Welbeck Top Tips for Financial Planning in the New Tax Year 2012/13

With the start of a new tax year, now is the perfect time for a complete financial review to ensure the continued health of your personal finances. Get ahead of the game, avoid the rush at the end of the tax year and let’s arrange a meeting to plan ahead for this year.

Here’s a few top-tips for the forthcoming financial year:

Consider your retirement options

Anyone getting ready to receive an income from their pension should research all of the options available to them – there are a variety of options available so it is always worth receiving advice so that you can make an informed decision and choose the best route to suit you and your personal circumstances. A poorly informed decision can have a big impact on your retirement.

Clear outstanding debts

Especially in the current climate, you could be far-pushed to find a savings account that pays the same rate of interest that is charged on credit, so clearing any outstanding debt should be a top priority in the forthcoming year. If you have debt on a credit card charging you interest, it is certainly worth transferring this debt to a card with a zero per cent rate on balance transfers.

Use your Individual Savings Account (ISA)

Using your ISA allowance of £11,280 for the 2012/13 tax year, means that you can avoid paying tax on any interest earned on your savings.  However, you must tell HM Revenue and Customs about losses before you’re allowed to deduct them from your gains and there are time limits – so do be aware of these.

Protection of assets

Being tax-efficient is particularly important, if you have assets worth over £325,000 you may have to pay inheritance tax (IHT) after your death. We may be able to help you reduce your overall IHT liability with some simple tax planning techniques, so please do make an appointment with us.

Consider your investments and risk position

Consider what you want to get out of the coming year in terms of your investments. Depending on your attitude to risk, you may view the current climate as a disaster zone or a perfect opportunity.

It may be worth reviewing your investments to ensure you are receiving as much as you can, if not, it may be worth changing your investment strategy.

Investment portfolio diversification

A top tip for the new tax year is to make sure your investments are well spread. Diversity is often considered fundamental in reducing the overall risk of a failing fund or share. It is advisable to build a balanced investment portfolio across a range of asset classes and investments; such as stocks, mutual funds, index funds, small and large cap funds.

Life expectancy and personal protection

It comes highly recommended to start planning your retirement as soon as possible. More and more of us are living well into our retirement, making it increasingly important to start making saving provisions in order to fund ourselves throughout these later years.

It may also be the time to consider personal protection – especially if you have loved ones.

Take action

Unfortunately, these things don’t just take care of themselves, however we are here to help, so please make an appointment with us. With careful planning, we can help you get the very most from your money.

To speak to an expert adviser for a New Tax Year  Wealth Check contact us on 020 7776 2135 or email marketing@welbeckgroup.co.uk

The value of your investment can fall as well as rise and you may get back less than the amount you have invested. Levels, bases and reliefs of taxation are subject to change and their value depends on the individual circumstances of the investor.

The Financial Services Authority does not regulate some forms of Inheritance Tax Planning. The Financial Services Authority does not regulate taxation and trust advice.

The original rules to the legislation on “Disguised Remuneration” (employment income provided by a third party) have undergone a vast number of amendments since being published by HM Revenue & Customs (HMRC) on 9th December 2010.

The original rules sparked trepidation amongst many – especially since the new rules on “disguised remuneration” came into contact with employee trusts which are used for employee share schemes. Changes in the regulation would have led to up front tax charges on any cash or assets that an employee hadn’t yet received and indeed may never do so. 

Fortunately, the Government took note and subsequently HMRC published FAQs to address these particular concerns. They have now included more exemptions to the rule. Meaning the original Finance Bill of 25 pages is now over 65 pages long. Conversely, the majority of companies should not have to change their existing practice of making and hedging employee share plan awards through employee trusts.

With these extra pages of complex legislation, a detailed look at the rules is almost a must! This is where Welbeck Solutions can help.

 “The new ‘disguised remuneration’ legislation means that  share schemes can still be able to be used  in conjunction with employee benefit trusts (EBTs) without any adverse tax implications”

Introduction to remuneration:

The concept of disguised remuneration is very extensive. Under the rules, up-front income tax and National Insurance contributions charges may arise if a third party – primarily a company – allocates cash, assets, or shares, for an employee with the intention to possibly transfer the shares to the employee. Therefore, a tax charge could arise for the employee concerned even if the sum or asset is not formally awarded to an employee but is somehow allocated to them.

A number of exclusions and reliefs have since been included in order to exclude certain share plans from the disguised remuneration implications. It is essential to be sure measures for employees either fall outside of the new rules completely, or are within one of the stated exclusions. Both of these factors are dependent on whether the person in question may benefit from full relief – please do speak to your tax advisor for further clarification.

Deferral arrangements

The new rules could be applicable to deferral arrangements. There are exemptions to the rule which have been specifically targeted at deferred remuneration. For this reason there are a number of conditions needing to be met for these to apply.

Hedging share awards

Care needs to be taken over hedging arrangements to ensure that shares are not allocated or “earmarked” for particular employees. If shares have been earmarked, the employee will be liable to income tax and national insurance contributions NICs on the value of the shares at the date in which they are allocated – even if they have not yet been received.

Cashless exercise arrangements

If the trustee of an employee benefit trust, or other such third party, offers a cashless exercise facility, the employee will be liable to income tax and NICs on the value of the loan if it is not repaid within 40 days. Should they be offered by the employing company or a company within the same group, cashless exercise arrangements should be unaffected by the new rules.

Employee loans

On or after 6 April 2011, other loans granted to employees by an employee benefit trust or other such third party, are likely to be affected by the new rules.

No disguised remuneration tax charge will arise for loans granted between 9th December 2010 and 6th April 2011 provided the loan is repaid before 6 April 2012, even if it was granted by a third party. Loans made by an employing company or a company within the same group of companies should remain unaffected.

Sub-funds, Sub-trusts and family benefit trusts

If assets are allocated to an employee through any of these means, then the person in question is likely to be liable to an income tax on those assets at the date in which they are allocated.

For existing sub-funds and family benefit trusts, providing certain provisions are taken, no charge should arise. In any event, this can be complicated so specific advice would be beneficial.

In Conclusion:

The changes have now become law and there are some extremely difficult areas that will need careful review.  For further information please speak to one of our introducers at Welbeck Solutions – we can guide you through these complex changes and help decide the best course of action for you.

The Business Premises Renovations Allowance (BPRA) was due to expire on the 11^th April 2012. However in the budget announcements earlier this year, the Chancellor of the Exchequer, Mr. George Osbourne, declared the scheme would indeed be extended by a further five years from this original date of expiry.

The BRPA was originally established with the sole aim to encourage the conversion and renovation of empty business premises in designated, so-called “disadvantaged” areas, by the introduction of a 100 per cent tax relief incentive.

 This relief allows property owners of qualifying buildings to claim 100 per cent tax relief for any qualifying capital expenditure when converting or renovating a disused commercial property.

 The scheme seems particularly popular with additional rate taxpayer’s who can offset their tax charges against the relief available on such an investment.

To qualify:

1. The building requiring the work must be in one of the determined disadvantaged areas – care must be taken as the areas which have been assigned are not necessarily deemed “disadvantaged” – some areas are just certain districts within their Local Authority, whilst others are the whole of the Local Authority area.
2. The building must have originally been used for specific commercial purposes and shall be used as such once building work has taken place – i.e an office, profession or trade.
3. The original building must not have been used for:

-          Synthetic fibres

-          The coal industry or steel making

-          Certain agriculture – including the production or marketing of certain dairy products

-          Fisheries

-          Shipbuilding

1. The building must have remained empty for twelve months.
2. The building must not have been used as a dwelling.

 There are uncertainties as to which buildings qualify for the BPRA relief, so any person seeking to invest must conduct thorough research to ensure the basic conditions are met.

 Any capital expenditure from converting or refurbishing a qualifying building into qualifying business premises can be claimed back through the BPRA scheme. Conversley, any capital expenditure from acquiring land, extensions or land development, will not qualify for the BPRA relief – nor will the cost of plant and machinery which will not become permanent fixtures.

Any investor, or company who meets the qualifying business premises criteria and incur qualifying capital costs, can claim 100 per cent tax relief which can be deductible from trading profits.

 There are some downsides – including the aforementioned rule whereby the property must have remained empty for at least twelve months prior to its purchase. The empty-rates relief was abolished so this could mean that during the empty period, rates may have been incurred. In addition, if the property is sold, demolished or no longer resides as a qualifying commercial property within seven years of the start of its intended use, any BPRA previously claimed may be returnable. It is important to determine all necessary information in your individual circumstance prior to purchase.

 There are many tax planning providers on the market who have pre packaged BPRA structures available- which for the right investor can offer significant returns. Welbeck Solutions are at the forefront of the tax panning market and can introduce you to a solution that fits your needs.

This document is for information only and doesn’t constitute advice.  It is based on our opinion and understanding of legislative and regulatory aspects in the financial marketplace.  We strongly recommend you seek professional advice before taking any course of action.

To contact us at Welbeck Solutions please email marketing@welbeckgroup.co.uk or call us on 0207 776 2135

The Business Premises Renovations Allowance (BPRA) was due to expire on the 11^th April 2012. However in the budget announcements earlier this year, the Chancellor of the Exchequer, Mr. George Osbourne, declared the scheme would indeed be extended by a further five years from this original date of expiry.

The BRPA was originally established with the sole aim to encourage the conversion and renovation of empty business premises in designated, so-called “disadvantaged” areas, by the introduction of a 100 per cent tax relief incentive.

 This relief allows property owners of qualifying buildings to claim 100 per cent tax relief for any qualifying capital expenditure when converting or renovating a disused commercial property.

 The scheme seems particularly popular with additional rate taxpayer’s who can offset their tax charges against the relief available on such an investment.

To qualify:

1. The building requiring the work must be in one of the determined disadvantaged areas – care must be taken as the areas which have been assigned are not necessarily deemed “disadvantaged” – some areas are just certain districts within their Local Authority, whilst others are the whole of the Local Authority area.
2. The building must have originally been used for specific commercial purposes and shall be used as such once building work has taken place – i.e an office, profession or trade.
3. The original building must not have been used for:

-          Synthetic fibres

-          The coal industry or steel making

-          Certain agriculture – including the production or marketing of certain dairy products

-          Fisheries

-          Shipbuilding

1. The building must have remained empty for twelve months.
2. The building must not have been used as a dwelling.

 There are uncertainties as to which buildings qualify for the BPRA relief, so any person seeking to invest must conduct thorough research to ensure the basic conditions are met.

 Any capital expenditure from converting or refurbishing a qualifying building into qualifying business premises can be claimed back through the BPRA scheme. Conversley, any capital expenditure from acquiring land, extensions or land development, will not qualify for the BPRA relief – nor will the cost of plant and machinery which will not become permanent fixtures.

Any investor, or company who meets the qualifying business premises criteria and incur qualifying capital costs, can claim 100 per cent tax relief which can be deductible from trading profits.

 There are some downsides – including the aforementioned rule whereby the property must have remained empty for at least twelve months prior to its purchase. The empty-rates relief was abolished so this could mean that during the empty period, rates may have been incurred. In addition, if the property is sold, demolished or no longer resides as a qualifying commercial property within seven years of the start of its intended use, any BPRA previously claimed may be returnable. It is important to determine all necessary information in your individual circumstance prior to purchase.

 There are many tax planning providers on the market who have pre packaged BPRA structures available- which for the right investor can offer significant returns. Welbeck Solutions are at the forefront of the tax panning market and can introduce you to a solution that fits your needs.

This document is for information only and doesn’t constitute advice.  It is based on our opinion and understanding of legislative and regulatory aspects in the financial marketplace.  We strongly recommend you seek professional advice before taking any course of action.

To contact us at Welbeck Solutions please email marketing@welbeckgroup.co.uk or call us on 0207 776 2135

If you’re self-employed, you probably pay tax every July, called a ‘payment on account’. At Welbeck Group, we can explore clever ways that may reduce your tax payment due on 31 July.

HM Revenue and Customs calculate your payment on account by looking at your previous year’s tax bill. Half of this bill is the amount due on 31 July. That’s where Welbeck Tax Solutions come in. An expert from our team will meet with you, discuss your situation and investigate ways of potentially reducing July’s bill.

But don’t delay. Time’s running out to put us to work. To find out more about how we might save you money this summer, contact us via email or call us now on 0207 776 2135.

This blog is for information only and doesn’t constitute advice. It is based on our opinion and understanding of legislative and regulatory aspects in the financial marketplace. We strongly recommend you seek professional advice before taking any course of action.

Whatever your reasons for investing, lining the taxman’s pockets probably isn’t one of them. That’s why it could pay to expand your horizons – and consider the tax-efficient benefits of investing in an offshore bond.

Not only do offshore bonds usually give you a wider choice of investments than you might find in an onshore bond. You can also potentially grow these investments in a virtually tax-free environment, helping maximise your returns.

Reducing and deferring income tax

Like all investment bonds, offshore bonds are subject to income tax, not capital gains tax. However, there are a few ways they can reduce or defer income tax on your investment:

• An offshore bond is known as a ‘non-income producing asset’. This means tax is only paid when you withdraw money from the bond – except for irrecoverable withholding tax on certain funds.
• If you’re a higher-rate tax payer, you could take money from the bond in later years – when you may not be a higher-rate tax payer.
• You only pay income tax on certain ‘chargeable events’. These include surrendering or part-surrendering your bond, or withdrawing over your 5% allowance (more of this later).
• If you assign the bond to a lower-rate taxpayer, they will be charged at their lower income tax rate when they surrender the bond or withdraw money from it.
• You can switch the investments in your offshore bond without being hit by income tax or capital gains tax.
• Every year, you can take up to 5% of the original amount invested – and any top up premium – until 100% of the original premium is repaid as a ‘tax-deferred withdrawal’.
• If you’re a basic-rate tax payer – and any gain on the offshore bond added to other income puts you in the higher-rate tax band – ‘top slicing relief’ can reduce your liability to higher-rate tax.
• If you’re a non-UK domicile, you can take your 5% tax-deferred allowance without having to pay the usual