Monthly Archives: August 2015

More Phishing Emails – A Growing Problem

shutterstock_223094779We’ve previously blogged about an increase in the number of phishing emails targeting individuals and businesses in and around the North West.

The new scam poses as an email from one of your contacts and requests a money transfer of around £5,000. In some cases emails have been sent to a company’s finance team, appearing to be from a colleague. A general rule of thumb is that all emails requesting any personal information or money transfers should be cautiously investigated and verified before any action is taken.

For more information on identifying  phishing scams or to report a scam, we advise you to contact Action Fraud on 0300 1232040.

HMRC Seeking More Access To Information From Third Parties

shutterstock_163502132Government consultation is currently in progress on further steps to tackle the hidden economy by increasing HMRC powers to access data from third parties.

At present, HMRC can access data on bank and credit/debit card transactions. The plan is to extend that to include data held by third party trade facilitators such as electronic payment providers and business intermediaries (including those allowing customers to make orders, purchases or reservations relating to goods, services or digital content).

The move comes as a response to the perceived £5.6bn of missing tax from the hidden economy, of which HMRC plans to utilise its data gathering powers to recoup £860m by 2020/21.

It has been highlighted that the data would be used for identifying compliance issues with businesses, and not the transactions of individual customers. Although, bulk information can be used as an independent check against the data that taxpayers themselves report to HMRC.

HMRC also believes that gathering this information will “reduce errors and improve overall compliance”. Since the start of HMRC’s existence, they have been increasingly pushing for more powers and capturing more data has been important to clamping down on tax avoidance.

Although this may not directly affect you, this highlights the progress HMRC are making in their acquisition of personal data. Having spent years developing software (known as Connect) that seeks links between individual taxpayers and businesses, income, assets and transactions. This will be another stepping stone in HMRC’s plans to seek out discrepancies and recoup some of the missing £5.6bn tax.

The exact format of the new powers and the date they will come into effect is not yet known.  It seems inevitable, however, that HMRC’s powers will increase.

For compliant businesses, the new measures should, in theory, not be an issue. However, the problem is that access to more data can cause tax enquiries to take even longer and cost more in professional fees whilst taxpayers prove to HMRC that all their affairs are above board.

For more information or advice on protecting your business from any fees that come with an HMRC investigation, please get in touch with our tax team by emailing tax@pmm.co.uk or call Julie Walsh on 01254 679131.

Private Education – Is It Affordable?

Private Education BlogIt’s no secret that the cost of private education tends to rise much faster than inflation in the longer term. In 2015, private school fees have risen by 3.5%, the lowest rate since 1994 according to the Independent Schools Council (ICS) 2015 Annual Census. However, despite rising costs, record numbers of pupils attend private schools.

Despite the common misconception that private education is just for Britain’s wealthy, there are some affordable ways parents can meet the cost of their children’s education.

The costs and bursaries/scholarships

Fee levels vary significantly by region from just over £3,000 per term for a typical day school in Wales to more than £5,000 per term in London. Many schools offer bursaries and/or scholarships to help less affluent families afford private education. Families whose disposable income is largely taken up by school fees are given the most support and many institutions actively canvas for these types of applicants. According to the ISC, over a third of pupils in private education now receive some form of financial assistance.

Start saving early

Work out the numbers for your preferred option and assess how much you need to save on a monthly basis. It helps to keep a budget. Starting to save, from the moment your child is born, could give you around 10 years to build up funds. Make sure that your investment strategy is sound. Proper investment can yield much better returns than the bank or building society in the early years, but don’t take too many risks when you need to draw down on the savings you have accumulated. If you are responsible for a child under the age of 16 you can make use of child benefits, and tax-free advantages of ISAs. But watch out! Junior ISAs can’t be withdrawn until the child is 18, so could only be used to fund university education.

State schooling until they move to secondary school

Starting a child’s private education later could save money – for a child entering school this year and leaving in 2028, sending a child to private school from age 11 could save you up to £100,000.

Both parents working

Having combined salaries with your partner can help you manage the costs of your child’s private education. This may increase the appeal of sending your child to boarding school. Whilst this is a more expensive option, it allows parents to continue to work without having to compromise family time during term time.

Help from the grandparents

Many grandparents are starting to get more involved in supporting their family and contributing towards their grandchildren’s education. Gifts of capital and out of income can be a successful way of reducing any inheritance tax liability whilst providing for future generations. Trusts might also be a useful way of reducing tax liabilities overall.

In summary, remember the three basics of financial planning. Make the most of all the tax breaks available to you, manage your investment strategy carefully and most importantly – plan ahead and start early. For more information on planning for your child’s future, get in touch with our Wealth Management team by telephone on 01254 679131 or by email at wm@pmm.co.uk.

Inheritance Tax and Business Property Relief

Inheritance Tax & BPRA common objective for many of our clients is to pass on money to their families on their death. With house prices having escalated significantly, a greater number of estates have become subject to inheritance tax, reducing the amount their loved ones receive.

In response, the Chancellor has created an additional nil rate band relating to the family home which will be phased in over the next few years. Potentially for a couple with a home worth £500,000, they may be able to pass on a joint estate of £1 million not subject to inheritance tax. It should be noted that this only relates to homes passed on to direct descendants; it also doesn’t address the inheritance tax concerns of those who don’t own a property.

If after these additional measures you still have an inheritance tax liability, you may look to give away assets thus reducing the size of your estate. This can be problematic in that you can’t then use those assets, but often more importantly you need to survive a further seven years from the date of the gift for it not to be added back into your estate for IHT purposes.

There are however, investments that can be made that allow you to achieve 100% relief for inheritance tax purposes whilst remaining under your control and from which you can access funds if required. It’s a relief that owners of small family businesses will often use to pass on shares in their unquoted trading companies free of tax, and is known as Business Property Relief (“BPR”).

But if you don’t own a family business you can still take advantage of this relief. One of the simplest methods can be to acquire a portfolio of qualifying trading company shares quoted on the AIM share market. Provided you hold the shares and survive for 2 years from purchase, the value of those shares will be 100% relievable. It should be remembered that shares on the AIM market can be higher risk and will not be appropriate for everyone. You should take appropriate advice before investing.

If AIM shares sound too risky for you, there are other investments that make use of BPR by holding shares in unquoted companies that engage in trades such as asset finance, solar power, and property finance. They focus more on capital preservation producing predictable, modest returns rather than high growth. There is an increasing number of providers in the market and they are often complex in structure, and again taking advice is highly recommended.  These investments can, however, be highly effective in both individual and trust tax planning.

If you do need advice regarding investments that benefit from Business Property Relief or any aspect of Inheritance Tax, please call 01254 679131 or contact one of our advisers:

Richard Hesketh (richard.hesketh@pmm.co.uk) – Wealth Management and Investments

Jane Parry (jane.parry@pmm.co.uk) – Head of Tax

 

Auto Enrolment – Should I Be Preparing Now?

Auto Enrolment blogIn March 2015, a total of 5.2 million eligible job holders were automatically enrolled and around 35,000 employers had completed their declaration of compliance, according to The Pensions Regulator. This year, around 45,000 employers will reach their staging date, but that’s only the tip of the iceberg. Next year 45,000 businesses per month will be required to comply.

Most small owner-managed businesses with fewer than 30 employees will have little or no time to deal with the amount of administrative work that comes with auto enrolment, not to mention the payroll expertise.

It seems that many of the traditional pension providers, often large, well-known insurance companies, are being choosy about the smaller businesses and their schemes, deeming them not as profitable due to the smaller number of employees and contributions being paid.

So what can small businesses do now?

  • Start the process 9 to 12 months ahead of your staging date. Identify a suitable provider and discuss what you want from your scheme.
  • At least 6 months before your staging date start setting up your pension scheme with your chosen adviser. Don’t think that because you employ fewer than 30 people it will be quick and easy.
  • Don’t assume that you can use your existing pension scheme, if you have one. It may not meet the new requirements.

For more information or for a no obligation discussion, please email Antony Keen at antony.keen@pmm.co.uk or call 01254 679131.

Jane Parry Secures Her Place On The North West Women Of Influence List

jane-parry-pm-m-370x229

The inaugural North West Business Insider Women of Influence list has been revealed, with over 100 regional business women being recognised.

Jane Parry, Managing Partner at PM+M, features on the list, alongside a host of other influential regional business women from a wide variety of sectors including banking, manufacturing and technology. With over 350 names being submitted, the final selection was no small task for Chris Maguire, editor of North West Business Insider.

On hearing she had made it onto the list, Jane said: “It is an honour to be included on the very first Women of Influence list. There are so many inspirational and intelligent business women in the North West and I am proud to work with and alongside them.”

The list will feature in the August digital edition of North West Business Insider.

Is It The End For Tax Free Termination Payments?

HMRC - Tax Free Payments - Wage Slip

A consultation is to take place to review the treatment of termination payments with a view to simplifying the treatment of tax and national insurance.

This does however mean that the current rule allowing the first £30,000 of some termination payments to be made tax free could be abolished, as contractual and non-contractual payments are aligned in their treatment for income tax and national insurance purposes.

This could be replaced with a new exemption from tax and national insurance, which will increase in proportion with the length of service.  In addition, no allowance would be available until completion of two years’ service with the company.

There is also a move to link the exemption to any statutory redundancy payment.

HMRC are consulting until 16 October 2015 on the current proposals and our tax team with provide more information as soon as it becomes available.