Monthly Archives: June 2017

HMRC Inheritance Tax receipts at a record high


Inheritance tax paid by British families has hit a record high of £5.1bn in the year to May 2017.

This is largely caused by the fiscal drag of continuing house price inflation compared to the frozen inheritance tax nil rate band of £325,000.

The new residence nil rate band which came into effect on 6 April this year may start to reduce the inheritance tax take figures, but the complexity of the new rules and the relatively narrow band of people for whom it will be of benefit mean it is unlikely to have a dramatic effect.

Inheritance Tax by the numbers

  • Inheritance tax is charged at 40% on the portion of a deceased person’s estate over and above the nil rate band of £325,000.
  • Anything left to a spouse is exempt (providing they are UK domiciled).
  • If the deceased person is a widow or widower, they may also have inherited their former spouse’s nil rate band if they didn’t use it, meaning they can have £650,000 of exemption.
  • The residence nil rate band adds another £100,000 of exemption per person – but with a complex set of conditions surrounding it. This allowance increases by £25,000 per year until it reaches £175,000 per person in April 2020.
  • You can also inherit your deceased spouse’s residence nil rate band if they didn’t use it.
  • Adding all those nil rate and residence nil rate bands together means that couples can get up to £1million of inheritance tax exemption if they plan properly.

Inheritance tax is complex and thinking about what you want to happen after your death can be daunting.  However, if you don’t want your family to be contributing to the Government’s tax receipts, you need to face it.  Our job is to make that as clear and painless as possible for you, helping you understand the options available to you and making sure that your estate and pension planning are aligned.

We draw on our strong blend of tax and financial planning expertise, coupled with our personal touch, to help our clients build the right solution for their families.

For more information, talk to us and we’d be more than happy to help.

Jane Parry – Tax Partner
jane.parry@pmm.co.uk
01254 679131

PM+M Fundraising for Bury Hospice

 

A team at PM+M’s Bury office has entered the Bury Hospice Corporate Challenge.  There are various fundraising plans afoot which will take place between now and the end of October, when the challenge finishes.  The team at our Bury office have been given £50 to start their fundraising and are determined to turn this into as much money as possible in aid of the Hospice.

The first fundraiser is taking place over the course of Thursday 29th June with a cake sale around the businesses based at Waterfold Business Park, where our Bury office is situated.  The enthusiasm from the local businesses has been great and we just hope we have enough cakes to put a smile on everyone’s face and to raise as much as we can before the first league table for the challenge is published at the end of June. Mary Berry, watch your back!

There is also a ‘Guess the number of sweets in the jar’ and clients, contacts and visitors to our office can take part.  The number is a safely guarded secret!

We’re having fun working as a team on this challenge and the reward will most definitely be the funds raised for such a worthy cause, close to our Bury office.

If you have any items that would be worth donating to a car boot sale, please contact Helen Clayton on 0161 641 8684 or email helen.clayton@pmm.co.uk.

Watch this space for news of future events – we hope you will be able to support us along the way.

Charities Update


As Annual General Meetings (AGM) approach for many of PM+M’s Not-For-Profit clients, trustees are busy working on the trustees’ report which is incorporated into the financial statements.

The financial statements focus on the charity’s financial performance and position but in isolation this does not give the reader a rounded overview of what the charity has achieved and the resources they’ve used.

The trustees’ report is an opportunity to publicise significant activities, the achievements of the charity and the impact they have made on delivering their services to their users.  All registered charities must prepare a trustees’ report and make it available on request.  Registered charities with a gross income exceeding £25,000 in a financial year must file their accounts and annual report with the Charity Commission.

It’s important to understand that the charity generally has three viewers:

  • Current and potential funders
  • Beneficiaries of their services
  • Wider public

Charities are publicly accountable, so the information provided should show a fair, balanced and transparent review of the charity.

The Charities SORP (FRS 102) sets out seven main section headings for the trustees’ report:

  • Reference and administrative details
  • Structure, governance and management
  • Objectives and activities
  • Achievements and performance
  • Financial review
  • Plans for future periods
  • Funds held as custodian trustee on behalf of others

Finally, a statement of trustees’ responsibilities must be included and signed by at least one trustee.

A charitable company must also incorporate a strategic report if they are not classed as a small company.

On a recent monitoring review carried out by the Charity Commission, 54% of the sample did not meet the public benefit reporting requirement as it did not include a public benefit statement nor did it explain who benefitted from the charity’s activities.

The public benefit reporting requirement must include both an explanation of activities undertaken by the charity to further its purposes for the public benefit and a statement by the trustees as to whether they have had due regard to the Commission’s guidance on public benefit.

Other common areas which are required but are overlooked include:

Reserves policy

The policy should cover the reasons why the charity needs reserves, the levels of reserves the trustees believe they need, steps taken to ensure the required levels are maintained and the process in place to monitor and review the policy.

Key management personnel

Trustees need to set out who they delegate day to day management to and whom they consider to be the key management personnel of the charity.

If you would like any further information please speak to Helen Binns (helen.binns@pmm.co.uk), head of the PM+M Not for Profit sector, who will be more than happy to help.

Cloud accounting – the future of your business

Cloud seminar

On Thursday 25 May, the PM+M Run My Business Team were joined by Cloud Software providers Xero and ReceiptBank to deliver our first Cloud Accounting Seminar.

This first seminar was an introduction for our clients to our cloud team and the services we carry out.  The cloud team has one objective: to make life easier for our clients.

With the arrival of Making Tax Digital for Businesses (MTDfB) scheduled to start in 2018, the need for businesses to hold their records digitally has never been more important. The new rules will force all businesses to submit quarterly accounting information to HMRC in an electronic format.  Under current proposals, the first wave of sole trader and partnership businesses will come into the new regime in April 2018, with more joining in 2019 and all businesses and companies scheduled to be within the regime by April 2020.

Cloud accounting offers a platform for individuals and businesses to record transactions digitally to help with the MTDfB process but, more importantly, to benefit from being able to view business finances in real time for better decision making and save time by automating processing.

The dedicated cloud teamwork with several different Cloud Accounting Software packages and work with clients to implement and train on the systems but also to look at specific add-ons that will help to streamline the business.

At the seminar, Xero demonstrated some of its most useful features for automating processes such as the direct bank feeds, auto-matching and customised online invoicing.  The add-on ReceiptBank demonstrated their integration into Xero. This add-on allows users to scan or email purchase invoices into the software which then extracts all the key information and posts it into your accounts system “hands-free”. Both systems have apps which can be downloaded to mobile phones, tablets etc. making them completely mobile.

If you would like to discuss any Cloud Accounting requirements or find out about how Making Tax Digital will affect your business, please contact Jill Morris (jill.morris@pmm.co.uk)

After the election…

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After what has seemed a long election campaign, we finally have a result. And rather than the anticipated increase in seats for the Conservative Party, the UK woke up to find Theresa May’s party no longer enjoyed a parliamentary majority, and would seek to govern in coalition with the Democratic Unionist Party.

Uncertainty resulting from the vote has seen the value of Sterling drift downwards, and it may require a stabilisation of the political situation before the Pound recovers. Shares haven’t been adversely affected so far, with the FTSE index trading at higher levels than the previous day’s close.

What was seen as an opportunity to strengthen Theresa May’s hand, ahead of Brexit negotiations appears to have backfired, and adds doubt to the process and the timescales involved. The government will also to seek to ensure that any political uncertainty does not carry over into the wider economy. Multinational businesses usually prefer to operate and invest in a stable political environment.

For investors, don’t panic. Make sure you are invested in a sufficiently diversified portfolio. And if you are a little unsure, take advice.

The sooner the better

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It’s always struck me that there is often a disconnect or lack of understanding with fee earners between the time they charge on their timesheets and the funding of a law firm. In the majority of firms, time recording systems continue to be used and I’m not going to get into a discussion now about whether that’s out of touch, appropriate or useful – that can be covered another time. Fee earners, from day one, are taught to record time and quite often are driven to do this merely by a chargeable hours target.

The concept of meeting your annual budgeted chargeable hours to be paid a bonus at the end of the year is still quite common and it’s clear what kind of behaviour that will drive. Until a fee earner assumes billing responsibilities, it is unlikely that they will be aware of the impact of their recording of time either on the firm’s financial results, the consideration to the level of fees to be charged, the timing of that billing and, ultimately, of when the bill is paid. Further, it may even be that when a fee earner assumes such responsibilities, they are still not aware of the effect on all of those areas. The sooner they are made aware of all relevant factors and implications, the better.

  • Do they understand that 80% recoverability effectively means that for each week worked, one day is just not worth anything in cash or profit? In fact, it has a negative impact since the team are still paid for that fifth day but there is no income generated.
  • Do they understand that it’s impossible to tell what level a fee should be set at if chargeable hours aren’t accurately recorded?
  • Do they understand that it is difficult to gauge whether the team or firm is under (or over) resourced if chargeable hours aren’t reliably recorded?
  • Do they appreciate the time lag between time costs and indeed disbursements being recorded, the team and disbursements being paid until the bill is actually settled and therefore do they understand the impact on the firm’s funding position?

In my view, there is a significant training opportunity for fee earners to assist with the firm’s financial reporting and the firm’s profitability and funding position.  This training can be provided for more senior fee earners, sometimes even partners, where there has been a lack of financial training through their career or where a fee earner is just starting out. If you think that there is an opportunity for improvement in your firm or that a refresh would be helpful, please contact me at helen.clayton@pmm.co.uk or call 0161 641 8684.