PM+M Helps East Lancs Box Co. Limited Secure Six Figure Lancashire Growth Fund Grant

Press Photo - ELB

L-R: Andrew Cowking (PM+M), David Ingham, Peter Ingham, Amy Ingham & Neil Harrison

Andrew Cowking and the PM+M team have helped East Lancashire Box Co. secure a £120,000 grant from the Lancashire Growth Fund which will see the creation of 12 new jobs.

East Lancashire Box Co. was established in 1981 and is headquartered in Rishton near Blackburn. It manufactures bespoke cardboard box packaging and products. It offers a complete service, from initial concepts to the final product and handles all elements of design, print and production. The company’s product range is visible on the shelves of all the major supermarkets both within the UK and overseas.

The grant will be used to purchase new equipment including a state-of-the-art printer and a die cutter. The aim is to create a colour printing facility under one roof in 16,000 sq ft of new production space at the Junction 7 Business Park in Clayton-Le-Moors with the capacity to meet current and expected demand. The 12 new jobs will include apprenticeship and production positions.

Andrew Cowking – partner at PM+M – handled the forecasts for the grant application whilst Neil Harrison of The Harrison Partnership coordinated all elements of the grant application process, which was completed in just over 3 weeks from starting the application to the making of the offer.

Peter Ingham – director of East Lancashire Box Co. – said: This is a significant investment for the company and is an exciting milestone in our history. The grant will help to support our growth plans and will ensure that we are able to develop our offering and provide a bespoke service to all our customers – from small businesses to multinationals.

Andrew Cowking added: “East Lancashire Box Co. is a forward thinking family-owned business and one of the region’s most entrepreneurial companies. We were delighted to help them secure the grant and we look forward to seeing how it aids their expansion over the coming years.”


Buy-to-let – the new rules are coming

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If you cast your mind back to the 2015 summer budget, you may remember the significant changes that will impact all landlords. The implementation date of these changes is drawing ever closer and it will eat into landlords’ profits and, in some cases, may wipe them out completely.

With the slashed tax relief and added stamp duty, you may feel that someone has got it in for buy-to-let landlords. The question is what can you do about it?

What does the loss of tax relief mean?

This is one of the biggest changes to buy-to-let and now means that people buying to let residential property will no longer be able to claim tax relief on their mortgage interest payments at their marginal rate of tax. Before the changes this meant that basic rate taxpayers would get 20% tax relief, but those at a higher rate would receive 40% or 45% in tax relief.

What’s changing?

The changes mean that the tax relief will be a flat rate of 20%. Basic rate taxpayers, in most cases, will not see any changes, but those on higher incomes will find themselves losing much more in mortgage interest payments.   Also, more landlords may find themselves unexpectedly moving up into the higher rate tax bracket because of the way the new rules work.

To provide some perspective, here’s an example:

A landlord with a £150,000 buy-to-let mortgage on a property worth £200,000, with a monthly rent of £800, would currently have a net profit after tax of around £2,160 a year. With the lower tax relief, the net after-tax profit would be reduced £960.

Overall, the higher the interest you pay, the more you will feel the changes.

However, the full impact of the new rules is not felt immediately, as these changes will be gradually phased in from 6 April 2017, with transitional rules in place until April 2020. During the transition, the amount of interest directly deductible from rents will reduce and the proportion deducted as a fixed 20% credit will increase. This means in the transitional period landlords will be able to claim:

Tax year Interest deductible from profits Interest at fixed basic rate credit
2017/18 75% 25%
2018/19 50% 50%
2019/20 25% 75%

Income tax on property gains!

New rules announced last year, designed to target non-resident companies and individuals from escaping UK tax on profits made from the sale of UK properties, could inadvertently impact UK landlords. The new rules seek to charge the profits on selling UK property to UK income tax rather than CGT when the ownership of the property is more in the nature of a trade than a fixed investment.

When the changes were announced, there was widespread concern that UK landlords could be affected.

HMRC have now addressed this by releasing a 64-page guidance document to help clarify how they will seek to operate the rules.  In the guidance, they state that the new rules will not apply to businesses which buy properties in order to generate rental income, even if these businesses also enjoy an uplift in market value of the property. So the average UK buy-to-let landlord should not be subject to income tax on the gains he makes when he sells properties which were acquired for letting.

Whilst this is good news, it is only HMRC guidance and not law. For those particularly concerned about this new legislation, the position can be clarified with HMRC under their non-statutory clearance application process.

 

 

Trivial benefits in kind exemption may not be so trivial

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It’s Christmas and the annual minefield of gifts and Christmas parties for employers to navigate. If you are giving your employees gifts to create goodwill, the last thing you want to do is destroy that goodwill with an unexpected tax bill.

However, help is at hand from the new trivial benefits rules.

Previously, the rules were subjective. HMRC allowed exemptions for reasonable gifts but there were no clear thresholds, making it difficult to have certainty about tax treatment.

Under the new rules, benefits and gifts can be tax-free providing that:

-       They cost no more than £50 per benefit and
-       They are not cash or a cash voucher (gift vouchers e.g. for a shop, are allowed).

There is no limit on the number of trivial benefits that can fall into the new rules for employees, providing that they do not form part of the employee’s remuneration for their job or part of a salary sacrifice arrangement.

Special rules apply for directors to limit the overall total for a tax year to £300 of tax-free trivial benefits.

The new rules are good news for generous employers who can now have clarity about what is and is not tax-free, not just at Christmas, but throughout the year. Also, employers who were previously providing vouchers and paying the tax under a PAYE settlement agreement may no longer need to that.

And don’t forget the £150 per person tax exemption for events such as Christmas parties. But do be aware that the limit can only apply to one event, not spread across multiple ones and it includes the extras such as employer funded travel.

The VAT inclusive cost needs to be used when considering if the tax-free limit is reached for both trivial benefits and the annual events exemption.

For more information in trivial benefits, please contact our tax team by emailing tax@pmm.co.uk or by calling 01254 679131.

Funding in the professional services sector

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As many will know, accessing funding in the professional services sector can be a challenging task with most firms being short on tangible assets for security purposes and potentially long on work in progress lock up, especially where conditional fee arrangements are involved. In reality, the most valuable assets are people, and try offering those up as security for your loan or overdraft!

Historically, funders have tended to blow hot and cold with regard to law firms with the appetite for lending variable dependent upon how sector sentiment is running. However, that need not be an obstacle to securing the cash you need and it is worth re-focusing on some of the key drivers.

Financial management - You need to be able to demonstrate sound financial management, particularly working capital management through regular client billing of time spent and disbursements. Allied to this is the ability to produce accurate and timely management information.

Client base –  Ideally there should be a good spread of quality clients and sources of profitable repeat work. Over reliance on a few major clients may be seen as a potential weakness.

Nature of specialism - Firms that specialise to any material extent in work which necessitates lengthy lock up, for example conditional fee arrangements, clinical negligence and criminal cases or where the outlook is less favourable, for example legal aid, tend to be viewed less positively.

Sustainable drawings policy - Where drawings are at a level where inadequate profit retention is demonstrated, or worse still, where these result in increased borrowings, it will have a negative impact on lending appetite.

Partner/staffing structure - There will often be an optimum partner/staffing structure which will maximise profitability and cash flow. It could be a negative sign if this is deemed to be too top heavy where there is insufficient delegation of work and high salary levels which depress profitability.

Reputation - A firm’s reputation and its profile in any specialist areas are critical in attracting and retaining the “right people”, which in turn can stimulate a lender’s confidence in the business. For example, a firm with a poor claims record and higher than normal Professional Indemnity Insurance premium would be looked upon less favourably.

Of course, if it is funding for an acquisition that you are looking for, the issues can be somewhat more demanding and also complicated by the funding position of your target, all of which will have an effect of the price of the acquisition and how it needs to be structured, i.e. over what period of time can you afford to pay the vendors. Conversely, as a vendor, your business will look more attractive if a purchaser is not inheriting your cash flow and funding issues.

So, if any of this rings a bell, please get in touch for a no obligations discussion.

Jim Akrill, Corporate Finance Partner (Jim.akrill@pmm.co.uk).

 

PM+M named one of the top three best employers at Accountancy Age awards

David Gorton + Jane Parry

The PM+M team is celebrating after being named one of the three best employers at this year’s prestigious Accountancy Age Awards which took place in London on Tuesday evening. PM+M is the only North West firm to be placed in one of the top three spots.

The awards process is managed on behalf of Accountancy Age Magazine by Best Companies Group (BCG) which is an independent research firm specialising in identifying and recognising great places to work. BCG manages programmes worldwide, including the US, Canada and the UK.

PM+M was placed third and was judged on various criteria including company policies, practices and benefits along with detailed feedback from an employee engagement and satisfaction survey.

The awards are open to any accountancy practice with at least 15 employees working in the United Kingdom. Entrants can be publicly or privately held, but must have been in business for a minimum of one year and have a UK facility.

Jane Parry – managing partner of PM+M – commented: “Our team is at the very heart of everything we do so this achievement is a real milestone for the firm. Having an inclusive and motivated culture is something that we passionately believe in; along with collaboration, accountability and team-work.

Jane added: Our focus is always on growing and promoting our own talent. We know that it’s not just about financial remuneration; it’s also about providing training and support as well as focusing on building an environment where people want to succeed. Jane concluded: The fact that part of the judging process was based on our team’s own comments makes it all the more special.”

The Chancellor’s first (and last) Autumn Statement delivered little by way of surprises

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The main tax changes were already known about – the planned increase in the personal allowance and income tax higher rate threshold and the reduction in the rate of corporation tax and reform of corporation tax loss and interest relief rules being the key ones.

The confirmation that the planned reduction in corporation tax rates to 17% in 2020 (19% next April)  is to go ahead is good news.  Interestingly, there was no mention of the “15% and beyond” spoken of by Theresa May on Monday.

Only time will tell how the North West will benefit from the £1.1bn extra investment in England’s local transport network; the more than £1bn for digital infrastructure; the £2.3bn to help provide 100,000 new homes in high-demand areas; the £1.4bn to deliver 40,000 extra affordable homes; and the £400m for venture capital funds through the British Business Bank to unlock £1bn in finance for growing firms.  However, all are potentially positive announcements for the region.

It is to be hoped that a reasonable amount of the new £23bn National Productivity Investment Fund will find its way to the North West to support innovation by North West businesses and improve connectivity.

Given the advance publicity about R&D and innovation, it was a little surprising not to see any changes to R&D tax credits.  However, this is already a very generous relief.  The issue is more with the low take up of the scheme, rather than the nature of the tax reliefs on offer.  It is to be hoped that some of the new funding might be directed at improving accessibility of R&D reliefs.

The announcement of consultation on incorporation, which now seems to be seen as tax avoidance, was a little concerning and could cause uncertainty for many businesses who might be considering incorporation for perfectly legitimate commercial reasons.

There were a few targeted tax avoidance announcements, from a government which has already made significant strides in tackling avoidance and levelling the tax playing field.  None of them should have widespread impact.

Overall a relatively low key statement but some optimistic signs of a strong commitment to improving UK productivity and maintaining the UK’s attractiveness as a home for global businesses whilst helping UK businesses to compete in world markets.

Our full commentary will be emailed out tomorrow following our Autumn Statement seminar. If you’d like to receive a copy, please sign up to our mailing list here.

Inheritance Tax And The New Residence Nil Rate Band

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Much of my time is spent advising clients on inheritance tax, both the current liability on their estates, and what can be done to address it. It’s an emotive subject, with many clients feeling aggrieved that the wealth they have created over their lifetime is being taxed again on death.

In response to this, the former Chancellor, George Osborne introduced additional measures to potentially reduce the tax take for the treasury, and allow people to pass on more of their money to their families on death.

On death, if you leave assets to anyone other than your spouse, inheritance tax is paid at a rate of 40% on any assets you hold above the nil rate band; this currently stands at £325,000 each (£650,000 for couples).

It has long been the objective of the Conservative Party, to increase the point at which inheritance tax becomes payable by couples to above £1 million. The simplest way to address this would have been to increase the nil rate band to £500,000 each. However, for political and financial reasons this was not the solution George Osborne devised.

An additional nil rate band was created of up to £175,000 each, relating to the family home.  This will be phased in over 4 years from 6 April 2017, starting at £100,000 each and increasing by £25,000 per year over 3 years. This is in addition to the existing nil rate band. Thus, if you as a couple have a home worth £350,000, you may eventually be able to pass on a joint estate of £1 million without being subject to inheritance tax.

This all sounds good news but it should be noted that not everyone will qualify.  Here are a few key points:

  • If your estate is worth more than £2m your entitlement to the residence nil rate band starts to disappear;
  • The rules stipulate that homes must be passed on to direct descendants, by which it means children and grandchildren;
  • I’ve had to inform clients who are leaving all their assets to nephews and nieces that they won’t get this additional relief;
  • Step-children and adopted children are counted in the definition as children so that is welcome;
  • If leaving the property into a trust, it must be one that creates a fixed entitlement to the property to a direct descendant, it can’t be wholly discretionary;
  • If one spouse doesn’t use their residence nil rate band, it can be passed on to the other spouse to use on the second death in the same way as the ‘normal’ nil rate band;
  • It can only be claimed against one property so two properties totalling £350,000 may require you to claim this relief against the higher value property only; and
  • There are also a myriad of rules relating to downsizing, which will probably require further revision by the Government to ensure they work in the way intended.

Inheritance tax is an area where many people will require advice. If you wish to receive advice on the Residence Nil Rate Band or any other inheritance tax matter, please get in touch.

Written by Richard Hesketh
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Richard Hesketh 
Client Manager
Email: richard.hesketh@pmm.co.uk
Direct: 01254 604340

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Jane Parry 
Managing Partner & Head of Tax
Email: jane.parry@pmm.co.uk 
Direct: 01254 604329

 
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PM+M Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority.

Trumping the market!

shutterstock_353116961The vote is in and Donald Trump has been voted President, words perhaps few people expected to read this morning and a deja vu feeling of Brexit!

Whilst investors and markets would undoubtedly have preferred the more stable influence of Hilary Clinton, Trump as President might not be a disaster. It is worth noting that the power of the President’s Office is limited by the Constitution, through the chambers of Congress and the Supreme Court. The Federal Reserve also remains independent.

So what does Trump mean for investors?  Initially, as we saw with Brexit, markets are likely to be volatile and we have already seen falls in the Asian markets overnight; the FTSE is currently down 1.2%. During volatile markets, and especially when you may be showing some short-term losses on investments, it is tempting to sell and wait for the markets to improve before reinvesting.

It is perhaps useful to look at market patterns and history before making the decision to sell.  According to Fidelity International, an investor who invested in the FTSE All Share Index for the last fifteen years, but missed the best ten days would have achieved an annualised return of 1.46%, against 5.69% by those investors that remained invested. Missing the best forty days reduced your annualised return to -5.62!

Often the largest returns are achieved shortly after these falls, so the message is simple. Provided you have a clear investment strategy and review process in place, you should hold your nerve and investments, and over the medium and longer term you will be rewarded.

Like a game of Top Trumps, if you hold the quality cards you win over the longer term.

For a review of your pension and investments, please contact Antony Keen by emailing antony.keen@pmm.co.uk or by calling 01254 679131.

Scam Alert – A notice to clients and contacts to remain vigilant

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The latest scam to sweep the internet is clever. With this one, we’re not talking about a person in Nigeria claiming that he has £1,000,000 that he’d like to send you. The scam is seemingly a referral marketing tool promising you £75 for “signing up” and a further £25 if you refer a friend and they sign up.

All you have to do is provide 2 forms of ID which confirm your name, address and date of birth. You also need to provide your bank account details to receive the £75 and subsequent referral payments. Easy right? Whilst you will (and many have!) receive the money, have you thought about the consequences of divulging your information?

What you are essentially doing is facilitating identity fraud. A limited company set up in your name, using the details you have provided and registered to your home address. You will be registered as the sole director.

This company probably used to conduct an illegal activity of some sort, including but not limited to, money laundering or selling counterfeit goods. Given you’ve provided all the necessary information, the scammers will most likely open a bank account in your name, run up debt and ruin your credit history. This creates issues for the individual on both a personal and professional level. In extreme cases, you could potentially end up with a criminal record.

If you think you have fallen victim to this scam, or one which sounds similar, you need to arrange for the company to be struck off at Companies House. This will cost you £10 and you will need to fill in form DS01. A small price to pay to avoid the potential consequences. You should also notify the Police. There is however little they can do. There has been no ID theft involved as you willingly provided your ID to the scammers. Notifying the Police will at least alert them to the issue and will go towards helping build a case against those responsible for the scam. Lastly, you should contact your bank and close your account. Whilst this may seem extreme, you have no idea where your bank details have been passed on to and where they may be used in the future.

Should you have further questions, the PM+M team are on hand to help. Please call us on 01254 679131. No question is too silly and what’s most important to us is that our clients and contacts protect themselves in the best way that they can.

 

 

 

Pendleside Corporate Challenge

Picture taken by Tom Wright

Picture taken by Tom Wright

The PM+M team have been fundraising over the last couple of months as a part of the Pendleside Hospice Corporate Challenge. Over 25 companies took part in the challenge to raise as much money as possible. The challenge closed with an awards ceremony on Thursday 20 October at Burnley Mechanics. The PM+M team organised numerous “dress-down” days, a quiz for 75 local business professionals and sold raffle tickets which all added up to an impressive total of £1,303.47 raised for the hospice.

Pendleside Hospice enhances the quality of life for people with life-limiting illnesses, by delivering specialist and holistic care. Pendleside address their individually assessed physical, psychological, social and spiritual needs. This care is free of charge to those they serve and relies on the kindness of donations.

Neil Welsh, PM+M Financial Advisor, said of the event “It has been great to be associated with the Corporate Challenge and to support a number of the fundraising events. I have attended two black-tie events including the final awards night, an evening of drinking-games (don’t ask!) and a quiz-night, buying an inordinate amount of raffle-tickets along the way!”

Helen Binns, PM+M Director and Head of the Burnley office, added “We’ve been very proud to take part in the Corporate Challenge this year and it’s been a fantastic series of events. There has been a lot of great fundraising ideas and it’s been fantastic to see all the companies involved support each other’s events to raise as much money as possible for such a worthy cause. We can’t wait to start it all again next year!”