A progressive, South West based accountancy practice

George’s Balancing Act

Another political budget, with one eye on the EU referendum, and another on the looming battle to replace David Cameron as Tory party leader. George Osborne has to avoid alienating the general public, AND keep as many Tory MPs on his side, so they vote for him when David Cameron’s long announced retirement as PM takes effect.

So what has George pulled out of his magician’s hat?

The budget has been delivered against a backdrop of slowing growth, and concerns about the global economy. There has been a significant amount of prior publicity, so we knew some of what was coming. It’s been described as a “budget for the next generation”, which basically means the Chancellor is appealing to the under 40s.

The following report highlights some changes that you need to factor in to your forward planning.

Changes affecting individuals
Stamp Duty Land Tax
We were promised the result of the recent consultation on the new SDLT regime, which takes effect on 1 April 2016. While this could be reported under Changes Affecting Landlords, the impact will be much wider.

Anyone buying a second home from April will be subject to the new 3% additional charge. This affects not only buy-to-let purchases, but also parents buying homes for their children, and homeowners who buy a new home before selling their own (although they can get the extra SDLT back if they sell within 36 months). It could also affect couple buying a home together where one partner already owns their own home.
The additional SDLT will not apply if you buy a replacement property within 36 months, even if you owned more than one before the sale of the property which is subsequently replaced.

Exemptions have been introduced for:

  • Married couples who are separating and having to buy another place to live.
  • People buying a property who own 50% or less of another property that was inherited within the last 36 months.
  • Replacement of a main residence within 18 months of selling their old main residence, even if they already own another property.

Income tax
The increase in the personal allowance (to £11,000) is welcomed, if you earn over £10,600 per year. This will save £80 for a basic rate taxpayer. The allowance is rising to £11,500 in 2017/18. The aim is to get it to £12,500 by 2020/21.

The higher rate threshold will increase to £43,000 from next month, then £45,000 in April 2017. The government are aiming for a threshold of £50,000 by the end of this Parliament (May 2020).

The amount of Marriage Allowance that can be transferred is increased to £1,100, meaning the saving increases to £220 from £212 this year.

Savings and pensions
The threatened attack on pension saving has been deferred.

A new “Help to Save” scheme has been announced. Savers on some tax credits will be given bonuses if they save more than £50 per month. In principle, it is similar to the “Help to Buy” scheme, but is less generous and you do not need to buy a house with the savings.

A new “Lifetime ISA” is to be introduced in April 2017.

Anyone aged 18 – 40 can open an account, and receive a bonus of 25% of the amount saved before their 50th Birthday. However, the bonus is capped at £1,000 per annum.

The bonus, and any growth on it, are clawed back if funds are withdrawn before your 60th Birthday. There is also a 5% charge on any funds withdrawn before the holder’s 60th Birthday. Funds can be used to buy a house without penalty, after 12 months.

The government are exploring whether other life events could be funded without penalty, and if holders may borrow against the security of the fund, as long as any loan is repaid.

The limit for saving into a general ISA is rising to £20,000 in April 2017.

Capital Gains Tax
The rate of CGT will drop from 28% to 20% (for a higher rate taxpayer) and from 18% to 10% (for a basic rate taxpayer) from April 2016. The reduced rates do not apply to taxable gains on residential property and capitalised interest (which is just disguised income).

The 10% rate under Entrepreneurs Relief has been extended to shareholders who acquire newly issued shares after today, and hold them for at least three years after 6 April 2016.

Insurance Premium Tax
IPT will rise from 9.5% to 10%, with the extra cash being spent on flood defences.

Sugar levy
A new levy on soft drinks, based on their sugar content is expected to raise £520 million. This will fall as producers switch to lower sugar alternatives, and education consumers to buy more healthy alternatives. The monies raised will be spent in improving sport in primary schools, funding extended school-based activities and encouraging breakfast clubs.

Additional changes affecting landlords
Landlords are subject to income and capital gains taxes or corporation tax, depending on which structure they use for their property interests
Wear and tear allowance
From April, landlords will only be able to deduct the actual amount spent of repairs and replacements in their rental portfolio. Until now, you have been able to deduct an allowance of 10% of the rent (less council tax/rates if paid)

Property income exemption
A new exemption has been announced.  Landlords with small amounts of income will be able to deduct £1,000 from their income, instead of the actual expenditure.

Changes affecting businesses
The Chancellor has announced a Business Tax Roadmap, which sets out where he expects to take business taxation over the rest of the Parliament. This is a clear attempt to provide some certainty in the tax arena in the run up to the EU referendum. Uncertainty is a big enemy of investment, so anything that reduces it is to be welcomed, even if the roadmap shows increasing taxes. (You can always plan around the hikes if you know they’re coming).

Corporation tax
Currently 20%, it will reduce to 19% on 1 April 2017, and to 17% (was 18%) on 1 April 2020.

Business Rates
The threshold for receiving 100% rates relief has been increased from a rateable value of £6,000 to £12,000. Between £12,000 and £15,000, a tapered rate will apply. The changes take effect from April 2017.
Future increases will be referenced to CPI, rather than the higher RPI figure. While quite technical, it will cut the rate of increase in the business rate burden.

Class 2 NIC
This small levy has been abolished, with effect from April 2018.

The treatment of non-residential property is being brought into line with that for residential property. SDLT will be charged on that slice of the purchase price within bands as follows:

Purchase price
Rate applying to slice
Up to £150,000 0
£150,001 – £250,000 2%
£250,001 – £500,000 5% (was 3% on whole price)
Over £500,000 5% (was 4% on whole price))

A purchase price of £250,001 will now give rise to a SDLT liability of just £2,000.05, instead of £7,500. At £500,001, the liability falls from £25,000.05 to £14,500.05.

Termination payments
From April 2018, new rules will ensure some termination payments that currently avoid NIC will be subject to the 13.8% employer NIC charge. More on this during 2016/17.

Salary sacrifice arrangements
The Government has been concerned about the 30% increase in arrangements since 2010, but remain committed to allowing pension contributions, cycle to work schemes and child care schemes to be included in a sacrifice arrangement.

Although specifically targeted at the public sector, there is to be a consultation on a simpler set of rules to determine whether a worker using his/her own company should be subject to the rules known as IR35.


The election’s over, what’s next?

So now we know the outcome of the most unpredictable election in a generation. The question for good businesses is not “How did that happen?”, but

“What happens next?”

The Tories look like they will be just one seat short of an overall majority. They are likely to form a government without partners, as the opposition is too divided to vote them out, so another 5 years as PM for David Cameron is on the cards.

The main opposition is likely to come from within the party. By this, I mean from his euro-sceptic element. It is possible that EU membership becomes the main battle ground for the next five years.

This uncertainty will be damaging to business, and my hope is we get to the promised in/out referendum as soon as possible.

What does that mean for business?

In many ways it is good news for business. The economic policy will continue. Deficit reduction will remain the central aim. In fact, the aim will be to generate a surplus.

The uncertainty over our EU membership is perhaps the biggest worry for business, especially those who export to that bloc.

General comments

The stability that this result brings probably means that interest rates will stay low for a while longer. We should see a gradual rise back to “normal” levels by 2020. This provides an opportunity to pay down debt, and strengthen the balance sheet.

As I write (midnight on Election Day), sterling has risen on the FX markets, meaning UK exports are more expensive, but imported costs are lower. The pressure for an early rise in interest rates is much reduced.

Here are a few specifics, and some suggested action.

A lower target for tax avoidance revenue

Despite my question on TV (!), (http://www.bbc.co.uk/iplayer/episode/b05t39yq/election-2015-english-regions-election-2015-a-bbc-spotlight-special) we have no idea on where the Government will raise the extra £5bn they pledged in their manifesto. We can expect most of the “vanilla” planning to remain unchallenged.

Presumably, some of the more esoteric strategies will be attacked, and there may be a tightening up of the rules on some of the CGT reliefs. Tax relief on pension contributions may also be restricted.

Therefore, the action point is to review the normal salary/dividend mix, expecting the planning to remain available.

If you are planning to sell your business over the next five years, it might be sensible to start planning now, as the only major taxes not subject to the “no increase” pledge are CGT and Corporation tax.

More encouragement to take on workers

The Tories have pledged to continue the employment allowance, so employers will be able to take up to £2,000 per annum off their Employer NIC bill. The pledge was to keep it for five years!

They want to fund up to 3 million more apprenticeships, and aim for full employment.

Small businesses should now be considering whether this is the right time to take on an apprentice. The skills shortage is likely to be the biggest brake on growth over the next five years.

The action to take here is to develop a five year plan to recruit apprentices and train them up to be your next generation of managers.

More encouragement to start up businesses

The recent pension rule change has opened up a new source of funding. Up to 10% of retirement age people are considering using their pension pot to fund a new venture.

In addition, the Government want to triple the number of start-up loans to 75,000.

Those considering a new business venture should look outside of the traditional sources for funding; there are a huge number of alternatives to the “Big Four” banks.

Other taxes

Cameron pledged no increase in Income tax, VAT or NIC for five years. It is difficult to see where he can increase taxes, as the Tories want to increase the IHT limit to £500,000 per person (£1m for married couples and civil partners).

The UK is in a competitive market for non-EU companies, so it is difficult to see them reversing the recent trend in reducing corporation tax rates.

This pretty much leaves only CGT, business rates, council tax and consumer taxes (alcohol, tobacco and fuel duty) as the only major areas in which taxes could be raised.

The recently announced review of business rates is expected to increase the take by £1bn, so now is the time to review that rates bill and make appeals if you think you have a case.

Tax reliefs

The other way in which tax could be raised is to restrict tax reliefs. For example, tax relief for pension contributions and gift aid could be restricted to the basic rate of tax. Gift aid relief costs around £1bn a year. Cutting gift aid relief could protect another £0.5bn of tax, without “raising” any tax.

Pension tax relief costs around £4bn a year. Another £2bn could be protected by limiting relief.

If a pension contribution is planned, it may be sensible to do it sooner rather than later, as tax relief may be restricted after the next budget or Autumn statement.

Good housekeeping in general

Of course, major changes are always a good reason to review your prices and costs. We can assist in identifying the “low cost, big impact” changes that would have the most effect, and help you to implement them if required.

Contact us, or your current adviser for help with this.

Director/shareholder reward packages: The dynamics have changed


The introduction of the Employment Allowance (“EA”) allows employers a discount of up to £2,000 off their liability to Employers’ NIC. This has added another factor into the salary vs dividend debate.

There is one other complicating factor as well. The level of other taxable, non-dividend, income enjoyed by the director/shareholder.

If there’s no other income

A salary equivalent to the director’s personal allowance is most efficient. The additional NIC paid by the director (at 12% on the excess over £8,060) is more than compensated by the additional corporation tax saving at 20%.

With no other employees, this works for companies with up to 5 directors/ shareholders.

What if the director has other income?

Many directors own the company premises, and enjoy a rent from that. Where rent (or indeed any other taxable income) is enjoyed by the director, a little more care is needed. The optimal position would be to create total taxable income (excluding dividends) of exactly £10,600 (for 2015/16). So if the director was receiving rent of £3,000 a year, the ideal salary would be £7,600.

What about pensions?

There are two aspects to this.

Contributions to a private pension scheme
Dividends do not count as pensionable income, and so tax relief on personal contributions would be limited to the amount of taxable salary. (Rent doesn’t count either).

The simplest way around this is to get the company to make an employer contribution, but you may need a different kind of pension scheme, and this may need to be negotiated/agreed with fellow directors.

I had just such a case where one of three directors wanted to top up his pension. Unfortunately, the wider savings from the low salary route meant his tax relief was limited to just £5,000, as he already had two smaller schemes running, and the company did not have sufficient profits to get full tax relief on even that small amount.

State pension entitlement
Employees are credited with a year’s worth of contributions if their weekly earnings exceed £112.00 (2015/16 rates). Therefore, the director will need a salary of at least £5,824 to add another year to their state pension accrual. In the example above, a salary of £7,000 meets the criteria, but what if the rental income was £6,000?

Voting a salary of £5,824 would take the director into income tax, as total income would exceed the personal allowance.

At 2015/16 rates, this would impose an income tax bill of £244.80 on the director, but would add a year to the pension entitlement. The cost-benefit decision is personal to each individual; is an extra year’s pension worth paying that tax?

The factors to consider are:

  • how many years before you can take your pension,
  • how long you think you’ll be around to enjoy it, and
  • how much more could you generate in income by saving that tax over the years before you retire/

among others.

Creating alternative income

If the circumstances allow, it may be more efficient to draw one’s income as rent or interest from your own company, rather than by way of salary.


Any rent charged must be at a market rate. We would suggest that a written agreement is drawn up, making it clear who is responsible for repairs etc., as well as covering the amount of the rent.


A director can only charge interest to his company if he has a loan account in credit, and there is an obligation on the company to pay interest. Any “interest” paid on a loan which was intended to be interest-free could be challenged and treated as remuneration. In order to avoid any uncertainty, we would suggest a written agreement, which makes clear the terms of the loan. The agreement does not need to be onerous, but a clear statement can help to avoid later disputes.


The start of a new tax year is a good time to review your financial position, as many rates and allowances change. Thankfully, for directors’ salaries, the annual earnings period means you haven’t lost out if your review has not yet been completed.

Contact your adviser, or drop us a line if you’d like a review done of your personal situation.

Numbers (UK) Limited

5 May 2015

Budget 2014

With many forecasters predicting a quiet budget, you would think there’s not much to report. Think again. There is a vast amount of change incorporated. This blog sets out the main changes, and some of the points for action that SMEs may want to consider….

  1. General taxation

1.1 Tax thresholds

The tax free threshold rises to £10,000, with a further increase to £10,500 in April 2015. The NIC threshold for both employee and employer contributions increases to £153 per week (£663 per month or £7,956 per annum)

Action: If you have adopted the traditional low salary/ dividend reward structure you’ll need to adjust the amounts to keep to the most efficient split.

1.2 Savings rate

From 2015, the Chancellor has abolished the 10% rate for the first £2,880 of savings income, has made it tax free. He has also extended the band to £5,000.

From April 2015, company owners may be able to take up to £15,500 a year tax free, by careful planning of their reward between interest on a DLA, salary and/or rent. This would save over £3,000 a year at current corporation tax rates.

1.3 Transferable allowances

Also in April 2015, it will be possible to transfer up to £1,050 of allowance from a non-taxpaying spouse or civil partner. The maximum amount is set at 10% of the basic personal allowance, so should rise each year.

Action: It becomes easier to maximise tax free income, but a fully transferable allowance would have addressed the current unfairness for families where one partner stays at home and doesn’t earn an income. Now would be a good time to review the current structure of a business to see if it facilitates the tax minimisation offered.

  1. Employment taxes

2.1 Employment allowance

The new employment allowance is worth up to £2,000 per year. It is limited to the amount of employer NICs payable by an employer, and has several conditions attached but will be a valuable boost to cashflow.

Action: Employers must claim the allowance on their first EPS under RTI. It will then be deducted automatically by HMRC from the amount due.

Failure to do this could lead to a delay or even total loss in getting the relief. As someone who has spent a large part of the last year correcting errors made by HMRC under the new RTI system, I face this change with more than a little dread

2.2 Low interest/ interest free loans

The limit is being doubled to £10,000 from April. Essentially to help South East commuters with the cost of their season tickets, there’s no reason why the rest of us cannot look to motivate staff by offering this as part of their deal.

Funding a new car for them may be one idea, but remember, they have to pay it back from taxed income, and you should ensure you can get the loan back should they leave your employment.

And if they have personal debts, on which they are paying interest, you could save them money in their household budget, in lieu of a pay rise.

Action: Review remuneration packages for all staff to see if this could be a tax free way of boosting their personal finances.

2.3 New child care scheme

This has received a lot of press, although it doesn’t start until April 2015. Employees are going to be able to claim tax relief on up to £10,000 of child care costs, but only if both spouses are working. If one stays at home, then you won’t qualify.

Action: Employers should review the new scheme and advise employees of the forthcoming changes. Employees should work out if they are going to better off, and if not, perhaps look to enter a scheme now before the changes are implemented.

2.4 NIC for under 21s

April 2015 will see the abolition of NICs on wages paid to under 21s, provided they don’t earn above the Upper Earnings Limit (£805 for 2014/15). While this may be welcome, it may make over 21s too expensive by comparison. For example, a 21 year old on minimum wage will cost over £273 per week from April 2015. A younger person would cost only £205 for the same working week.

Mind you, there is a 33% increase in cost on that person’s 21 birthday, so it may not be “Many Happy Returns” from employers.

Action: Employers will need to cost very carefully to ensure that the extra maturity/experience of older staff outweigh the considerable increase in costs.

2.5 Employee share schemes

The value of “free shares” that can be acquired under the Share Incentive Plan (“SIP”) is to double to £3,600. There is a similar increase in the value of partnership shares that can be bought under the scheme.

Action: review the available share schemes as part of a wider reward package review ahead of auto-enrolment. With the right product, you can actually secure savings for both employer and employee. Contact us for details.

2.6 Benefits in kind

Car and van fuel benefits are to increase in line with inflation for the next few years. Car benefit scale rates are increasing substantially, and could be as much as 37% of the car’s list price by 2016/17. Tax could be over £3,000 per year for each vehicle.

Action: review all company vehicles and work out whether you and/or your employee might be better off with a privately owned vehicle, particularly if the employer can lend up to £10,000 towards the purchase price. (See para 2.2 above).

  1. Pension taxation

Perhaps the biggest surprise in this year’s budget were the changes to pension funds. The cut in limits had been announced in advance, but the extra flexibility on taking the pension was a welcome surprise.

3.1 Contribution and fund limits

The annual amount of tax relieved contributions is cut from £50,000 to £40,000 from April 2014. The lifetime limit is also cut, by 1/6th, from £1.5M to £1.25M. The cut in annual limit might affect those who have a final salary scheme and who receive a big pay rise or a promotion to a higher paid post. A pay rise of as little as £2,500 could result in a tax charge that takes away some of the pleasure of getting it in the first place.

If you have a final salary pension scheme, ask your employer to find out if you’ll have to pay the tax on the deemed annual increase in fund value, when offered any significant pay rise.

3.2 Taking your pension

The Chancellor made so many proposals today (19 March 2014), that he needs a separate Act of parliament to legislate it all. On the whole, it is very good news. You will no longer have to take an annuity on or before the age of 75. Neither will you face the penal tax charge of 55% if you choose to take more than the tax free lump sum. You’ll be taxed at your marginal rate, which will be much lower for most people.

3.3 Small pension posts

If your pension savings total less than £30,000, you will be able to take the whole amount tax free. The current limit is about £18,000. If your total funds are worth more than £30,000, you’ll still be able to take up to three in total if individually, they are worth less than £10,000 each. The previous limit was £2,000.

3.4 Income drawdown

The limits have been improved here as well, with a reduction in the income needed to qualify (to £12,000 from £20,000) and an increase in the amount you can take (from 125% of the equivalent annuity to 150%).

Action: Although the changes take effect from 27 March 2014, legislation is required. In any event, it is even more important to take independent advice, as the breadth of options has increased significantly.

We can recommend a good financial adviser from our panel.

4 Business taxation

4.1 Capital allowances

Up to £500,000 of qualifying capital investment can be written off against profits in the year in which it is incurred. The increase (from £250,000) takes effect from April 2014. Previously, we were expecting the limit to drop back down to £25,000, but this is not enough to make major investments.

Action: Review your investment plans, and if tax relief is a vital factor in affordability, consider making the investment before April 2015, when the relief may be cut. 

4.2 R&D tax credits

Most businesses invest in R&D, most without realising it. The amount of expenditure that can be offset against profits (current or future) is 200% of the actual amount that qualifies. This can be surrendered for a cash payment. In the 2014 budget, the percentage cash refund is increased from 11% to 14.5%, for expenditure incurred on or after 1 April 2014.

Action: Review your business to see what, if any, expenditure qualifies, or ask us to conduct the review for you.

4.3 Corporate tax rates

The “main” rate of Corporation Tax drops from 23% to 21% from 1 April 2014. Having an inefficient group structure, or a series of associated companies has thus become less expensive. The marginal rate of tax will fall from 23.75% to 21.25%.

Action: There is now very little “damage” in terms of extra tax in setting up numerous companies all controlled by the same individual or group. A review of business strategy should be done to identify whether the “hiving off” of activities into separate companies may be of benefit.

4.4 Other changes

Improvements to various investment schemes (e.g. SEIS) have been made.

Action: Review these schemes as part of your overall investment/tax mitigation strategy. We hold joint meeting for clients with an IFA to cover the broadest possible spectrum of options, so call if this is of interest.

4.5 Partnership taxation

Although this is termed as anti-avoidance, the imposition of employment taxes on salaries partners in LLPs, and the cancellation of tax motivated profit share allocations in all partnerships, may hit innocent partnerships. Where profits have been allocated on a commercial basis, perhaps in line with a partnership agreement, HMRC should hold back from imposing a tax charge.

Action: review your partnership profit sharing arrangements and structure to ensure it is commercially defensible. Review the new legislation when it is published and make amendments if you feel vulnerable.

4.6 VAT registration limits

These are increased to £81,000 (from £79,000), with the deregistration limit increasing by £2,000 as well, to £79,000.

Action: Review your business transactions to see if you still need to be VAT-registered, or if you can gain an advantage by using one of the Vat schemes available (e.g. flat rate scheme, cash accounting or annual accounting).

  1. Future changes

There’s a lot of changes already planned in for 2015 and 2016, so watch our social media output for details!

Numbers (UK) Limited

19 March 2014

George’s Marvellous (?) Medicine


George Osborne has just delivered his last Budget speech before the election. As it stands, the election is too close to call, so who knows if he’ll get another opportunity.

This was a highly political budget, but included a huge number of changes. I’ll attempt to summarise those changes, and list some action points.


The budget has been delivered against a background of higher growth, and lower inflation. This has given the Chancellor a large degree of room for manoeuvre. He has used this to announce a wide range of changes, while continuing to reduce the expected deficit.

He now expects to return to a surplus in 2018/19, meaning the national debt will eventually start to fall then. These figures have been based on reasonable growth forecasts of an average of 2.4% per annum over the next Parliament.

Changes affecting individuals

Income tax

The increase in the personal allowance is welcomed, if you earn over £10,000 per year. This will save around £10 per month for a basic rate taxpayer.

The higher rate threshold will increase to £42,385 from next month, then £42,700 and £43,300 over the next two years.

The amount of Marriage Allowance that can be transferred is increased to £1,100, meaning the saving increases from £212 to £220.

National Insurance

The rates already announced in December 2014 have not been adjusted. The change will save someone on the average Plymouth salary about £1 per month.

Tax credits

There are small increases to the amounts, and the income thresholds beyond which they are withdrawn.

Savings and pensions

There’s a big increase in the amount of savings income that you can earn tax free, if your other income is less than £15,600 next year. If you fit the criteria, you may be able to earn up to £15,600 a year free of tax, even without the use of ISAs.

For every basic rate taxpayer, the first £1,000 of savings income will be exempt from tax.

ISAs are to be far more flexible. You will be able to take money out, and put it back in later, without the repayment counting towards your annual limit.

Pensioners are to have even more flexibility, including the ability to “sell” their annuities in return for a lump sum. Care must be taken as the “Red Book” contains a forecast of £0.5 billion of tax on these transactions, implying

The lifetime limit for pension saving will be cut to £1 million. Last time the limit was cut, there was an election that could be made to protect the tax free status of funds already accumulated in excess of the reduced limit, so we must expect a similar situation. A visit to your friendly IFA is definitely a good idea! Please contact us if you need a referral.

Using an ISA to buy a home

First time buyers will be given an incentive to help them raise a deposit. For every £200 saved, the Government will contribute £50, up to a limit of £12,000 of savings. You can read full details of the scheme here. The scheme is due to open in Autumn 2015.

The Death of the Tax Return

Mark Twain once said “The reports of my death have been greatly exaggerated.” It is a similar situation with the tax return. While the annual rush to meet the January deadline should go, you will be able (required?) to complete your online tax account throughout the year. It should make life a lot easier for people who have tax deducted at source, but will still require those in receipt of untaxed income to advise HMRC of the amounts.

It is worth pointing out that there will have to be a deadline, to ensure that information is uploaded on a reasonably timely basis. In the old days, before Self-Assessment, a lot of time and money was wasted in unnecessary legal action by HMRC, trying to get accurate figures from taxpayers.

Changes affecting businesses

Class 2 NIC

The £2.80 weekly levy will be abolished. For many years, it has been used simply as a device to ensure the self-employed register for income tax, so its abolition will not change the dynamics a great deal. It will make it slightly less attractive to run as a limited company. Profits will have to be in excess of £8,060 per annum before the savings start, rather than around £5,500.

Employment Allowance

Employers will continue to receive up to £2,000 per annum of discount on their employer NICs. Unfortunately, it is not transferable if you would otherwise pay less than that.

Employers’ NIC is abolished for under 21 year olds from April 2015, and for young apprentices from April 2016.

Small business rates relief

The doubling of relief continues for another year, meaning any business with a single premises of rateable value of less than £12,000 will still not pay business rates. There are other rules for businesses with multiple premises or whose only location exceeds that limit.

Improvements to tax relief schemes

The Chancellor announced improvements to the Film, High End TV Relief schemes.

Tax avoidance

There was the usual announcement on raising tax from attacking tax avoidance and evasion. The amount targeted this time is £3.1 billion.

Other changes

Money for South West transport schemes

There is £7 billion for investment in transport schemes in the South West. This should make Plymouth an even more attractive place to live and work.

New Enterprise Zone

A new zone based on Plymouth Dockyard was announced. Typically, there are business rate, capital allowances, and planning advantages for businesses located in Enterprise Zones.

A word of warning

The Budget includes a massive reduction in the deficit in 2016/17, which has to be paid for from higher taxes or expenditure cuts. We need to assume this is coming, and use the next 12 months to adjust our own budget so we are prepared for their budget changes.

Action to take

Families should rework their budgets and see if they can put aside some savings ready for the (even) leaner years to come.

Savers should contact an IFA to review the potential savings products and plans available, as they have become much more flexible, and will have greater flexibility still by Autumn 2015.

Small businesses should look at their chosen structure and consider whether a change to a limited company would be beneficial, or whether they should relocate to the new Enterprise Zone (when it’s et up).

All businesses should look at the detail of the enhanced tax relief schemes and see whether they can fit the criteria. It is particularly important for business in the new technology sectors (energy saving, online activities etc.)

Similarly, all businesses should be considering their plans to increase staffing over the next two years, and cost in both the increase in National Minimum Wage, and the cuts in NIC for employing young people.


Although it was trailed as “not a giveaway budget, there was a huge amount of new opportunities announced. While the detail has yet to be unveiled, it is well worth reading a good summary of the proposals, and asking your tax adviser to research those changes which may be of benefit to you, our family or your business.

Taking advantage


A lot has been written about the fall in oil prices, the low inflation expected in the UK, and the deflation now being recorded in the Eurozone. Deflation is considered to be a dangerous thing. The argument goes something like this.

Prices fall, and consumers decide to wait before buying anything, in the hope that prices fall further. While this may sound like good news, it puts retailers and manufacturers under pressure. Their profits are lower, and in turn, they look to cut back on investment, and costs. Costs include wages, which mean employees have less to spend, which means they hold off on major purchases, thus reinforcing the cycle.

Japan, in particular has experienced a couple of decades of very slow economic growth, caused in part by this kind of deflation. As a consequence, it has lost its global reputation for innovation, and in turn market share for technology products.

So how can this be good news?

As I write (January 2015), petrol prices are already below £1.10 a litre, and it looks as if they are going to be lower as we move into spring. In part, this has been caused by lower demand from China and other economies, increased US shale gas production, and a refusal to cut production from the OPEC countries (some would say for geopolitical reasons).

Fuel costs form part of the delivery cost for virtually all items sold in shops. If these are lower, then the shop prices should be lower.

It should mean our regular shopping, and topping up the car, are cheaper than in 2014. Unfortunately, the home heating market doesn’t operate in such a simple way, so we may not see cuts in our gas and electric bills.

What can we do with the “windfall?”

It is difficult to know how long it will last, but here are a few ideas on how to “spend” the savings.

  1. Set up a regular savings plan

The spare cash could be used to fund a regular savings plan. We can usually find cash for things we prioritise, such as a takeaway meal, a holiday or a special present for a loved one. Why not prioritise a savings plan?

Make sure you don’t miss the money

If you set up a regular transfer for just after payday, chances are you’ll not notice it. Most of us arrange for utility bills to be taken just after payday. We do this so we know we have the money available to meet our commitments, and manage the rest of the month as best we can. Why not do the same with our savings?

If we are brutally honest, we can probably make do without our daily coffee, lunch out, or weekly takeaway if we had to. Making the savings transfer early in the month will force us to do just that.

You could also make one off transfers each time you “save” on your regular bills. For example, it costs me about £10 less to fill up with diesel now, so I could transfer that cash each time I fill up with petrol. As I fill up about twice a month, over £200 could be added to my savings within 12 months.

Find a reason

At this point, you’ll probably saying, that’s not a good enough reason to go without, so you should try and find a reason to save. Here are some advantages…..

It gives you the incentive to actually save. Aiming for something, is better than doing something just for the sake of it. Think about dieting for example!!

It helps build support within the family if they know, the “sacrifice” is for a good reason. I know our son loves going on cruises, but these have to be saved for. Having that expectation makes it easier for him to accept the deprivation that may be necessary.

It will help you set a target for the amount to save. A general intention to save does not allow a target level to be set. It becomes an endless, aimless task. Setting a goal means you can measure your progress towards it, see the end date, and give specific information to others who have an interest in the end objective. Many of us use SMART goals in business, so why not adopt this for our savings projects.

Hopefully, by the time you have reached the target, you’ll have identified another reason to save, or have just developed the habit.

Resist the temptation to “dip into” savings

We all know that savings are “for a rainy day” right? The question is ”How rainy does it need to be?” Is a need for a takeaway enough? What about a new suit, or dress?

If I know there’s cash available, I get seriously tempted to spend it. After all, I can use my money management spreadsheets to justify the spend, and show that I can put more aside in future to make up the shortfall, except I never seem to catch up…..

Name it, and shame yourself

Giving the savings account an appropriate name means you are reminded of the reason you are saving each time you log on, or access it. The reminder can help you resist the temptation to “dip into” the savings. For example, if you call the savings account “children’s holiday fund”, how will you feel if you take out money to fund a takeaway or other temporary requirement?

Make it inaccessible

Online banking and smart phone apps make it all too easy to transfer money around. If you can, try using an account that is difficult to access. I have set up a savings account in my wife’s name. This means I cannot access it using our online banking service. We have to visit a branch as she does not have internet banking, or the app. Hence, it is much more difficult to remove funds than pay them in!

  1. Pay down debt

Many people have taken advantage of the low interest rates to make overpayments on their mortgage(s). While you need to be careful of early repayment penalties etc., this can save a small fortune. One client of ours has cut 8 years off his mortgage term, saving himself over £20,000 in interest! In turn, your loan to value ration drops quicker, giving you access to the very best rates on the market, which allows to overpay more without increasing the total amount paid.

Or you could target those higher rate credit and store cards.

Make it hard to borrow more

Some of you may be thinking, I could just end up buying more on these cards if I have more “available to spend”. In a similar way to above, why not make it difficult to spend using the cards?

Cut them up, or put them in a drawer. My wife and I have cut up all our credit cards (except one which we use for internet purchases) and will be making a collage of them. This will act as a reminder of how easy it is to build up debt!

  1. Self-insure

The washing machine will need replacing. If not, the fridge will need repairing, or the dishwasher, or the PC, or the……..

Good businesses plan for replacements and have a contingency fund. Why not set up one for your domestic expenditure? We all know that consumer goods don’t last forever, so we will need to replace them eventually. Having a bit of extra cash means we can plan for this eventuality without reducing our standard of living.

There could be other benefits

It could even save money, as we can start to reduce our dependence on extended warranties and service contracts. Use a separate account which gives you instant access, as you probably won’t want to wait for a month if you need to replace the washing machine!

  1. Give it away

You could simply give away the extra cash. If there is a cause that’s close to your heart, find out how to give it support. If you are a UK taxpayer, maximise the benefit by making a gift aid declaration. If not, find the easiest way to make it happen. Most 3rd sector organisations can help you help them.

  1. And finally…..

You may just want to cut back on your income earning activities, and enjoy the extra free time that creates. Be careful though, as these low prices are unlikely to become a permanent feature of the economic landscape, and it may be difficult to increase your hours/ salary etc. in future.


The recent steep fall in fuel prices has given us some extra cash in our pocket (assuming we drive).We could just fritter away the benefits, or we could make some changes and positively affect our financial futures. The options set out above are just a few of the ways this can be achieved. Let me know what you decide to do., or call me if you’d like some help with general budgeting, business planning, or wealth creation

Work ON, not IN!

[Originally a guest post on www.owenjonesdesign.com]


It is a real problem when you are doing something you love isn’t it?

You set up your business because you are good at something, or you are passionate about it, or both, but you never seem to make progress. You are busy doing what you love, but somehow it’s not as rewarding as you’d thought it would be.

Very often, that is because you are working IN, and not ON your business.

What’s the difference?

If you are going to reap the rewards of your hard work, then you’ll need to balance these two aspects. Before you can do that, you need to understand what they are.

Working in the business

This is basically doing the stuff for clients/customers that the business was set up to do. For Owen, this is producing high quality design ideas, and implementing them as part of the branding strategy. It involves meeting with the clients, getting to understand both what the client does, and the ethos underpinning that work. Similarly, we follow the same process of understanding the client and their objectives, whether we are preparing a succession plan and managing the process, preparing an Inheritance Tax planning report or discussing a business issue with a client as part of our PMI program (“The Numbers”).

Working on the business is different

This aspect makes the business, or more accurately its owner, the client. It may seem odd, but businesses are merely means to achieve the ends of their owners. If not, the owners become employees of their business, and will often earn more, with less stress, by finding employment with someone else!

Working ON the business involves taking a step away from the day-to-day tasks, and asking yourself strategic questions, like:

What things are important to me?

What does my life need to look like in five years’ time if I can count them a success?

What kind of work/clients do I want for my business?

What things do I need to change to get to those goals?

So, if it’s so important, why doesn’t it get done?

There are several reasons why not, and each requires a different remedy. Here’s a few ideas to get started. (But contact Owen and give him your own ideas!)

1.   The tyranny of the urgent.

So, you have a client deadline fast approaching, and it’s not going too well. The client is demanding a proposal/finished product/sample/presentation…….. and you’re running out of time. This happens to us all, but if you find it happens more than three times a year, ask yourself these questions.

  •  Am I overpromising?

Most clients will be relaxed about an extended deadline if they know about it early enough. Estimate a completion date, and then add an extra week/fortnight to give yourself time to do a quality job.

  •  Is this client worth busting a gut for?

If they are always hassling you, slow in responding, and unreasonable in demanding late changes to your brief, then the answer may well be “no”.

  •  Is the fee worthwhile?

Remember, a large fee is not always a good thing. Think about the time commitment, (including the initial marketing time) and work out an effective hourly rate. You will earn more by taking on two smaller jobs with a higher effective rate.

2.  It can wait.

Of course, long term planning is exactly that, long term, but what will you say in five years’ time? Can it still wait? There’s an old Chinese proverb that states “The best time to plant a tree was twenty years ago; the second best time is now.”

The problem is, every year you delay it puts you back another year in achieving your goals.

3. It’s not what I set up my business to do.

This goes back to my introduction. We get excited about the work the business does, and most of us do not run strategic planning businesses. Therefore, it doesn’t give us that same “buzz” as a well-executed project.

How to make it happen

  1. Schedule your “blue sky” thinking time.

I have a fixed Friday morning appointment in my diary. This 3 hour slot is split between working ON my business, and doing a specific marketing task, such as recording a video for our YouTube channel, or writing a blog. (That doesn’t mean that I don’t do marketing at any other time of the week).

Studies have shown that scheduling a task makes it 20 times more likely to happen. It is much easier to say to a client that you have a commitment if it’s in your diary, than being caught unprepared when the phone rings.

2.  Appoint a business coach or financially literate outsider to work with you.

In this way, you have an accountability partner, and you will make more effort to avoid letting them down. You are far more likely to get out of bed and go for that morning run, if you are meeting a friend, than if you plan to go alone.

A good business coach will earn you far more than their cost, by helping you achieve your goals.

3.  Tell as many people as you can that you are going to do this.

While you are not as accountable under idea 2 above, it is very embarrassing to tell a lot of people that you haven’t done what you promised yourself you would do!

4.  If you cannot afford a business coach, find a fellow business owner, (not a competitor), with whom you can share ideas, problems and your thoughts.

Again, scheduling a regular meeting will benefit both of you. You’ll be surprised how clearly you see solutions to problems that are not your own. Conclusion

Working ON your business is crucial to achieving your goals, but it is not easy to create the sense of urgency or the time to do it. Finding people to help is almost as essential.

If you’d like further advice or ideas, or want Owen or I to help you achieve your goals, get in touch. We’d be delighted to help.

Avoiding that “Monday feeling”

Mondays happen on a regular basis. For most people, Monday is the day we get back after a couple of days off.

Problem is, other people have also had time off, and some of them will have remembered something over the weekend they want you to do. And their first opportunity to ask you is…

…Monday morning.

Here a few tips to help you set up your week for success.

  1. Expect and plan for the unexpected.

You WILL get interrupted. So leave some time for those interruptions. I can remember an instance where we had a potential client walk in off the street with his accounts under his arm. We had capacity for someone to see him, so my boss at the time took the meeting, and we ended up with a client who is still with the firm, over 25 years later!

If you can get in early, use that time to clear one important task before the interruptions begin. If you don’t know what’s important, take that time to allocate your tasks into a prioritised order. I use the four quadrant time management chart. If you would like a copy, get in touch.

Use the Friday afternoon or early Monday start to update and re-prioritise your to do list. There is a mental/ emotional response built in as well, which should help you to “switch off” over the weekend, as you’ll leave feeling that everything is under control.

  1. Keep focused

It sounds counter to the above, but you can build in time for the unexpected, if you plan for your priority tasks. Clearing your desk on a Friday afternoon, and putting away files etc. that are no longer needed sets you up for a great start to the following week.

It will also let you leave work with a sense of having achieved something if your desk is neat and tidy! Time management studies shows that we touch every piece of paper on our desk, at least 7 times before we action it. And if it’s still there the following morning, the whole process starts again.

We tend to have more energy first thing, so tackle that difficult task first. Remember, if you don’t “eat the frog” when it’s small, you’ll have to deal with it when it’s much bigger!

Setting up for a great start should also help to leave at home any negative things that have occurred over the weekend. (Typically HMRC letters tend to arrive on Saturdays!)


.       Learn to say “no”

You don’t have to do EVERYTHING. Others may be much better at certain things, and (unless it’s your boss), you can say “no” and keep on track. Be aware particularly of people trying to “upload” their tasks. There’s a whole new article to write on resisting upwards delegation!

  1. Be personable

Many people struggle with the whole “Monday morning feeling”. Making sure you take time to catch up with people. Showing an interest in what they did at the weekend, and smiling, can really improve the atmosphere in your workplace. A recent survey revealed that if you can improve team morale by 20%, your PROFITS (note not your income but your profits) will improve by 42%.

And your customers will look forward to seeing you, and may spend more, and more often as a result….

You can also build in some personality to your emails as well. It doesn’t take long to ask “how are you?” or “did you have a good weekend?” at the start of an email. Remember, people buy from people, so being personable can generate extra income.


.       Don’t overfill your day

I often over commit, and this leaves me feeling like a failure. While setting stretching targets usually leads to better performance, going too far can throw you off track in a big way. This is especially true of Mondays, when interruptions are at their highest. One commentator I read, suggests setting between five and eight goals for each week. Any more can lead to target overload, and the resulting mental stress can quickly ensure that none of the goals are achieved.

  1. Arrive early and well-prepared

Getting in early, having had a healthy breakfast can give you an initial boost. If you can exercise before you get in, so much the better. The endorphins released will also help you feel better, but be careful not to overdo it, as too many endorphins can just make you too relaxed!

  1. And finally…

Remember that there is Tuesday. You don’t have to clear everything on Monday. Generally, the world will not fall apart if you don’t solve all of Monday’s problems on Monday. So take some pressure off yourself and plan to clear some, less important issues, on Tuesday, Wednesday,…. (you get the idea).

Monday mornings can challenge even the very best business leaders, but applying some or all of these techniques should mean you don’t have another Monday morning on Tuesday.

Steve Carey BA (Hons); ACA; CTA

A new source of funding?


The new pension rules give a great opportunity for some tax free cash. The additional flexibility that kicks in next year is to be welcomed, but there are opportunities NOW.

The preconditions

You do have to be over 60 years of age in order to benefit, but I am told by one financial adviser that you may be able to get access to your funds earlier in “special circumstances”.

One surprising aspect of this is that you do not need a large pension pot in order to benefit. In fact, if you have less than £10,000 in a pension fund, you can take all of it now, under the “triviality” rules. These have been with us for many years, but the limit was only increased from £2,000 this month. This applies even if your total pension savings exceed the £30,000 limit.

If your total pension’s savings are less than £30,000, you can take all of it as a lump sum, even if one scheme has more than £10,000 in it. (The previous limit was £18,000). This applies even if you are in draw-down.

How does it work?

You still benefit from the 25% tax free lump sum, but the rest would be treated as your taxable income. If you are a non-taxpayer, then no tax would be due. For example, if your total income, including the pension extraction, is below the personal allowance (£10,000 for 2014/15), you would pay no tax on the lump sum, and tax at 0% on the extra taken from the pension fund.

Even if you are a taxpayer, there can be an advantage by making a contribution and immediately cashing it in.

I’ve heard you can make £500 on a small pension contribution? How is that done?

Making a pension contribution attracts tax relief from the Government. The tax relief is given at ¼ of the amount invested (i.e. the Government put in 20% and you contribute 80%).

Putting some numbers on it, gives us:

You put in                                   £8,000

Tax relief adds                          £2,000

Total invested                           £10,000

Tax free lump sum taken     £2,500

Taxed lump sum                     £7,500

Tax due at 20%                       £1,500

Net amount received back  £8,500 (being £6,000 from the taxed element, plus £2,500 tax free).

This equates to a post-tax return of 6.25% in a matter of weeks. I would suggest that this is better than most other investments, in the current climate (although I do have a couple of clients who have doubled their money in a month by investing in a North American tech stock, but that’s a different story).

You will of course, have to consider any charges which might be incurred, as this will reduce the investment return.

So can I just repeat the exercise over and over again?

Sadly not. There are a number of rules which prevent this. There are already rules which prevent lump sums being reinvested in pensions (the “recycling” rules) and there are also limits on the amount of savings you can invest in pensions over your lifetime (the “lifetime allowance” rules).

The title of the blog suggests this could be a new source of funding. How?

The opportunity noted above requires an initial investment (in this case £8,000). However, the triviality rules apply to existing schemes as well. It is therefore possible to draw down a reasonable amount of cash, up to £30,000 with careful planning, and pay tax of less than £5,000 on it (assuming you are a basic rate taxpayer). This would leave more than £25,000, which could be a massive help to a small or medium sized business.

Many small businesses are struggling to raise finance, and have done for several years. I have seen many approach their banks, only to be told that nothing can be done. With a large cash injection, the risk to the bank, or the improvement in cash flow, can make it easier for main stream lenders to back more proposals.

What should we do now then?

I would suggest you review your current pension provision, with a view to unlocking some of the value. If you are a business owner looking for funding, speak to your family and friends to see if their pension could be used in this way.

Loans to private businesses would generally earn interest at between 5.5% and 15% depending on the risk, so there is plenty of scope to negotiate a rate of return which helps both parties.

The human factor – a word of warning

There are real dangers in borrowing money from/ lending to friends and family. Wherever possible, you should have a proper legal agreement drawn up. It needn’t cost a fortune, and it could save you a lot of time and stress later.

I want to explore this, what help can you give me?

We can prepare a formal report on your financial position, including an estimate of what funds may be available from your pensions, and put you in touch with a great financial adviser, and a lawyer who can give you the essential financial and legal advice to implement any plan you decide upon.

This is an opportunity that may transform your business, and it is worth investing a few hours of your time in exploring your options.