should carefully review their activities to decide whether their processes and technologies fulfill the relevant criteria. It is shocking to note that, according to the report, only 12% of eligible businesses make use of R & D tax relief.

The report opined that “tax is a vast and complex subject and business owners often simply do not have the time to manage their tax affairs or understand the allowances available to them whilst also running their business day to day.”  It concluded by suggesting  that the use of  a professional adviser, such as an accountant or independent financial adviser could really make a difference to the amount of tax a business paid.

At this time, when bank borrowing is perceived to be difficult, any saving of tax might lead to more growth for the UK’s SMEs.

For further information/advice on this topic please contact Ward Williams: www.wardwilliams.co.uk

Preparing for the New Tax Year - Practical Tips

Keep Clear Records
Keeping clear records is a tax essential. If your records are clear (and complete!) then there is more chance that your tax return will be accurate and include full claims for all legitimate expenses. Furthermore, knowing you have been keeping clear records means you can worry less about how difficult a tax enquiry could be.

Write down every expense
Self employed persons are often surprised at the types of expenses that can be claimed against their income for tax purposes. Generally speaking anything that is ‘Wholly and Exclusively’ incurred for your trade can be claimed, but if you incur expenses and you’re not sure if you can claim for these, then write them down and ask your advisor as you may find that a claim is possible. If you don’t write it down then you will never know!

Finish your tax return as soon as possible after the tax year ends
This year almost 10% of taxpayers filed their 2010/11tax returns late or not at all and thus will have incurred an automatic £100 late filing penalty. Finishing your tax return well before the deadline not only means you avoid the penalties associated with late filing but will also mean that you have more time to prepare for any January bill, or you will be able to reclaim any tax due to you sooner. You will also stand more chance of remembering what that illegible scribble in your books means.

Make sure your employer has given you everything
Employees are annually issued with a form P60 to show their taxable earnings and tax deducted for the tax year. This form is indispensable for any employee completing a tax return and must be given to the employee by 31 May following the end of the tax year. However many employees are unaware that another form is also essential if they want their tax returns to be correct and complete. For any employees receiving taxable benefits in kind (i.e. company cars or medical insurance) or expense payments where the employer does not hold a dispensation, a form P11d should be issued to them by 6 July following the end of the tax year. The Revenue receive these forms directly from the employers so if an employee misses this from their tax return, then more than likely they can expect HMRC to get interested.

Don’t forget your bank interest
Self Assessment is designed to collect information on all of a taxpayer’s income, not just income from business sources. Bank interest from all accounts (but not ISAs) must be shown on the tax return. Banks send HMRC your bank interest details each year and if there is a discrepancy then HMRC may raise an enquiry.

Be generous
Make sure you tell your advisor about any charitable giving you have been doing during the year. Higher rate tax payers can get up to 30% gross tax relief just because they have donated money to a registered charity. This could mean up to £30 of tax saved for an £80 donation. A gift aid declaration should be made when donating the money and a copy kept in your file.

Don’t forget tax credits
Tax credits aren’t just for people on very low salaries or necessarily just for those with young children. H M Revenue and Customs provide an easy to use calculator which takes only a couple of minutes to complete, asks no difficult questions and gives you an instant result as to whether or not you are entitled to make a claim. You can find this calculator at http://taxcredits.hmrc.gov.uk/Qualify/DIQHousehold.aspx.

Avoid paying a lump sum in January
Anyone receiving income from a PAYE source and completing their tax return by the 30 December is eligible to have any tax they owe ‘coded out’ provided that certain limits are fulfilled. This means that instead of demanding a lump sum payment at the end of January, HMRC will include the tax due in your next PAYE coding notice and collect it gradually via your pay in the next tax year. Your advisor will be able to help you determine whether this is a viable option for you.

Don’t panic if you receive an enquiry letter
HMRC can raise an enquiry where they believe information on your tax return is incorrect. They can also raise an enquiry randomly, so don’t just assume that they know something you don’t. Enquiries are often best dealt with the help of an advisor but you can lessen the stress by adhering to our tip on keeping clear records.

See an Independent Financial Advisor
Independent Financial Advisers are able to give tailored advice regarding all types of financial strategies and investments. Ward Williams Financial Services offer a free initial consultation and include in their considerations any tax savings you could make.  Pension contributions, ISAs, Premium Bonds, EIS investments, VCT investments can all potentially save you tax, and our advisers are able to help set up all of these.

For further information/advice on this topic please contact our Ward Williams Tax team on 01932 830664 (Weybridge) 01895 830664 (Uxbridge) or visit http://www.wardwilliams.co.uk/

A day in the life of a HR Director - by Sally Phillips, Ward Williams HR

Over coffee at home this morning I’m pondering over what is already on our agenda for this year and deadlines to adhere to. Today I will be working on Recruitment - preparing to deliver a Management Training Course and preparation for rolling out annual reviews; all for a variety of clients.

I was also going back over past employment where I used to wake up every morning thinking to myself – another day another dollar! They were the days when I just went to work and hadn’t really thought about what I really wanted to do. Well that’s all history now. I smile to myself when I get out of bed and get ready to go to the office. Don’t get me wrong I don’t like the cold dark mornings  - but  I don’t class my role as work or a job, it’s what I do and I love every minute of it. No day is the same and each day brings different challenges. 

Many people view positions in Human Resources as just administrative, but to be successful  you will have to have a good knowledge of your client’s business and be able to recruit the best possible candidates for the roles in line with business priorities. You will also be excellent at identifying training requirements for staff, ensure that diversity objectives are met and support line managers and heads of department.  It’s so important to work closely with our clients and form an open and honest commercially based relationship. This enables us to recommend what’s right for their business and deliver the right solution.

So my day starts with addressing all of the above. We pride ourselves on the ‘excellent’ quality services we provide. This is reflected in our client retention numbers and the positive feedback we receive from our clients.

Our HR department consists of Kate, Collette and I; together we ensure that our clients have the right people to achieve its business objectives and to keep it running successfully whilst ensuring compliance.

My next challenge is to prepare for our client’s management training course. They have recently restructured the group and have given heads of departments key responsibilities in the running of their departments. This has enabled their HR department to delegate a lot of their workload back to the managers. They will now be more hands on with the managing of their departments and we need to ensure that we deliver the correct training to further develop their people skills.

 I list out the topics that I will be covering and start preparing the workshop. Workshops work well as they encourage everyone to move out of their comfort zone. For some people moving into a management role can be uncomfortable so I focus on subjects such as ‘developing yourself and others’, ‘communicating effectively’ and ‘how to continue to motivate yourself and your team’. This year the department heads will also be responsible for conducting their teams annual reviews, so again training in this area will be carried out prior to the reviews being rolled out.

Our priority is to fully support the employer with up-to-date templates covering all aspects of HR, along with indemnified advice and telephone support. We also want to ensure their staff remain motivated in their roles, and by getting their internal HR right relays a positive and professional message to the people within their organisation. Having WWHR on board is a solid investment into the success of their organisation and the development of their staff. So the saying ‘another day another dollar’ is quite apt with investing time and training staff.

Are you ready for the Olympics?

The 2012 Olympics are fast approaching along with requests from employees to take leave either as a spectator, a volunteer or for flexible working arrangements. As an employer it is important to understand and to work with your employees to try and find a balance between the requests made by your employees, and how these can be managed to avoid affecting the needs of your business.

Your employees may be divided into the following groups according to their level of involvement:

Employees requesting time off as spectators:

Many employees will know by now which events they plan to attend so it will be worth taking some time to discuss options.

Employees requesting time off as volunteers:

Employees should receive notification by early 2012 if they have been selected to participate as a volunteer – it’s worth noting some of these requests can be as much as 10 days leave with an additional 3 days training.

Employees remaining at work requesting flexible working arrangements:

Some employees may not be attending the games but may request some flexible working arrangements in terms of watching some of the events.

Employees that choose to have no involvement:

Others may have no interest at all but it will be important to avoid perceived favouritism towards those that would like to be involved.

For more information on keeping the balance right, introducing a policy or on any other issues to avoid as the 2012 Olympic Games approaches then please contact Sally Phillips at Ward Williams HR on 01932 834712 or email sally@wardwilliams.co.uk