The bad news is that all employers (even if you have only one employee) will be required to set up a Workplace Pension with the automatic enrolment of the their employees, and they will also be required to make payments into their employees' policies.
The good news is that if you have 40 employees or less, you will not be required to set up your Workplace Pension until some time in 2015. The Workplace Pension is being phased in over 6 years in stages with the largest employers who had to begin it in 2012.
For further information and to establish your exact “Staging Date”, go online to www.thepensionsregulator.gov.uk/automatic-employment
Tom Shuster
Partner
Monday 28 January 2013
Monday 21 January 2013
Changes you should know about
• There is a reduction in the amount a person can earn before he starts having to pay 40% tax. Taking into account the personal allowance, in this Tax Year (2012/2013) 40% tax kicks in above £42,475. In 2013/14 it will kick in at the lower level of £41,450.
• The maximum pension contribution annually will reduce from £50,000 to £40,000 but not until 2014/2015, so it will still be possible to contribute up to £50,000 in 2013/2014 (Note: there is no change to the rule that the maximum personal contribution an individual can make is limited to 100% of their taxable earnings; so, if their total taxable earnings are less than £50,000, this earnings level becomes their limit; however, there is also no change to the fact that a company can contribute up to £50,000 to an employee’s pension - even if that is more than his taxable income).
There are also a few promises the Chancellor has made for the future such as promising to raise the Inheritance Tax nil rate band in 2015/16 and also to make increases in the Capital Gains Tax Allowance, but I do not think we are being too cynical if we choose to ignore these until they actually happen! 2012 saw the Property Market pretty much flat, but the rental incomes generally increased as those who were unable to buy, had to rent. This has tempted landlords to buy more property. 2012 also saw the insurance market turned a bit on its head as a result of an EU Gender Directive – dictating to insurance companies that they had to give men and women equal insurance quotes – despite the over-riding statistical proof that young men have more automobile accidents than young women and that women generally live longer than men. 2013 also sees the FSA (Financial Services Authority) morph and divide itself into two new bodies – the FCA (Financial Conduct Authority) and the PRA (Prudential Regulatory Authority). We will have to wait and see whether this change will mean.
• The maximum pension contribution annually will reduce from £50,000 to £40,000 but not until 2014/2015, so it will still be possible to contribute up to £50,000 in 2013/2014 (Note: there is no change to the rule that the maximum personal contribution an individual can make is limited to 100% of their taxable earnings; so, if their total taxable earnings are less than £50,000, this earnings level becomes their limit; however, there is also no change to the fact that a company can contribute up to £50,000 to an employee’s pension - even if that is more than his taxable income).
There are also a few promises the Chancellor has made for the future such as promising to raise the Inheritance Tax nil rate band in 2015/16 and also to make increases in the Capital Gains Tax Allowance, but I do not think we are being too cynical if we choose to ignore these until they actually happen! 2012 saw the Property Market pretty much flat, but the rental incomes generally increased as those who were unable to buy, had to rent. This has tempted landlords to buy more property. 2012 also saw the insurance market turned a bit on its head as a result of an EU Gender Directive – dictating to insurance companies that they had to give men and women equal insurance quotes – despite the over-riding statistical proof that young men have more automobile accidents than young women and that women generally live longer than men. 2013 also sees the FSA (Financial Services Authority) morph and divide itself into two new bodies – the FCA (Financial Conduct Authority) and the PRA (Prudential Regulatory Authority). We will have to wait and see whether this change will mean.
Monday 14 January 2013
TIPS FOR THE MATURE AMONGST US!
If you are 65 or older, you can still get a mortgage. Most lenders have become very cautious about lending past the normal State retirement age, but there are still a number of smaller lenders who are willing to help and who can arrange borrowing even into a person’s 80s – where the pension or other guaranteed income can justify it, of course. We can assist you to find out what options would be available. Using the equity in your property may be a last resort but it is important to understand the options open to you. There are basically three approaches that are included under the term “Equity Release”.
– an Interest-Only Mortgage where you pay only the interest each month with no end date;
– a Life-Time Mortgage where the interest is added to the amount borrowed so no payment at all needs to be made;
– a Home Reversion Schemes whereby you give up ownership on part or all of the property in exchange for a lump sum and the right to live in the property indefinitely.
Equity Release options start to become available from age 55 onwards. Here, too, we can help you find out what is available for you to see if it helps you with what you want to achieve. Equity Release can, in some circumstances, provide a short-term solution to a financial problem. One of our clients who was selling his house to buy another decided to use Equity Release as a bridging loan.
– an Interest-Only Mortgage where you pay only the interest each month with no end date;
– a Life-Time Mortgage where the interest is added to the amount borrowed so no payment at all needs to be made;
– a Home Reversion Schemes whereby you give up ownership on part or all of the property in exchange for a lump sum and the right to live in the property indefinitely.
Equity Release options start to become available from age 55 onwards. Here, too, we can help you find out what is available for you to see if it helps you with what you want to achieve. Equity Release can, in some circumstances, provide a short-term solution to a financial problem. One of our clients who was selling his house to buy another decided to use Equity Release as a bridging loan.
Monday 7 January 2013
PERSONAL TAX CHANGES
There were some useful improvements to individual tax benefits – although some of these were just future promises. The following were the immediate changes, which we felt were most significant for individuals:
• The increase in the Personal Allowance from 6 April 2013 to £9,440. This represents the amount an individual can earn before he starts paying any tax and is the largest ever such increase in one tax year. The current level is £8,105.
• The increase in the Individual Savings Account (ISA) from £10,680 per year to £11,280 from 6 April 2013. Half of this (£5,640) can be put into a Cash ISA.
• The reduction in the maximum rate of income tax from 50% to 45% from 6 April 2013 (for those earning in excess of £150,000).
• The increase in the Basic State Pension from £107.45 per week to £110.14 per week.
• Corporation Tax for smaller businesses does not change this year but it does remain very low at 20% and Corporation Tax for larger businesses will reduce from 24% to 23% in the new Tax Year.
There was also an announcement that will help many older people who have private Drawdown Pensions. The Government is reversing its previous position announced two years ago. This will allow individuals to draw a higher income from their Drawdown Pensions than before. This should mean that those with such pensions will be able to access approximately 20% more income than they can take currently. However, the Government has not yet announced a date from which this change is to apply so it is likely to take some months before we know when people will be able to take this higher income from their pension.
• The increase in the Personal Allowance from 6 April 2013 to £9,440. This represents the amount an individual can earn before he starts paying any tax and is the largest ever such increase in one tax year. The current level is £8,105.
• The increase in the Individual Savings Account (ISA) from £10,680 per year to £11,280 from 6 April 2013. Half of this (£5,640) can be put into a Cash ISA.
• The reduction in the maximum rate of income tax from 50% to 45% from 6 April 2013 (for those earning in excess of £150,000).
• The increase in the Basic State Pension from £107.45 per week to £110.14 per week.
• Corporation Tax for smaller businesses does not change this year but it does remain very low at 20% and Corporation Tax for larger businesses will reduce from 24% to 23% in the new Tax Year.
There was also an announcement that will help many older people who have private Drawdown Pensions. The Government is reversing its previous position announced two years ago. This will allow individuals to draw a higher income from their Drawdown Pensions than before. This should mean that those with such pensions will be able to access approximately 20% more income than they can take currently. However, the Government has not yet announced a date from which this change is to apply so it is likely to take some months before we know when people will be able to take this higher income from their pension.
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