State pension deferral rate to drop

Pensioners are being warned that the government has set out plans to reduce the annual state pension deferral rate from 10.4% to 5.8%. 

Pensioners can choose to defer claiming their state pension when they reach state pension age, and when they do claim it they may get extra state pension.

Currently deferred state pensions increase by 1% for every five weeks a claim is put off. This is equivalent to 10.4% for every full year a claim is deferred.

However under draft regulations set out by the government, when the new state pension is introduced in April 2016, the deferred state pension will increase by 1% for every nine weeks it is not claimed, or 5.8% for the whole year.

The draft regulations are quite a big step change and could have significant consequences for people who were thinking about deferring their state pensions.

With interest rates likely to increase, the deferral rate will start to look like less good value, and pensioners may want to reconsider whether deferring is the right thing to do.

There are also tax implications that need to be considered when someone is contemplating deferring or not. Personal circumstances need to be taken into account such as the rate of income tax which they would pay if they received their state pension now, their personal wealth and even their health.

We would urge anybody considering whether to defer their state pension to speak to a trusted independent adviser.

For more information on pensions, wealth management or tax planning, contact Hart Shaw’s Financial Planning team on T: 0114 251 8870 or email: info@hartshawfp.co.uk.

 

Hart Shaw Financial Planning

Taxation Services at Hart Shaw

Hart Shaw mobile app

Budget 2014 – Businesses to benefit from Budget say Sheffield based accountants

Sheffield based chartered accountants Hart Shaw say many businesses could benefit from some of the measures introduced in the Budget.

George Osborne’s “Budget for a Resilient UK” outlined a number of new measures, while also welcoming significantly improved growth forecasts, with the UK economy expected to grow by 2.7% in 2014.

Although the surprise announcement that the Annual Investment Allowance (AIA) for capital expenditure has been doubled from £250,000 to £500,000 will not affect most small and medium-sized businesses, those with heavy capital investment plans will be cheered and the vast majority of businesses will now get 100% up-front relief on qualifying investment in plant and machinery.

Osborne also pledged to cut energy costs for manufacturers by capping the Carbon Price Floor, while R&D tax credits to loss making companies will be raised from 11% to 14.5% from April 2014.

As widely expected, measures were announced to raise the amount of income people receive tax-free to £10,500 from 2015.

For individuals radical changes were announced to pensions and savings. As well as a move to merge cash and stocks and shares ISAs with an upper limit of £15,000, Osborne announced the reduction from 10% to 0% of the starting rate of tax for savings and an extension of the band to a maximum of £5,000.

Changes to pensions include the introduction of new pensioner bonds and the removal of all tax restrictions on pensioners’ access to their pension.

Steve Vickers, Tax Partner at Hart Shaw said: “This was certainly a Budget setting out the Government’s agenda for the next election, with many measures announced to help businesses and individuals alike.

“Crucially businesses will be able to increase investment in infrastructure through the AIA, while energy-bills will be reduced thanks to the scrapping of green levies.

“Pensioners and savers will also be cheered through some radical, and surprising, measures.

“As always we would urge all businesses and individuals to study the small print to see what announcements will affect them and contact an accountant for further advice on how to make the most of these opportunities.”

For more information and for a detailed budget summary, please visit our website.

Steve Vickers can be contacted on T: 0114 251 8850 or email: steve.vickers@hartshaw.co.uk.

 

Connect with Steve on LinkedIn

Hart Shaw Budget Summary

Hart Shaw on Twitter

Budget 2013 – Employer NIC Budget measures a welcome boost to SMEs

Whilst short on a great host of tax cuts for small businesses George Osborne’s latest Budget has introduced some welcome measures aimed at helping small and medium-sized enterprises (SMEs).

The cutting of Stamp Duty on shares traded on AIM will also encourage investment in SMEs, as will the extension of the CGT holiday for individuals investing via the Seed EIS.

However as with any Budget we advise that people take a closer look at all the announcements to see how it affects them.

The headline announcement in the Budget was that 450,000 SMEs will no longer be required to pay employer National Insurance Contributions (NICs), with the first £2,000 being taken off employers’ NI bills from April 2014.

This will reduce a significant burden on small businesses, and allow them to take on new staff and invest in their companies.

In what was labeled as a Budget for an “Aspiration Nation”, Osborne also laid out other measures to help businesses including a cut of 1% in the top rate of Corporation Tax to 20% by April 2015, while Stamp Duty is also to be scrapped on shares traded on growth markets like AIM.

Osborne also committed to extending the Capital Gains Tax holiday for the Seed Enterprise Investment Scheme meaning any investors making capital gains in 2013-14 will receive a 50% CGT relief when they reinvest those gains into seed companies in either 2013-14 or 2014-15.

Other significant business announcements included tax relief for social enterprises, further tax avoidance and evasion measures (including the introduction of a General Anti-Abuse Rule in 2014) and government procurement for small firms to increase fivefold.

For the individual, the biggest announcement in the Budget was the income tax rate threshold being raised to £10,000 in 2014 – a year earlier than planned.

Further help for families include tax relief worth £1,200 on childcare vouchers up to £6,000 per child from 2015, while Osborne also introduced a “Help-to-Buy” scheme, including interest-free loans of up to 20% of the value of new-build properties, and bank guarantees underpinning £130 billion of new mortgage lending for three years from 2014 in an effort to help people move and invigorate the housing market.

The headline announcements came against a backdrop of a downgrade in the economy – with the growth forecast cut to 0.6% in 2013, from a predicted 1.2% in December.

For more information contact Steve Vickers, Tax Partner at Hart Shaw on T: 0114 251 8850 or email: steve.vickers@hartshaw.co.uk.

Follow Steve on LinkedIn

Click here to read and download a full review of the 2013 Budget

Budget Summary 2013

A summary of this year’s Budget is now available on our website.

Budget Summary 2013

Please click here to read our summary.

Please click here to download a PDF booklet of the Budget Summary.

The Budget is covered extensively in the national news and in the press. In these hard times, what will it mean for you?

We have prepared this summary to outline the issues that are most likely to be of interest to you. We have included informative comments to help you assess the likely effect that the proposed changes may have on you personally and their significance.

If you have a question concerning any of the issues covered in this summary, or would like advice on the best possible course of action in a particular area, please contact Steve Vickers, Tax Partner on T: 0114 251 8850 or email: steve.vickers@hartshaw.co.uk.

Follow Steve on LinkedIn

Hart Shaw Taxation

Autumn Statement 2012

On Wednesday 5 December the Office for Budget Responsibility (OBR) published its updated forecast for the UK economy. Chancellor George Osborne responded to that forecast in a statement to the House of Commons later on that day.

In the period since the Budget in March a number of consultation papers and discussion documents have been published by HMRC and some of these proposals are summarised here. Draft legislation relating to many of these areas will be published on 11 December.

Our summary provides a reminder of other key developments which are to take place from April 2013.

The Chancellor’s statement

His speech and the subsequent documentation was a ‘mini-Budget’ announcing tax measures in addition to the normal economic measures.

Our summary concentrates on the tax measures which include:

• changes to personal allowances and tax bands
• changes to pensions reliefs
• a tenfold increase in the Annual Investment Allowance to £250,000
• a further reduction in the main rate of corporation tax
• announcements regarding the General Anti Abuse Rule and other ‘abusive arrangements’.

To read our summary click here

HMRC Starts Consultation On Income Tax Relief

The Government has now launched its consultation into plans to cap currently uncapped income tax reliefs.

The Government has already made a much-publicised U-turn on a proposed cap on charitable donations, but other proposals remain unchanged, with the cap set to take effect from 6 April 2013.

Reliefs which will be capped include trade and property loss relief against general income, employment loss relief, post-cessation trade and property reliefs, early trade losses relief, share loss relief, and relief for qualifying loan interest costs.

Under the proposals, first unveiled by Chancellor George Osborne in March’s Budget speech, the cap will be either £50,000 or 25% of an individual’s income – whichever is greater. The consultation closes on 5 October 2012.

Although we knew from the Chancellor’s Budget speech that income tax relief would be capped, the Government has now launched its consultation into the proposals, giving those affected a chance to have their say.

In the meantime, anyone who thinks the proposed new cap may have an impact on them should seek expert advice from a tax professional as soon as possible to help them plan ahead for when the changes take effect.

For further information, please contact Steve Vickers, Tax Partner on T: 0114 251 8850 or email: steve.vickers@hartshaw.co.uk.

Follow Steve on Linked In

Hart Shaw Taxation

Money Matters – Summer 2012 newsletter from Hart Shaw

Money Matters, the summer 2012 newsletter from Hart Shaw is now available to download from our website, along with two new briefings.

The cover article in Money matters looks at the intention to limit the amount of income tax relief individuals can claim.  More details on this should be available as the summer progresses but planning for individuals likely to be affected will need to be considered during 2012/13.

It may not be good news for some when changes to Child Benefit and Capital Allowances on cars come into effect but awareness of the changes should better equip you to make decisions to minimise the damage so we have included a review of the latest position in both of these areas.

Business Property Relief is a very important relief for Inheritance Tax purposes but its availability in certain circumstances can be regularly challenged by HMRC. In a recent case the judge ruled against HMRC so does that leave the door open for more to benefit? Read ‘BPR battle’ to find out if you could benefit.

Staying with potentially good news, we have included articles on the new National Loan Guarantee Scheme to help small businesses and the tax advantage that may be available to spouses who have jointly owned assets such as land and buildings.

Using tax reliefs effectively is sometimes dependent on structuring transactions properly. We include an article on a recent case where tax relief was denied on business borrowing because of how it was structured. When undertaking significant business transactions, please do not hesitate to contact us so that we can help you best plan for any opportunities. 

In addition to the newsletter you will find special briefings where we look in more detail at:

Tax tips and traps for the smaller company

This client briefing focuses on practical tax matters and tax saving tips for the smaller company. It highlights the issues which need to be considered to ensure that owners maximise the return on their investment of both time and money. It also offers guidance on the traps that should be avoided!

Issues covered include:  

• Profit extraction – methods and their tax implications;
• Benefits and expenses – pitfalls and opportunities;
• Tax implications of finance by loan or shares and
• Capital allowances – where are we now?

Dividends and Loans – tax and other considerations for the OMB

There are many issues which are a regular occurrence for the owner managed business company. Our briefing considers the tax and other considerations of both dividends and loans for the owner managed business to help avoid pitfalls whilst extracting profits efficiently. Issues covered include tax implications of directors’ loans, both to and from the company and an overview of legal and tax aspects surrounding dividend payments. 

Please also contact us if you would like us to review your tax position or have any questions regarding any of the articles we have included in our newsletter. Your views are always important to us and we would welcome any feedback you could give us.

Click here to download Money Matters and the latest briefings from Hart Shaw.

 

Tax rates 2012-13

Another Budget has come and gone after weeks of press speculation. In fact, this was  George Osborne’s third budget speech. After so much talk of austerity, were there any glimmers of hope?

 

Many of the figures are fundamental to our business and personal lives and you will find the key taxes summarised on our website at http://www.hartshaw.co.uk/TaxRates2012-13.pdf. We are sure that you will find it a useful point of reference throughout the coming tax year and below we have listed just a few examples of how it can be used. 

 

To quote Lord Bramwell, ‘Like mothers, taxes are often misunderstood, but seldom forgotten.’

Our tax rates contain lots of information to reduce those misunderstandings!

 

Property taxes

 

Prior to the Budget, there had been a lot of talk about expensive homes. Our tax rates highlight the rates of Stamp Duty Land Tax to help you calculate the exact cost when buying a property.

 

Asset sales

 

If you sell an asset such as land, capital gains may be due. Our tax rates highlight the main rates so that you can consider the tax bill that may arise.

 

Rates for businesses

 

If you run a business, obtaining the right allowances on equipment that your business buys can affect the tax that your business has to pay each year. There are a number of changes this year, so our tax rates highlight the main allowances that are available, including rates available on business cars.

 

Rates for employees

 

This is always an area that is close to peoples’ hearts. Am I paying the right amount of tax?

 

Benefits that employees’ receive from their job, like company cars and fuel, affect the tax that they pay. There are a number of changes to the company car regime this year, so our tax rates explain how these are computed to help ensure that you are paying the correct amount of tax.

 

Travel is a daily part of business life. If you drive your own car on business, HMRC allow certain tax free mileage allowances to be paid. If you are paid less than these rates, you may be entitled to a tax refund. Our tax rates highlight the rates.

 

Rates that affect us all

 

Long term planning for a comfortable retirement can never start too early. Our tax rates explain how much can be contributed to an approved pension scheme each year tax efficiently.

 

Our tax rates contain the main inheritance tax rates and exemptions but early planning can mitigate these tremendously. For example, a bit of simple tax planning can often make a world of difference – getting the right Will in place could save your family £130,000!

 

These rates are intended for use as a quick point of reference. Should you require any further information, have a simple question or require detailed advice we are only a phone call away.

Steve Vickers, Tax Partner, 0114 251 8850

steve.vickers@hartshaw.co.uk

Follow Steve on Linked In

Hart Shaw Taxation

 

Budget presents welcome measures to help businesses

Hart Shaw is advising businesses and individuals to review their financial affairs closely, after the Chancellor introduced a number of measures in his 2012 Budget.

The Chancellor promised his budget would “unashamedly back business” as he cut Corporation Tax to 24% next month, while there will be consultations on allowing small businesses with turnovers up to £77,000 to be taxed on the basis of the cash going through the firm. Mr Osborne also pledged to increase the £1bn Business Finance Partnership by 20%. The Budget also saw the implementation of tax relief for the video games, animation and high end television production sectors, while the Government is considering enterprise loans for young people to start their own business.

Extra funding will also be available to help construction firms build new homes.

However the Chancellor also promised to crack down on tax avoidance, introducing a new General Anti-Tax Avoidance Rule (GAAR) by 2013 and a stamp duty level of 7% on homes worth more than £2m, while companies that buy any such homes will pay a 15% stamp duty level.

A new cap is also being introduced on tax reliefs, with a cap of 25% of total income for anyone claiming more than £50,000 in a year.

Perhaps the most controversial announcement made in the Budget was cutting the top rate of tax from 50p to 45p, with Mr Osborne telling the House 50p income tax rate was “harming the British economy” and was costing the taxpayer as money was moved to avoid the levy.

Mr Osborne also raised the personal income tax allowance to £9,205 from April 2013.

Steve Vickers, Tax Partner at Hart Shaw comments “We are encouraged by the moves to support businesses, particularly in a time of “austerity” but we are less enthusiastic about the effect the budget will have on individuals.”

Click here to read and download a full review of the 2012 budget from Hart Shaw’s website.

steve.vickers@hartshaw.co.uk

Hart Shaw Taxation

Follow Steve on Linked In

 

2012 Budget Predictions

There’s a good deal of consensus that government borrowing needs to come down. Increasing tax revenues is part of the solution. But with no sign of a recovery to boost tax revenues, the pressure to raise tax rates remains. So what news will George Osborne deliver in his budget speech on 21 March?

Abolition of the 50p tax rate? This doesn’t affect most of us, but grabs many headlines. Many Tory MPs want it, but will they want to keep their Lib Dem colleagues (and voters) happy?

Raising the income tax personal allowance to £10,000 would be a popular move and the ruling parties have agreed to do this by 2015. It would certainly help low and middle earners, many of the former being in fuel-poverty.

Another option is a cut in national insurance rates. Surely though, a cut in income tax rates would be more “visible” and win more political points. With the latter not being touted, a cut in national insurance must be unlikely.

As for the two big “money spinners”: VAT and fuel duty, it’s anyone’s guess. Promised rises in fuel duty have already been postponed, and VAT rate reduction is contrary to past Tory promises. If I were a betting man I’d be backing something else.

Government think-tanks have been pushing for a further drop in the main rate of Corporation Tax from 26%. It’s already at its lowest I can remember, but last year the chancellor promised a further 3% reduction within 2 years.

What about a tax on expensive homes: often referred to as a “mansion tax”? The Lib Dem leader believes this could pay for tax cuts in other areas. This would be widely popular, but doesn’t get much, if any, support from his Tory colleagues.

My prediction is that whatever we get on 21^st March, most of us will lose more. Perhaps all we can hope for is that the pain is distributed sensibly and fairly.

Steve Vickers, Tax Partner at Hart Shaw

Follow Steve on Linked In