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!”

 

 

PM+M Christmas Present Appeal 2016

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We know – Bonfire night hasn’t even been and gone yet but it’s hard not to notice that Christmas decorations are starting to pop up in shops and on the high street already! So we thought, why not launch our annual Christmas present appeal a little earlier this year? Let’s make it our biggest one yet!

This year, the PM+M team are collecting gifts for Blackburn, Burnley and Bury Children’s Services. As our team is growing, it’s only fitting that our appeal should grow too so that more children can benefit from the incredible generosity the appeal receives.

If you are able to spare a little time and money, we know your donations will be greatly appreciated. For some children, this could be the only gift they receive this Christmas. Gifts can be for children of any age or gender and we have included a few guidelines below:

  • Gifts should be to the value of around £10
  • Gifts must be new
  • Please either deliver gifts wrapped or unwrapped
  • If wrapped, gifts should be clearly marked with gender and age range
  • Gifts should not contain confectionery or alcohol

Gifts can be dropped off at our any of our offices between 8:30am and 5pm before Friday 9 December.

The PM+M team would like to take this opportunity to thank you for your kindness and generosity and we do hope that as many of you as possible will join us in supporting such a worthy cause.

A reminder of our addresses is below but should you require any further information, please get in touch with our Marketing team on 01254 679131.

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The Apprenticeship Levy

shutterstock_305418650The new apprenticeship levy will have its challenges but have you considered the benefits of this new legislation when it comes into effect in April 2017?

The Government have already made their mark by abolishing the employers’ National Insurance Contribution (NIC) for apprentices under the age of 25 back in April 2016. This new levy is part of their commitment to increase the quality and quantity of apprenticeships available in England  in order to reach their goal of 3 million by 2020.

The Levy will be payable on payroll bills of over £3 million per year at 0.5%. This will affect many businesses, who perhaps haven’t even considered apprenticeships for some time.

All employers will receive an allowance of £15,000 to be offset against the payment of the levy.  This levy “pot” is then to be used on apprenticeship training and assessments from an approved provider only.

The Government will top up levy contributions by 10%.

The payments for apprentices studying English and Maths will be paid direct to the providers and not taken from the levy payments.

This is essentially another tax. However, businesses can benefit from this by utilising the levy to upskill existing team members. There is a huge employment demand upon us with nearly 21,000 people due to retire in the next few years.

Don’t waste this opportunity – look into your options now and prepare.

If you’re not sure whether the levy will affect you and want advice on this or other payroll matters, please contact Julie Mason at julie.mason@pmm.co.uk or call 01254 679131.

 

Tax-free childcare scheduled to launch in 2017

shutterstock_334181882It’s good news for parents! Under the new Government scheme, they will be able to set up an online account with HMRC to pay childcare with a registered provider, tax-free.

The Government will top up the account by 20% up to a total of £10,000. The maximum payment will be capped at £2,000 per child up to the age of 12 and £4,000 for children with disabilities up to the age of 17.

To be eligible for the scheme, each parent needs to be in employment and earning a minimum of £115 per week each and a maximum of £100,000.00 individually.

There’s no minimum monthly payment requirement and the parents can make withdrawals if they wish. Payments can be made from their tax-free childcare accounts to their chosen provider’s bank account via BACS. All regulated and approved childcare providers will receive an invitation to register for the online service.

Any childcare providers who are not regulated and wish to benefit from the scheme will have to register with a regulator with their unique 10-digit tax reference number and this can often take up to 12 weeks.

For more information on the tax-free childcare scheme, please contact Julie Mason at julie.mason@pmm.co.uk or call 01254 679131.

Women and Work Life Balance – The Key to Success

shutterstock_362157116A recent survey by North West Insider on Women in Business provided some interesting results that show the workplace is changing – or is it the attitudes of individuals too? The survey was focused towards women but both genders could respond.

  • 58% of women said that their work-life balance is good or excellent which compares to 37% of men.
  • 42% of boards were made up of less than a quarter of women
  • Both men and women cited job satisfaction, financial reward and a good work-life balance as measures of career success.

PM+M has just been named as one of the Top 10 employers by Accountancy Age and I’ve been interested in how all these KPIs and responses tie in.

25% of our partner group is female and we are led by our Managing Partner, Jane Parry.  I don’t perceive we have an imbalance with only 25% being female.  We certainly have a significant proportion of our management team and rising stars who are female so succession shouldn’t be an issue.

For me on a personal level, the key priority, from my fellow partners and colleagues of all levels, is the trust aspect.  It’s how I feel – it’s the trust I believe they have in me to do my job to the best of my ability whilst I also get the most out of my life with my young daughter, running a home and having time for me.  I know this sounds idealistic but, in general, I do seem to get the balance.  It takes some self-discipline, it takes the confidence to say no and it also takes me to finally believe that perfection is just not possible.  I’ll give it a damn good try though!

The key strengths here at PM+M, which were confirmed in the Accountancy Age survey, include strong and varied communication channels, providing routes for employees of all grades to contribute to change, mutual trust and individuals really understanding their roles and contributions and how this impacts on the firm, their colleagues and clients.  There are so many reasons why and where people find job satisfaction and so there is no one answer to it.  Increasingly, it is down to engaging everyone who wants to be in the intricacies of the business (you’ll never get everyone engaged in every aspect but you need to make it as accessible for as many as possible of all ages and levels of responsibility).  Who says the older more experienced have the best ideas and who says the best ideas are the biggest and most radical?

Helen Clayton – Partner + Head of Corporate Services

PM+M Shortlisted for Accountancy Age Best Employer Award

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Back in May of this year, PM+M were nominated for the Best Employer Award run by Accountancy Age, one of the industry’s leading online publications. The process to complete the application was lengthy and Kath Rigbye, our HR and Talent Manager worked tirelessly alongside Jane Parry, Managing Partner + Head of Tax, to provide the wealth of information required in order for Accountancy Age to process and judge our entry.

And it wasn’t just the senior management team who contributed. The entire PM+M team were required to fill in an anonymous survey and the results were fantastic! Topics covered were leadership of the firm, our culture and communication, role satisfaction, the working environment at PM+M, training and development and pay and benefits.

In September, we found out we were shortlisted and can now proudly say we are one of the top 10 accountancy firms to work for in the country! This is testament to the work we do as a team (for each other and for our clients!), the effort we all put into making PM+M a great place to work and the people we have working in the firm across our three offices in Blackburn, Burnley and Bury, who all help cultivate a fun, energetic and dynamic working environment providing great service to our clients.

We’ll have to wait until November to find out where we’re placed on the leader board but in the in the meantime, if you’re looking for a new challenge and are interested in joining a top 10 firm, we have a number of vacancies available on our website. Alternatively, please call Kath Rigbye on 01254 679131 who will be more than happy to talk you through our current and upcoming opportunities.

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A Day of Hit and Miss

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Thursday 22 September saw the return of the Napthens Clay Shoot, raising money for Blackburn Youth Zone. The event was held at the impressive Coniston Hotel Country Estate and Spa where the fantastic weather highlighted the stunning North Yorkshire countryside.

Teams of four were welcomed at the Estate’s Shooting Lodge for coffee and bacon rolls on arrival, before being matched with a professional instructor and sent on their way to shoot 35 clay pigeons from a series of shooting posts. These were varied to provide a range of difficulty and to replicate the behaviour of pheasant, grouse or rabbit. Whilst it is fair to say that the real thing need not have been too concerned about their safety in our presence, this wasn’t the case for some of the four-man teams. PM+M was represented by Tim Mills and your truly, with my guests for the day being Jon Palich of Handelsbanken Burnley, Graham Campbell of Moose Media and Mike Duviau of Go-Velo.

Thanks to the expert tutelage of instructor Allan we were quickly showing signs of improvement. Two of our party had shot before but two (me included) were entirely new to the experience. Of the 35 clays that were presented to each shooter we managed 16,16, 14 and 9 ‘hits’. I’d like to think that there was an eco-conscious decision being made to allow the re-use of some clays or for their breeding population to be preserved.

Upon completion of the shoot, our band of four re-joined our fellow guests at the Hotel for a fine lunch and to share stories of the clay(s) that got away. I offer the option of singular or plural for the reason that Stephen Ford of RBS managed to shoot 34 of his possible 35 to take the Sharp-Shooter award. The other award available on the day was for Best in Show (Best Dressed) and I have to confess that the suggestion in advance of the day of Jamie Allison of Napthens being convinced he had this in the bag I had to explore the dark recesses of my wardrobe to offer him some competition. The fact that he was from the organising company and that I had strategically added a Blackburn Youth Zone coloured orange tie to my outfit meant that I snatched the prize from his eager hands.

The raffle and auction that followed helped to raise over £7,000 for BYZ with some especially generous prizes on offer and some equally generous bids from the room. Co-sponsors  Bowker BMW, Together Money and Wardfield Sporting Goods please take a bow.

A great day was had by all, with guests entertained and professional connections built or maintained. I look forward to defending one title and aiming (pun intended) for a second next year. I think there could be some practice planned, after all PM+M honour is at stake!

Neil Welsh – PM+M Wealth Management