Budget 2013 – Never mind BEER, what about PENSIONS?

Away from the headlines about beer, children and mortgages in yesterday’s Budget was some generally positive news for anyone with a pension, writes Bevan & Buckland’s Financial Planning Manager, Gareth Tregidon.

Pre-Retirement

The first thing to note is that, in the main, there was nothing new announced that we weren’t already aware of.  The constant “tinkering” with pensions by successive Governments is one of the key reasons why I believe people lose confidence in this important area of financial planning.  Not having anything “new” is therefore very much a positive thing.

We were already aware that the annual allowance (the maximum amount you are allowed to pay into a pension each year and still receive tax relief) would reduce from £50,000 to £40,000 from next year.  This, together with a reduction in the Lifetime Allowance (the total amount that can be held within a pension whilst still qualifying for full tax benefits) were announced in the Chancellor’s Autumn Statement.

For those whose planning involves significant contributions, either through personal or company schemes, there are four main issues to be aware of.

1. If you are one of those lucky enough to be a member of a final salary pension, pay close attention to the total level of contributions being made.As the employer has to ensure that enough money is paid in to guarantee your benefits, this can represent a significant contribution, particularly for those on higher incomes.  (Your scheme administrators should be able to confirm the total level of contributions if you are unsure).
2.  Find out when your “PIP” starts.The new £40,000 limit applies not to the Tax Year but to your Personal Input Period (PIP).  In some cases, particularly with personal pensions, this may be the same as the Tax Year, however in many cases the dates will differ.  For anyone who’s PIP commences after 6^th April 2013 you will fall under the new limits almost immediately.  Your adviser, pension provider or scheme administrator can confirm what the date is, what contribution limits will apply and when.
3. The Lifetime Allowance calculations are not always as straightforward as you may think, especially if you are a member of a final salary scheme.For those with a personal or money purchase company scheme, the position regarding the total amount held in your pension is easier to work out.  If you are due to retire in the next few years, however, be careful to take into account future contributions and growth as well, and look at what you your fund may be worth in the future.

   Be careful as well if you receive an increase in your income during the year (for example, due to a promotion), as this could potentially increase your benefits beyond the limit.

   The Government has announced that certain levels of protection will be available to help people who, due to the reduction in the limits, will now exceed the allowance.  Full details have not yet been announced, and are to be included in the next Pensions Act.

Post-Retirement

There are two main announcements that could affect either those already utilising certain pension contracts to generate an income, or those who may do so in the near future.

This principally affects those with Capped or Flexible Drawdown contracts (more commonly called Income Drawdown).  If you’ve got one you will already know what they are, but in simple terms it is a way of leaving a pension invested rather than buying an annuity, and then drawing an income from the fund.

Until April 2011 the level of income that could be taken under a drawdown contract is based on the rates determined by the Government Actuaries Department (GAD). These GAD rates were designed to mirror the amount an individual could receive if they had purchased an annuity.

Over recent years these GAD rates have shown less resemblance to standard annuity rates, which led to a call for the system to be reviewed and revised.  This review has now been announced, which we hope will lead to increased rates for policy holders.

An additional benefit which comes into effect next week is the increase in the maximum percentage of the GAD rate that can be taken.

Until April 2011, a drawdown policy holder could take up to 120% of the prevailing GAD rate as an income.  This was reduced to 100% from that date which, combined with other factors such as falling annuity rates and erratic investment returns, led to some pensioners seeing a significant reduction in their incomes.  It has been confirmed that the maximum rate will return to 120% for all policies where the review date is 26^th March 2013 or later.  Where a review date falls before 26^th March the new limits will take effect at the next annual review.

Summary

Whether you are planning ahead for retirement or you have already reached that point, the announcements yesterday need to be considered carefully as the potential implications are significant.

As with any financial planning, if you are at all unsure take professional advice.  If you don’t already have an adviser, or would simply like a second opinion, please contact me and I will be happy to explain how we can help.

Gareth Tregidon.

Gareth Tregidon is manager of Bevan & Buckland’s Financial Planning Department, which operates from the firm’s Swansea, Pembroke and Haverfordwest offices. The department provides fee-based advice to personal and business clients, both from within the firm and elsewhere.

As well as having over 25 years’ experience in the provision of financial advice, Gareth is a Certified Financial Planner^CM and an accredited Later Life Adviser with the Society of Later Life Advisers (SOLLA).  He is former Chairman of the Institute of Financial Planning in South Wales, and an assessor for the internationally recognised Certified Financial Planner^CM licence. 

http://www.bevanbuckland.co.uk/services/financial-planning

Bevan & Buckland Accountants Swansea Tel: 01792 410100

Bevan & Buckland Accountants Haverfordwest Tel: 01437 760666

Bevan & Buckland Accountants Pembroke Tel: 01646 682383

Tax Return Incentive

Not done your Tax Return for 2010/11? 

Want to save on penalties & fines? 

Then read this to save money!

On 3^rd July 2012 HM Revenue & Customs (HMRC) began its “Tax Return Incentive”, writes Bevan & Buckland’s Tax Manager, Lee Bradley.

This incentive applies to any taxpayers who have not completed their Self-Assessment forms for the Tax Year 2009/10 or earlier.  HMRC are writing to anyone who falls within the 40% or 50% tax bands,  and who have failed to comply with a request to fill in a Self-Assessment Tax Returns, with an incentive. 

Anyone voluntarily coming forward will receive reduced penalties of £200, plus a fine equivalent to 10% of unpaid tax. “Compared to the standard rates of a £1,000 penalty plus fines of 100% of any unpaid tax, these reductions must be worth considering” writes Lee.   He also points out, however, that “the deadline to declare any untaxed income is the 2^nd October 2012, so don’t delay”.

This incentive from HMRC is certainly worth getting your tax affairs up to date before the deadline, as you could save thousands of pounds in penalties and fines. 

If this applies to you please speak to either your usual contact in Bevan and Buckland, or contact Lee directly using the details below, as soon as possible.

Bevan & Buckland have both the expertise and experience of dealing with these issues, so if we can help please contact Lee on 01792 410119 or lee@bevanbuckland.co.uk

 

Bevan & Buckland Accountants Swansea Tel: 01792 410100

Bevan & Buckland Accountants Haverfordwest Tel: 01437 760666

Bevan & Buckland Accountants Pembroke Tel: 01646 682383

Bevan & Buckland Accountants Carmarthen Tel: 01267 233115

Bevan & Buckland Accountants St David’s Tel: 01437 720352

SMEs urged to keep tax man informed

It was recently reported in the Financial Times (FT) that H M Revenue & Customs tried to fine a small business £30,000 for not informing them that their partnership was transferred to a limited company, writes Lee Bradley, Tax Manager of Bevan & Buckland.

The FT article reports that it was only after an appeal by the tax advisor to the Forum of Private Businesses, Andrew Needham of VAT Specialists that HMRC agreed to reduce the penalty from £30,000 to £10,000.  Mr Needham expressed concern that the case reflected a change in HMRC’s long standing policy of waiving its ability to impose penalties in such circumstances.

As Lee explains, it is essential with any change of business status, or even a change of address, that HMRC are informed as soon as possible. 

Lee recommends each section within HMRC is informed separately, as he has seen many occasions where HMRC do not share information between the different departments, despite being one organisation.  “It is always worth sending letters to each of the relevant departments dealing with the taxes that apply to your business,” said Lee. “When doing so, always include the relevant reference – inform VAT using your VAT number, Pay As You Earn using your PAYE reference, etc”.

“This may or may not be a hardening of HMRC’s stance”, he continues, “but you have to remember they have the ability to levy these fines, whether or not they’ve chosen to do so in the past”.

With the continued pressure on all Government departments to cut costs and increase revenues, it unfortunately seems likely that we will see more stories like this in the future. 

 

Bevan & Buckland have both the expertise and experience of dealing with these issues, so if we can help please contact Lee on 01792 410119 or lee@bevanbuckland.co.uk

 

 

You can read more about this case in our new September Newsletter – click on the link below 

http://www.bevanbuckland.co.uk/news-item/firms-urged-update-business-records-or-risk-penalties

http://www.bevanbuckland.co.uk/services/payroll Tel: 01792 410117

Bevan & Buckland Accountants Swansea Tel: 01792 410100

Bevan & Buckland Accountants Haverfordwest Tel: 01437 760666

Bevan & Buckland Accountants Pembroke Tel: 01646 682383

Bevan & Buckland Accountants Carmarthen Tel: 01267 233115

Bevan & Buckland Accountants St David’s Tel: 01437 720352

The Top Ten Points To Business Success

Whether your business is a start-up or long established you may face cashflow pressures at one time or another.  Inevitably, a small percentage of businesses will fail.  To make sure that your business survives for the future – Bevan & Buckland’s experience in dealing with all types of business over the last 30 years suggests the following are key areas for you to focus on.

1   Start with enough capital

For your business to succeed you must maintain cash reserves to survive economic downturns or an unplanned “disaster”.  It makes good sense to finance property purchases over the long term with a capital repayment mortgage over 20 years and keep a cash reserve for a “rainy day”.  Using up all your cash reserves to pay off long term property debt is not recommended when, as at present, the inflation rate is higher than the bank rate.   As a rule of thumb your long term borrowing should not exceed 50% of the asset value. Also, consider financing machinery purchases over 3 years rather than using up cash to pay for the whole cost on day one.  Even better – can your business perform adequately without buying expensive machinery? 

2       Get your pricing right

There will always be some-one cheaper and markets only seem to become more competitive.  However, your prices must be sufficient to cover your overheads and make a profit.  Sometime you will have to say no to unprofitable work to ensure the viability of your own business.

3   Spend less than you earn

This sounds simple but a significant proportion of business owners have difficulty with this.  When you calculate how much profit to draw from your business you must make an allowance for tax.  For a business generating cash is business oxygen.   You need it to survive.  If you generate cash you will inevitably pay tax.  Your accountant will do their best to ensure that your tax bill is kept as low as possible.  However, to make sure that a surprise tax bill does not catch you out it’s a good idea to open a second bank account which acts as your tax savings account.  This is particularly helpful where your tax payment date is several months after your financial year end.

4   Avoid bad debts

The importance of strict credit control procedures cannot be emphasised enough.  You won’t make a profit until your customer has paid you. 

5   Keep stock levels to a minimum

Over ordering a product or ordering the wrong product mix can tie up too much cash.  A well stocked business may look attractive.  However, stock represents cash.  And having too much cash sitting on your shelves is not a recipe for success. 

6   Don’t give personal guarantees

If you are trading in a high risk business sector, such as construction, then consider trading through a limited company or LLP to take advantage of limited liability.  If you do trade through a limited company then think very carefully before giving a personal guarantee to your supplier.

7   Avoid credit card debt

With credit card interest rates typically in excess of 16% no business or individual can afford to pay these finance costs.  If you must have a credit card then pay it off monthly.  If you can’t you may have deeper underlying cashflow problems which you should discuss with your accountant.

8   Be properly insured

Never overlook your insurance cover.  Cutting corners on business insurance cost to make short term savings can lead to disaster in the event of destruction of a major asset. 

9   Look after the customer

Business competition is likely to increase as all businesses become aggressive in gaining market share particularly where there is a low barrier to entry.  Customers will inevitably be less tolerant of poor service.  The growth of the internet also means that most businesses will have to have an internet presence in order to maximise returns in the future.

10 Confront difficult issues

Poor management is often cited as a reason for business failure.  You will, from time to time, have to confront issues and make deeply unpopular decisions to ensure the long term survival of your business. 

This article is necessarily of a standard nature.  However, it is hoped it may be relevant to readers.  If you have any specific queries then please do not hesitate to contact Alun Evans – Accounting and Insolvency Partner of our Haverfordwest Office.

Alun Evans
01437 760666

email: alun@bevanbuckland.co.uk

It might be easier for you to contact one of our other offices?

Bevan & Buckland Accountants Swansea Tel: 01792 410100

Bevan & Buckland Accountants Haverfordwest Tel: 01437 760666

Bevan & Buckland Accountants Pembroke Tel: 01646 682383

Bevan & Buckland Accountants Carmarthen Tel: 01267 233115

Some useful record keeping mobile apps

Information supplied by the HMRC.     

Simple record keeping applications for mobile devices

To help small businesses with record keeping on the go, the commercial software industry, following consultation with HM Revenue & Customs (HMRC), are producing simple record keeping mobile applications for businesses below the VAT threshold. These applications may help you with maintaining good records and include links to HMRC guidance related to record keeping that you may find useful. The majority of these applications are free.

The companies listed below have advised HMRC that they have commercial mobile applications for record keeping that meet the HMRC specification. This list is not exhaustive and it is probable that other software houses associated with mobile application development will also be developing applications.

Software supplier	Product	Platform
Forbes Computer Systems Ltd (Click Here)	Forbes Receipt Keeper	Android 2.1 onward
FreeAgent Central Ltd (Click Here) Tel:0800 2888691	Earnest	iPhone, iPod touch, iPad
Immagini Ltd (Click Here) Tel:01494 858374	ZipZipBooks	Android 2.3 onward
Intuit (Click Here)	MyBizTracker	iOS (iPhone, iPod touch)
Sage (Click Here) Tel:0800 447777	Sage Record Keeper	iPhone, iPad iOS 4.3 and above

AWEMA HIGHLIGHTS THE NEED FOR GOOD GOVERNANCE

Over the past two months the spotlight has been shone on the quality of governance at the Swansea based charity Awema.

There have been several reports looking at the issues that have arisen within the charity and these highlighted concerns with the following areas:

– Governance arrangements in relation to Awema Management Board (ABOMA) and management;

– Financial controls and processes;

– An absence of key policies and procedures; and an organisational structure that does not adequately support the operations of Awema

These problems at Awema have highlighted an important part of the role of being a charity trustee and the responsibilities involved.

Over the past year we have provided training to a number of charity boards on what good governance means both in principle and in practice. 

It is vital, particularly for new trustees but also for people who have been trustees for many years as the Charity Commission guidance is always being updated.

For guidance on the Hallmarks of an Effective Charity follow this link: http://www.charity-commission.gov.uk/Publications/cc10.aspx#c

If you are a charity trustee and concerned that you do not fully understand your responsibilities we would be happy to deliver training on what is expected of you.

We offer free training to Charities so if you are interested please contact Harri Lloyd Davies on (01792) 410104 or email harri@bevanbuckland.co.uk

Full details of our courses can be found at: http://www.bevanbuckland.co.uk/sites/www.bevanbuckland.co.uk/files/documents/BB%20Charity%20training%20programme%202011%20%282%29.pdf

Triple success for our trainees.

Bevan & Buckland trainees are celebrating their recent success at the ACCA exams. Catherine Gwynn, and Alex Matthews (seated) and Daniel Allsopp (standing) have all passed their exams and qualified as chartered certified accountants.  

Catherine and Alex, both 26 from Swansea, and Daniel, 25 from Port Talbot, are all graduates from Swansea University who joined Bevan & Buckland’s three year training programme. This programme offers hands-on experience as well as a mentor scheme and assistance with fees and study leave.

As Alex explained “I choose Bevan & Buckland because they had a good reputation locally and their training package was excellent, they have a range of in-house course that supplement the College study days”

“The on-the-job training and support from my mentors has been invaluable” commented Catherine. “I choose Bevan & Buckland” explained Daniel “because I wanted to be a part of a larger firm and gain more experience” explained Daniel.

Managing partner Cuan O’Shea explained, “I’m delighted for Alex, Daniel and Catherine, their success is well deserved, and a credit to their hard work.  Every year we aim to recruit new students through our graduate training programme, it provides the hands –on work experience alongside the mentoring and study leave support that we provide to help them achieve their qualifications.”

Find out more about Bevan and Buckland’s graduate training programme here.