Martin Aitken & Co Ltd News & Developments

Martin Aitken & Co: news and comment

Commercial Acuity

Business, tax and finance matters for company directors and business owner-managers.

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Prices rising at the fastest rate for nearly four yearsOutlook

The recent inflation data came as a surprise to many pundits.

The expectation had been for inflation, as measured by the Consumer Prices Index (CPI), to remain at April’s level of 2.7%. Instead, National Statistics revealed that annual inflation had reached 2.9% (3.7% on the Retail Prices Index yardstick).

The last time inflation was at this level was June 2013. Since then it has taken a rollercoaster ride to around zero for much of 2015, only to surge upwards in the past year: in May 2016 CPI inflation was just 0.3%.

At 2.9%, inflation is already above where the Bank of England had been expecting it to peak later this year. If the rate adds another 0.2% next month, then Mark Carney, the Bank’s Governor, will have to write a letter to the Chancellor explaining why the inflation target has been missed by more than 1%. It’s already clear what he would say from statements issued recently by the Bank: blame the fall in sterling since the Brexit vote.

The Bank sees little respite in the short term. In the press release issued in June alongside its interest rate decision, the Bank said inflation “is likely to remain above the target for an extended period as sterling’s depreciation continues to feed through into the prices of consumer goods and services”.

With many deposit accounts paying interest rates of under 1% (before tax), the news on inflation is a wake-up call if you’re holding more cash than you need to. A year ago money on deposit was just about keeping pace with price increases, whereas now it’s losing buying power at the rate of about 2% a year. To discuss your options in the renewed battle against inflation, please talk to us.

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Martin Aitken & Co joins LINC Scotland

LINC Scotland

LINC Scotland is the national association for business angels in Scotland, with a membership which includes many active individual investors and most of the main angel groups or syndicates.

At a practical level part of LINC Scotland's role is to support and improve the functioning of the local business angel market.  At individual deal level, LINC Scotland focus on improving the efficiency of the process by making targeted introductions to well matched business angels amongst its members. 

How does Angel investment work?

Angel investors provide funding (development capital) to your business in return for an equity stake in the company. Many businesses that receive angel investment will already be trading and generating revenue and they are seeking additional investment to take the enterprise to the next level.

This could be for expanding the business to grow market share, developing new products or service lines to meet an identified need which is not currently being met and/or expanding into new markets both at home and overseas.

Angel investors also tend to provide more than just financial support.Growth support

As many angel investors are seasoned entrepreneurs themselves, many will have been on a similar journey to the business they are investing in and will be keen to lend their knowledge and experience to assist the business to achieve the growth they are seeking. They of course have a vested interested and they will be highly motivated to see the business succeed.

Angel investors, like venture capitalists, like to be as certain as they can about the return they will make on their investment.

They want to be able to see, with evidence provided by the company and its management team, how the investment will be used, when it will be used, the key results the business expect during the investment period, and when they will be achieved, and what the likely returns are at each phase of growth.

The percentage equity stake required by the angel investors will vary depending on the size of investment the company is seeking. The equity stake requested by the angel investor, or more commonly a group or syndicate of angel investors, could be anywhere from 10% to 50%. Granting an equity stake in the business to external investors in return for development capital is not for everyone.

However, it is important to give consideration to this way of funding, for instance, as part of a potential cocktail of funding or as an alternative to debt, to generate the investment your business requires to take it to the next level.

What's Martin Aitken & Co's role?

We act for investors, high net worth individuals and corporate bodies, and companies receiving investment. The corporate advisory team led by Ewen Dyer and Euan Ferries provide advice at all stages of the investment process, including:

  • Providing an initial sounding board for companies seeking angel investment and investors looking to invest.
  • Getting the company investor ready e.g. preparing the business plan, financial projections over the investment period (and often beyond), preparing the pitch for funding >more
  • Sourcing and securing angel investment.
  • Deal structuring to ensure that investment structure fits both the objectives of the investor(s) and the company.
  • Tax impacts of the investment on both the individual investors and the companies receiving investment. Maximising the available tax reliefs e.g. Enterprise Investment Scheme and Seed Enterprise Investment Scheme
  • Constructing a cocktail of investment funding - via angel investment, asset backed debt e.g. bank loans, HP, alternative sources e.g. grants, mezzanine, crowdfunding.

For more information on angel finance get in touch with Euan Ferries, Corporate Advisory.

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Clydesdale Bank, LINC Scotland & Martin Aitken & Co are hosting a session on 2 November 2017 Ideaat the bank's St Vincent Street HQ in Glasgow.

Themes: Raising finance: asset backed debt, equity finance, mezzanine finance and getting your business investor ready. The session is supported by Scotland Food & Drink.

To find out more and to book your place >click here

 

Are you missing out on funding available for your business?MACO BUILDING BLOCKS

If you don’t know because you are not sure where to look or what’s available, then we will be able to help.

Research recently published by the Federation of Small Businesses indicated a figure of 90%+ of SMEs are missing out on funding which is available specifically to them.

We can help you to source and apply for grants and other economic incentives for your business’ investment plans.

The need for additional funding can be triggered by a number of factors:

  • New product development.
  • Start-up funding.
  • Building up operations to meet demand.
  • Hiring more people to produce, sell, service and manage.
  • Buying or leasing new premises.
  • Exporting to overseas markets

There are also grants available in specific industries e.g. Food Processing, Marketing and Co-operation Grant Scheme for those in the Food & Drink sector. There are others, too many to list here. Get in touch and we'll run through what's potentially available to you.

Applying for grantsMaco Icons6

Applying for grants can be viewed as drain on time and resources in the business, and a distraction from running the business and achieving the targets set out in the business plan.

However, many who have been through the process will tell you that they owe their growth to not only the funding they secured, but also the rigour of the funding process.

The application process can be time consuming. However, going through the process can be good for the business.

By analysing what you do, what you want to do and where you want to take the business (i.e. convincing funders that your proposals are economically viable and will lead to sustainable growth for you and a decent return for them) will help you to sharpen your propositions and it can be the catalyst for the development and innovation required to turn your vision and ideas into reality.

How can we help?

  • Assess your investment plans and the purpose of funding.
  • Review the potential for grant funding - we'll also give you an early assessment on the likelihood of securing a grant.
  • Quantity the case for assistance, taking into account any historic grant offers and conditions attached. Recommend suitable grants from both public and private sector providers.
  • Apply for the grant - we will help you through the whole process.

We have significant experience of helping our clients apply for grants that are available from Governments, both Scottish and UK, EU sources, Big Lottery grants and employment grants.

Upon identification of the most appropriate potential grants and incentives our team will work with you to prepare the application. By using our experience of the application processes and requirements we will ensure that your application meets the range of complex grant qualification criteria.

Are you going to VentureFest Scotland 20 September 2017 at the Glasgow Science Centre?

If so, sign up to attend Euan Ferries' workshop: Getting your financial ducks in a row >find out more

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Making a capital purchase this year?steel cog

Are you considering improvements to your business premises, investing in equipment or even purchasing new business premises? Have you spent capital buying or improving your business premises or equipment?

If so the purchase may well qualify for capital allowances.

Quite simply, capital allowances can reduce your annual tax bill. They can be claimed for some types of capital expenditure, but generally speaking anything that is used for a business purpose that has a useful life of two or more years may qualify.

Capital allowances are treated like any other expense and can be deducted from your profits, or added to a loss, when calculating your taxable profits at the end of the year. It is also often the case that embedded plant fixtures are not valued separately when purchasing a property and as a result qualifying items are missed.

To ensure that you don’t miss out, get in touch with us to find out if your capital expenditure could qualify. Further, if you are contemplating capex we’ll run the numbers for you to see if there is a potential claim in advance of you making the purchase, and we’ll discuss the potential grants and economic incentives that may also be available to you to help fund the purchase.

Download our guide to capital allowances: Tax Saving Ideas for Businesses

Cybercrime: ignore threat at your peril Risk

A couple of recent cyberattacks have given small companies the jitters – even more so than Brexit, according to a poll of 500 small and medium-sized companies (SMEs) conducted by Barclaycard.

The survey found that 44% were worried about being hit by cybercrime or a data breach compared with just 34% who cited Brexit as a major concern. A cyber-attack in May of this year caused disruption for over a week to companies and even the NHS, with operations and clinical appointments being cancelled and ambulances being diverted to unaffected hospitals.

Fears over cybercrime have led some SMEs to increase their spending on firewalls, security software and other defences to more than £3.8 billion over the next year. Last year, spending stood at £2.9 billion – that’s an average of £1,600 per business. Incidentally, that’s the same amount of money spent on contactless payments upgrades, so smaller businesses may have some tough decisions to make.

As companies grow, so do the threats. 34% of small businesses cited that they were concerned about their ability to manage multiple threats and demands. If you are watching the bottom line, cutting corners when it comes to protection against cyber-attack could have catastrophically expensive consequences for your company. Make sure you invest in the technology, get the right security systems in place and don’t leave it to chance.

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Business owners need to consider tax planning when it comes to selling or retiring.MACO TREES

One of the key issues for business owners planning to retire or sell a business centres on how best they plan their tax liability.  To maximise the best outcome business owners should plan well in advance.  In our experience it is never too early to consider financial planning and whilst ‘younger’ businesses may not place this at the top of the agenda right now, the reality is that planning at an early stage can be structured to help with current tax liabilities as well as those on retirement or sale.  

Both Capital Gains Tax (CGT) and Inheritance Tax (IHT) need to be considered carefully as part of the planning exercise and examined in close detail – without appropriate planning for these two very real scenarios business owners might find themselves or their ‘estate’, handing a blank cheque to the tax man!

CGT is payable when you sell an asset, for example,  a property or a business and there has been an increase in the value of the asset. Currently, CGT rates on most gains reduced from 18% to 10% for basic rate tax payers and from 28% to 20% for higher rate tax payers from April last year. However there are exceptions, gains from the sale of a residential property that does not qualify for full principal private residence relief continue to be taxed at 18%/28%.

Don’t leave it too late to consider your CGT liabilities, especially if you are planning to sell investments made many years ago. It can be quite a shock to realise how large the CGT liability can be.

CGT liabilities can be reduced by utilising the tax allowances to which you are entitled and by careful planning of your CGT position throughout your life. 

You can, of course, ensure you offset capital gains on successful investments with losses from investments that haven’t worked out so well. Losses can also be carried forward to offset gains in future tax years and equally important is the use of your Annual Exempt Amount (AEA). Currently capital gains of £11,300 or less for individuals are exempt from CGT. AEA for most trustees has increased to £5,650.

Moreover, a priority for any business owner should be the setting up a will as the first step in any estate-planning exercise, not only to make certain that matters are dealt with in a tax-efficient way, but to ensure that your exact wishes are carried out.

Having a will means you avoid relying on the intestacy rules that come into play where there is no will. Effectively the law decides what happens to the estate, - remember the point above about writing a blank cheque to the tax man! This can lead to financial anxiety for the surviving spouse/family along with a possible immediate charge to IHT.icon family

If you don’t want to give directly, you could consider a trust. With a little planning, you can transfer asset(s) into a trust with minimal CGT or IHT consequences and it can also reduce your taxable estate. There are, however, some additional tax charges and costs related to trusts that may be applicable. If you are interested in setting up a trust, you should have a conversation with your accountant/lawyer first to ensure that setting up a trust will meet your requirements.

Everyone has an inheritance tax (IHT) Nil Rate Band of £325,000 and this will remain frozen until 2020/21. In addition to the main nil-rate band, the Residence Nil Rate (RNRB) came into force in April 2017.

The maximum RNRB allowance this tax year will be £100,000 rising by £25,000 in each of the next three tax years. This will effectively raise the IHT free allowance to £500,000 per person. Where married couples jointly own a family home and wish to leave this to their children, the total IHT exemption will rise to £1m by 2020/21.

Business Property Relief can, with careful planning, potentially remove the full value of a business – sole trader, partnership, or shares in private company from being subject to an IHT charge, either via lifetime gifts or on death. You can gift as much cash as you like during your lifetime, in what is referred to as a ‘potentially exempt transfer’.

Gifting income producing assets to your children, such as shares in the family business or an investment property, is also a good way of reducing the overall family income tax bill whilst at the same time conducting succession planning. Do take care to ensure there are no CGT or IHT liabilities that crystallise on the gift/transfer.charity

Think also about testamentary gifts out of your estate to a Charity or leaving part or your entire estate to a charity. This act of benevolence can reduce the amount of IHT payable on your estate, whilst benefitting your charity of choice. You can also cut the Inheritance Tax rate payable on the rest of your estate from 40% to 36% if you leave a minimum of 10% of your net estate to your preferred charity. 

These areas can be daunting, but with a bit of careful planning it is possible to mitigate your exposure to unwanted CGT/IHT liabilities.

The word is always to seek professional advice. Get in touch with Tricia Halliday, Tax Director to arrange an appointment.

The Federation of Small Businesses & Martin Aitken & Co are hosting a Tax & Funding session in IdeaGlasgow on 29 August 2017. The session begins at 6pm.

Themes: business, personal and property taxes, remuneration planning, share option/EMI schemes, as well as sources of grant funding.

To find out more and to book your place >click here

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Just in case you missed our Employment Update: changes for the new tax year >click here to read in full

  • Scottish Rate of Income Tax (SRIT) changes
  • Restrictions on salary sacrifice and flexible benefit schemes
  • Gender pay gap reporting
  • Payment reference numbers update

Key steps in building your business journey

The business journey can be exciting, exhilarating and eventful. The buzz of growing a business, developing a product and aspiring to be the next Richard Branson is the exhilaration you won’t find in a standard 9-5 job.

Despite the fact you’re probably working 18 hours per day to ensure that your business idea grows, sales numbers increase and the company prospers; it’s important to consider the back office functions of your business and its processes and operation. These are too often forgotten about in the interim stages of a business but by considering them at the start, more time can be devoted later to the overall growth and development of the business.

Getting to grips with the booksCloud technology

In today’s world with everyday life becoming more digital and interactive, managing your accounts and tax is no different. The online cloud accounting environment is growing exponentially with the range of programs, add-on’s and applications available to assist you in streamlining your business and its operations. The flexibility of use, ease of information available and all round slicker systems puts the cloud software miles ahead of the more traditional desktop versions. The cloud accounting systems can be accessed anywhere (the office, at home, a motorway service station or even on the beach if you can’t switch off…) and simple tasks like creating and sending invoices, matching payments and reconciling your bank can be done by a few clicks on your smartphone.

The era of manual records is diminishing rapidly due to advances in technology but also due to HMRC’s Making Tax Digital initiative meaning the large majority of businesses will be required to prepare and submit information on a regular basis through a digital platform in the not too distant future. Time to tuck the red Cathedral cash book into a drawer…

Your accountant (covered in more detail shortly) should be able to advise regarding the best practice for your business and which software is most suitable. Depending on the package you take with an accountant, they may even train you on the relevant software at no extra cost. Even if there is a small fee, this will pay for itself when you have management information you can rely on throughout the year rather than it being out of date and incomplete. The completion of regular management information, either quarterly or monthly, can be very important for a business in the growth phase as this information will be relied upon by potential investors, lenders or grant bodies.

Ensuring that you have the bookkeeping in hand is often overlooked when some are setting up and growing a business (especially if the individual has little financial knowledge) but this is one of the key controls that should be implemented from the outset – either completed internally or outsourced to an external bookkeeper.

Compliancecompliance

Running a business brings with it a certain amount of compliance in terms of the accounts and tax. Company accounts require to be submitted to Companies House generally 9 months after each financial year end. HMRC also require payment of the company Corporation Tax in the same 9 month period. Your accountant will generally prepare and submit both of these documents on our behalf.

Further compliance to HMRC is also required in relation to PAYE/NI and VAT on a regular basis. The government’s directive that all companies offer workplace pensions also places an additional compliance burden upon businesses both from a financial and admin perspective. This is an ongoing directive with businesses currently going through the staging process of being legally required to provide pensions to employees.

Hiring an accountantcolourful clothes

Choosing an accountant can be very a difficult decision especially when starting up and progressing through the early stages of your business journey. It’s important to make sure that your decision is not solely around the best price you can obtain. Too much quote searching will blind your view of the service you will actually receive and you should remember it is more about the additional service you will receive rather than the regular compliance work for accounts and tax. One key point to make is that you should always be working with a Chartered Accountant’s firm; this will give you assurance that you are working with a qualified individual who is regulated by their professional body. They will have a broader range of knowledge and be in a better position to assist you and your business.

Managing cash flow and controlling costscapital

Cash flow will be the biggest challenge in the early part of business journey. Unless you have been in the fortunate situation of using crowdfunding, or have a significant amount of investment at the outset, managing the cash position of the business will prove to be the biggest task as you grow the business.

Suppliers may not offer you favourable credit terms in the early stages but with the vicious circle as it is in life, trade customers will expect regular payment terms meaning working capital will be stretched. It is important that cash movements are forecasted as much as possible to ensure that the business is operating within its means and dealing with the various pitfalls of debtors and creditors.

Using loans to support the early stages of the business comes with its own challenges. Lenders will require financial projections and will seek reassurance that the business will be able to service the debt and this will need to be factored into your cash flow along with the general operations of the business. Lenders may also look for some form of security depending on levels of borrowing and personal guarantees may be required which you should bear in mind.

Review costs on a regular basis to ensure that you are not overspending and look for areas where you can actively reduce costs – all this will go towards effective cash management.

Ideally, you should be thinking at least 3 months ahead in terms of business activity and planning to ensure that all cash commitments can be met in line with expected sales etc. It is also worth considering a ‘safe’ balance in your business i.e. what is the level of cash you want to retain at any one time. This safe balance should be enough to cover short term commitments like wages should activity not go as planned.

Effective cash management will go a long way to assisting you in the general operation and growth of your business not to mention delay the grey hairs for another few years…

Business supportplanning 2

It’s also important to note that businesses in the growth phase can be eligible for a great deal of support. It is becoming more common that local authorities have business development and support programs which can be accessed by businesses in their respective areas providing things such as business support and advice; shared office space and funding to name a few.

There are also larger national organisations, both in the private and public sector, offering business ‘incubator’ schemes to new and growing businesses with the sole aim of promoting and developing home-grown businesses. These schemes generally have a multitude of support types (accountancy, legal, marketing etc) and will run seminars where you can integrate with other businesses at the same stage.

Some of these types of schemes will also provide shared office space if eligibility criteria are met meaning rent and rates is one thing you can remove from your cash flow.

If you are interested to find out what business support is available in your area get in touch with your local Business Gateway.

Martin Aitken & Co is currently providing business advisory support to Glasgow City Council: Business Gateway under a European Regional Development Fund (ERDF) Framework and Lanarkshire Business Gateway. We are running drop-in finance & tax surgery sessions in our offices on the first Tuesday of every month. If you would like to book an appointment or to find out more about how Business Gateway may be help you, get in touch with Gavin Curr Business Advisory & Audit Manager >contact Gavin

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Tax Planning for Life 2017-18Maco Tax Planning Icon Strip

Our Tax Planning for Life 2017-18 guide navigates you through a wide range of planning opportunities and strategies for all stages and facets of life: from childhood to working/business life and onwards to those happy golden years of retirement and semi-retirement.

What's in this year’s guide?

  • Protecting your income from HMRC and succession planning strategies.
  • Ways to avoid the higher rate of tax.
  • Transferring assets and allowances between couples.
  • Working life: directors remuneration packages, entrepreneurs relief, grants & capital allowances.
  • Caveat emptor: buy to let investments, property tax reliefs
  • Investing your nest egg: ISAs, bonds, savings and trusts.
  • The future: estate planning.

Download TPL 2017-18 and Tax Rates 2017-18

Once you've worked out your priorities for the year ahead, give us a call to arrange an appointment.

Mastering tax returns calculator hm revenue

When it comes to preparing your Tax Return and calculating your correct tax position there are a number of factors that must be considered before submitting your Return to HMRC.

Ensure that you have included all your income received in the tax year. This includes Employment Income, Self-Employed profits or losses and Investment Income.

If you are employed, this will include your P60 and P11d which you should receive from your Employer. Even though your Salary has been taxed at source, this still needs to be included in your Tax Return as all income and gains must be included in your Tax Return.

Trading losses can be “offset” against other income in the tax year which could decrease your tax liability in the year. There are rules regarding any offset which a Tax Adviser will be able to discuss further with you if required.

You should receive Certificates of Interest from your Bank which will show any Bank Interest received on savings in the tax year. If you have closed any bank accounts during the year, you may still have received interest on this account before closure and therefore this must be included in your Tax Return. Remember that interest on ISAs are tax free and do not need to be included.

There are tax reliefs that are available to be claimed which will potentially reduce your tax liability. Personal Pension Contributions and Gift Aid Contributions will increase your Basic Rate Band and you will therefore receive tax relief if you are a higher rate tax payer.

Getting to grips with tax codes attention to detail 2

Tax Codes are issued to individuals who receive a salary or private pension. Understanding your tax code can be tricky as they can include adjustments against your Personal Allowance which could lead to you either not paying enough tax at source or paying too much tax.

If your total income is over £100k in the tax year, your personal allowance will be restricted (possibly to nil). If you receive a personal allowance when you should not have, HMRC will collect any outstanding tax by either Self-Assessment or via your tax code going forward.

You should review your tax code for any additional income (state pension) or benefits in kind (Medical Insurance, Car Benefit etc.) that you receive via your employment to ensure that these are being correctly incorporated into your code.

If in one tax year you pay a lump sum into a Private Pension and receive tax relief via your tax code, always review future tax codes as HMRC may assume that you will pay the same pension contribution each year and include the relief when you are not actually going to pay anything into your pension resulting in a shortfall of tax being deducted at source.   HMRC do not issue tax codes to your Tax Adviser anymore; if you receive a change in your tax code, forward this to your Tax Adviser to check that it is correct.

If you need further guidance on self-assessment tax or tax codes, get in touch with Iain Stirling, Tax Manager

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Making Tax Digital UpdateFinish Line

Making Tax Digital maybe on hold, but background work continues

Making Tax Digital, along with another 71 clauses, was taken out of the Finance Bill in April, but the original timescale hasn’t been delayed.

What’s MTD

With the pilot of the initiative well underway and many of the accounting software and tech companies, including Kashflow, Xero and Freeagent continue to work closely with HMRC to develop the implementation and roll-out plan.

At Martin Aitken & Co we're going on the basis that the UK Government is sticking to the published roadmap so that we can make sure that our clients have enough time to get ready.

What’s going on at the moment?

July - December 2017: Digital tax accounts show taxpayers an overview of their liabilities in one place.

2018: Businesses, self-employed people and landlords with turnover above the VAT registration threshold start updating HMRC quarterly for Income Tax and National Insurance obligations through accounting software.

2019: Businesses with a turnover between the minimum threshold of £10,000 and the VAT threshold start updating HMRC quarterly for Income Tax and National Insurance obligations through their accounting software. MTD starts for VAT figures and returns.

2020: Most businesses can start updating HMRC quarterly for Corporation Tax obligations through their accounting software. The full range of HMRC services is available through digital tax accounts.

With the next Finance Bill due in the autumn, we could still see MTD set in legislation by the end of the year.

What you should do now?

Assuming that the above timetable doesn’t change in any way, businesses with turnover above the VAT threshold of £85,000 will have to start keeping their records digitally as soon as April 2018. Get in touch with Mary Blyth, Cloud & Digital Services Manager to arrange an appointment to discuss the steps you need to take to become digitally enabled.

For businesses with turnover under the VAT threshold and above the £10,000 threshold, MTD will start the following year.

Find out more about Making Tax Digital and cloud accounting at our Cloud & Digital Lunch & Learn sessions >find out more

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No summer Budget, but…Assurance

The general election left the future of many spring Budget announcements up in the air, but that situation may soon change.

When Theresa May announced her snap election in April, it threw a major spanner in the previous month’s Budget. There was no time to pass the 776 pages of Finance Bill before parliament shut down. The result was that about 80% of the Bill was removed and its uncontroversial residue passed through parliament in a few days.

Several important changes that were pending have now disappeared. For example:

  • The reduction in the money purchase annual allowance from £10,000 to £4,000 from 6 April 2017. This could have created problems for people who phase their retirement, both drawing pension benefits and contributing to a pension.
  • The cut in the dividend allowance from £5,000 to £2,000 from 6 April 2018.
  • The introduction of making tax digital. This was due to begin for traders with income above the VAT threshold level from 6 April 2018, with others starting one year later.
  • The pension advice allowance. There was to have been a new tax exemption from 6 April 2017 for up to £500 per tax year for employee pension advice, paid for by an employer. The old, more restricted £150 allowance now remains in place.
  • The property and trading allowance of £1,000 each from 2017/18. These new allowances were aimed at keeping small amounts of trading income and property income out of tax.

At the time it was anticipated that following the election the Chancellor – not necessarily Mr Hammond – would reveal a Summer Budget, just as his predecessor did in 2015. The second Budget of the year was expected to reinstate the lost measures and add a few more that were best left until after the polls closed.

It did not quite work out that way, as we all know. Mr Hammond has remained in place at 11 Downing Street and in June told Andrew Marr “…there’s not going to be a sort of summer Budget or anything like that, there will be a regular Budget in November as we had always planned…”. Shortly after that appearance, the background notes to the Queen’s Speech revealed that there would indeed be a Summer Finance Bill, even if there was no Budget.

A tight timetable

The new Bill will incorporate “a range of tax measures including those to tackle avoidance”, but precisely what those measures will be or when the Bill will emerge is unclear. The Treasury has a record of stretching seasonal limits when it comes to publications and will not be helped by the parliamentary timetable, which arrives at the summer recess on 20 July.

Parliament resumes on 5 September, but only for nine days before the conference recess, which runs until 8 October.

One planned-and-abandoned/deferred measure which could be relevant to you is the reduction in the money purchase annual allowance. This generally operates when pension contributions are being made at the same time as benefits are (or have been) being drawn. If you think this might affect you, it is vital you check the current situation with us before taking any action.

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BREXIT – where are we now?EU Brexit Jun 16

When Theresa May called the General Election, she was quick to make it a Brexit election. Her rationale was that with a stronger majority behind her, she would be better placed to negotiate a favourable settlement with her European counterparts.

With the election over, the time has come to return to the task of unravelling our ties with Europe. So, what stage have we reached and what is likely to happen next?

The starting gun has been fired

On 29th March this year, Theresa May invoked Article 50 of the Lisbon Treaty. This was done in the form of a letter delivered to the President of the European Commission, Jean-Claude Junker, and signalled the start of the process of the UK’s departure from the EU. Starting from that date, the UK has two years to negotiate its exit. In the meantime, the four core conditions of our membership remain unchanged. This means that during this time we must allow the free movement of people, capital, goods and services.

The European Stance

The EU parliament has already confirmed its negotiating position, stating that EU citizens’ rights, the fair and equal treatment of EU citizens living in the UK and British citizens living in Europe must all be upheld. It has also said that any attempts by the UK to negotiate trade deals with individual EU countries, or with countries outside the EU, before its exit would be considered a breach of EU law. EU heads and officials have been quick to say that on its departure, the UK won’t be able to enjoy the same access to the EU internal market as it does now.

There is, of course, the knotty problem of our financial commitment to the EU. This is likely to become one of the most hotly-debated issues, with media estimates of the final bill currently ranging from €20bn to €100bn.

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Pension savers set to miss out on unclaimed tax reliefRetirement

Are you in a Defined Contribution Pension, such as a Stakeholder Pension or Personal Pension, or a SIPP? If you’re a higher rate taxpayer, you could be missing out on free cash because you haven’t claimed the correct tax relief on your pension contributions. This would be a shame, as tax relief on contributions represents a major reason for investing in a pension.

Tax relief explained

For every £80 you contribute to your pension, your pension company will reclaim a further £20 in tax relief, meaning they invest £100 on your behalf. If you are a higher rate taxpayer, you are entitled to tax relief at the higher rate of 40%.

With a large number of the UK’s 7.9m personal pension savers failing to claim the full amount of tax relief that they are entitled to receive on their pension savings, this could add up to a substantial sum over the course of an average working life.

This often happens because payments into pension schemes are made after deducting basic rate tax at 20%, and many savers who are higher-rate taxpayers overlook the fact that they are entitled to receive 40% tax relief, but may not be aware that they need to claim it via their tax return.

Claiming tax relief

If you complete an annual return, then you should include your personal pension contributions. HMRC will then give you higher-rate income tax relief through your tax calculation. If you don’t complete a tax return, then you should write to them and detail your pension contributions. HMRC should then update your tax code to take account of this, and include an allowance for your contributions in your tax calculation.

Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.

Nearing retirement, already retired or just setting out and need pensions advice? There's more over on www.mafsltd.co.uk

 

The pension changes - how mistakes are still being madeforesight

Thanks to the changes in pension legislation that came into effect in April 2015, those who have defined contribution pension plans have more choice available to them than ever before.

When they reach 55 they have a variety of options; they can leave their pension plan untouched, purchase an annuity, take an adjustable income (flexi access drawdown), take their cash in instalments (uncrystallised funds pension lump sum), or take their entire pension pot in one lump sum.

Many people are still finding the options open to them confusing and some are making choices that may not be the best options for their circumstances. Here’s some general guidance on accessing your pension.

Don't take out too much cash

Some people are withdrawing considerable sums from their pension and putting the cash into a deposit account. With interest rates low and inflation rising, this will erode the value of their savings. Options like income drawdown allow you to take the amount of money you need, leaving the rest invested in your fund.

Taking your whole pension pot as a lump sum could be a very expensive mistake. Although the first 25% will be tax-free, the rest will be added to your income for that tax year and could mean that you find yourself paying a much higher rate of tax and you will be left with a lot less money for your retirement years.

Annuities may not be your best option

Before the rules were introduced, it was in effect compulsory for most people to take an annuity, but this is no longer the case. Annuities have become steadily less attractive as rates have dropped substantially. There are other options to consider, such as only using part of your pension to buy an annuity to produce a secure income to cover your essential outgoings and considering other ways to produce a retirement income, such as income drawdown.

Don't underestimate how long you may live

Don’t be tempted to take high levels of income from your pension, or withdraw large lump sums or make choices that will help your family more than you. When making decisions, you need to think about your income needs for the rest of your life and possibly your spouse too. With life expectancy on the rise, you could have many years ahead of you.

The biggest mistake of all - not taking independent professional advice

Your pension pot is probably your biggest asset after your home, so it makes sense to get good advice when you’re thinking about taking money out. Our advice will help you see the bigger picture and plan effectively for the future.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.  Fees and tax treatment depend on the individual circumstances of each client and may be subject to change in the future.

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Why diversifying your assets could be the best strategyDiversification

As the government begins the process of leaving the EU, this year looks likely to mark a significant watershed for the UK economy and its relationship with the rest of Europe.

On the international stage, there is considerable uncertainty about what the Trump administration will mean for business and trade, both in the US and around the world.

The US economy

Donald Trump wants his administration to bring jobs back to the US, and will revisit trade deals the US has with a variety of world partners. Many predict he will be in for a bumpy ride, reasoning that policies that looked workable on the campaign trail may be more difficult to implement in government. However, investment pundit, Warren Buffett, doesn’t believe Trump will throw the stock market into chaos, or cause a recession. His advice is to keep the long haul in mind.

The UK

The International Monetary Fund (IMF) has raised its forecast for the UK’s growth this year, following better-than-expected performance since the Brexit vote. It now expects the UK to grow by 1.5%, compared with its previous forecast of 1.1%.

Europe

With national elections due in France and Germany, some see signs of a break-up of the Eurozone on the horizon. If these cracks were to deepen, then there would be implications for the financial markets, the economy and business.

Diversity holds the key

So, investors are bound to be thinking about their portfolios, and considering what they need to do to provide a degree of future-proofing for their investments. If markets look likely to experience increased volatility, then the old adage about not putting all your eggs in one basket certainly holds true.

 Ensuring that your assets are diversified across a range of investments such as equities, bonds and property, in a variety of sectors, and in UK and overseas markets, makes good sense. Many investment professionals agree that, although it doesn’t guarantee there won’t be losses, diversification is the most important component in reaching long-range financial goals, while minimising risk.

It makes sense to keep your portfolio under regular review where appropriate; this will help ensure that you are invested in the most suitable assets and that your portfolio is still in line with your investment objectives.

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What families need to know about the new residence nil-rate bandicon familyoffour

A new Inheritance Tax (IHT) nil-rate band that is available in addition to an individual’s own nil-rate band of £325,000 was introduced in April this year. It covers the main residence (or other qualifying property the deceased had lived in) when it is passed to descendants.

The new Residence Nil Rate Band (RNRB) will apply if you want to pass such property to a child or grandchild. It’s important to note that only direct descendants (including adopted, foster and step-children) can benefit, and that doesn’t include nieces and nephews for example. So not everyone will be able to rely on it for IHT planning purposes.

Gradual implementation

The allowance is being introduced in stages over four years, with a limit of £100,000 from April 2017, rising to £175,000 per person in 2020. This is in addition to the individual allowance for IHT, which currently remains unchanged at £325,000.

How it works

Once the changes are fully implemented, they will mean that each parent will be able to leave £500,000 in assets that include a ‘family home’ component of at least £175,000. As the allowance can be passed from one partner to another on death, when the first partner dies their allowance can be transferred to the surviving partner, meaning that they will then have an allowance of £1 million. Where an estate is worth over £2 million, the family home allowance (but not the individual allowance of £325,000) reduces by £1 for every £2 of value above £2 million.

Points to notelayers

Only one residential property will qualify for the relief, but it is possible to nominate which property is to qualify if there is more than one in the estate. Properties that the deceased has never lived in, such as buy-to-let properties, will not qualify.

Downsizing provisions

The family home doesn’t need to be owned on death to qualify. This is a help to those who may have downsized or sold their property to move into care or to live with a relative. The RNRB will still be available, provided that the property disposed of was owned by the individual and would have qualified for the RNRB had the individual retained it, and provided that the replacement property or assets form part of the estate passed to the descendants.

To qualify, the downsizing or the disposal of the property must have taken place after 8 July 2015. There is no time limit on the period between the disposal and the date of death.

Reviewing your Wills

It makes good sense to review the terms of your Will. The RNRB may be lost if the main residence is placed into a Discretionary Will Trust for the benefit of children or grandchildren. However, the rules surrounding the operation of the RNRB and the use of trusts is a complex area of law, and professional advice should be taken.

Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Not all Inheritance Tax Planning solutions are authorised and regulated by the Financial Conduct Authority.

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Dates for your diary

 

Tax & Funding: 29 August 6pm, GlasgowFSB logo

Federation of Small Businesses - Network and Learn - Business, Personal & Digital Tax: planning opportunities, directors' remuneration planning, property tax changes and MTD update. Business grants and fundng options available to SMEs in Scotland.

Speakers:  Tricia Halliday, Derek Hanlan and Euan Ferries, Martin Aitken & Co

Where: Collabor8te, 22 Montrose Street, Glasgow

To book and find out more >click here

 

Venturefest Scotland 2017vf scotland 2017 logo

20 September 9am-5pm, Glasgow Science Centre

Venturefest Scotland is a national business innovation summit designed to help high-growth SMEs and ambitious early-stage companies to grow through innovation.

Taking place annually in September at the Glasgow Science Centre, the event connects business owners, entrepreneurs, investors and innovators and provides a platform for growing companies to find the tools, advice, funding and contacts they need to take their businesses to the next level.

10am: Getting you financial ducks in a row

What do funders look for and what you need to do to get your business fit for purpose to successfully raise finance will be amongst the key takeaways from the session. We’ll also cover the various funding options available to start-up and growing businesses (e.g. debt, equity, grants) that are available and the journeys that are involved in each route so that you are going in with your eyes open.

Speakers: Euan Ferries, Derek Hanlan and Mary Blyth, Martin Aitken & Co

Meet the Expert: Looking to raise finance and/or access grant funding?

Book your appointment with Euan Ferries, Martin Aitken & Co. The sessions are running throughout the day. Select your appointment time on the booking form. 

To book and find out more >click here

 SFD HighRes LARGE

Funding Growth & Ambition in Scotland's Food & Drink Industry

2 November 8.30am: Clydesdale Bank, Scotland Food & Drink, LINC Scotland and Martin Aitken & Co

If you are looking to raise funding for your business in the next 12 months and are keen to find out more about the potential options available, and how to go about attracting investors, then this session is for you.

Speakers:

  • Deyrick Smith, Mark Wilson & Thomas McPake, Clydesdale Bank
  • Brian Hale, LINC Scotland
  • Euan Ferries & Derek Hanlan, Martin Aitken & Co
  • Rick Allison & Graham Young, Scotland Food & Drink

Where: Clydesdale Bank HQ, St Vincent Street, Glasgow

To book and find out more >click here

 

Cloud Accounting & Digital Business Applications: Autumn Lunch & Learn SessionsCloud meeting

Mary Blyth, Cloud Manager, Martin Aitken & Co is hosting lunch and learn sessions at our offices during October & November.

The sessions will cover:

  • Cloud accounting solutions: what packages are available to suit your business.
  • Digital applications: which apps will help you to run and manage the business, projects and day to day finances.
  • Transitioning to the cloud - what's involved, getting set up and training for staff.
  • Making Tax Digital.
  • Reporting, management information and forecasting. 

The sessions will be held from 12.30pm-1.30pm in Martin Aitken & Co's offices.

If you would like to attend one of the sessions, please send an email to This email address is being protected from spambots. You need JavaScript enabled to view it. to arrange a convenient date.maco logo 2016 full

Find out more about cloud accounting and digital applications on our cloud website >more

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How can we help? 

Get in touch with your usual contact at Martin Aitken & Co or Martin Aitken Financial Services to arrange an appointment.

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