Pensions under attack, act before 8 July!

With the 8 July Summer Budget fast approaching there has been much speculation surrounding tax relief on pension contributions, particularly for higher earners.

During their 2015 election campaign The Conservative party unveiled plans to reduce tax relief on pensions for anyone earning more than £150,000. With only a few weeks left until the 8 July Summer Budget the time left to make contributions under the current rules is running out!

Under current rules tax relief of up to 45% is available on pension contributions and there is an annual contribution allowance of £40,000.

We cannot predict what the Chancellor might announce on 8 July and neither can we predict the timing of any potential changes.

If you are a high-earner with income over £150,000 and interested in making pension contributions here are a few things you may want to consider:

Bring forward any planned or regular monthly contributions before 8 July 2015.

Contribute the maximum you can afford (out of disposable income) into your pension before 8 July 2015.

This article has been written for the general interest of our clients and contacts and is correct at the time of going to print. We recommend that you always seek professional advice and no responsibility for loss occasioned to any person acting  or refraining from acting as a result of material in this publication can be accepted

Improving Cashflow

More than any other factor, a business is defined by the balance between the money coming in and the money going out over any period of time. Ideally, the scales should be tipped in favour of the former, but the reality of the business environment is often more complicated.

When you start a business, it’s easy to concentrate your efforts into getting sales. Whether you are selling a product or a service, gaining your first order or making your first sale is incredibly exciting. It provides tangible proof that you made the right decision to set up your enterprise.

However, as many people discover, making a sale can seem like the easy part.

Getting paid for that sale is where problems often start and where cash flow – or rather lack of it – comes in.

What is cashflow?

Cashflow is the movement of money into or out of your business. If more money is going out, or due to go out, than you have available, then you have a cashflow problem. There could be a number of reasons for this: it could be down to mismanagement or poor buying decisions but in many cases it can be attributed to not being paid on time.

Knowledge about cashflow and an awareness of how it works as part of a company’s day-to-day operations is important for anyone in business, not just those who are starting out. Even if your business has been up and running for some time there is always opportunity to pick up new advice and tips on how to spot customers who may cause you problems, the right and wrong way to chase payment and, most crucially, what to do if the scales tip dramatically out of your favour.

Get in touch today to talk about your cashflow.

Defining late payment

Unless you have agreed when you’ll be paid, a payment becomes late 30 days after the customer receives the invoice or you provide the goods or service (if this is later).

You can claim interest and debt recovery costs if you experience late payment.

Need action now?

If like many small businesses, you’re relying on a payment coming in to pay your VAT bill or wages and it fails to materialise, what can you do?

Before considering legal action, check that you have done nothing to reduce the likelihood of being paid.

A surprising number of businesses open themselves up to being taken advantage of by not being able to confirm any of the following:

  • your invoices are in the right name and contain all the information the customer needs
  • do you have proof of delivery or a signed order for services?
  • does the customer have the funds to pay you?
  • have you got a record of all your orders and invoices?

Another crucial point is to ask for a purchase order number. Many people don’t because they haven’t used them before. This is particularly true of creative businesses that have grown over time. The days of a gentleman’s agreement or a handshake are long gone if you want to guarantee that you will get paid.

The next area to look at is the methods of payment you accept. While some businesses have leapt at the opportunity to use technology to ensure they get paid, others have yet to do so.

Do your invoices include your online banking details?

Do you accept credit or debit cards as payments?

If your business is too small to justify the costs of having permanent chip + pin terminals, with the ongoing merchant fees, have you looked into using companies that use mobile card payment systems?

Contact us today to discuss your cashflow planning.

Check your prospects

Is that great order you’re hoping to get likely to turn into a bad debt? There are a number of ways you can become proactive about your cashflow rather than reactive.

Before you accept an order from a new contact, check them out on the Companies House register.

Checking out a sole trader is more difficult, but asking for a VAT registration number or proof of business insurance or membership certificate from a trade or professional body can help. In addition, online reviews, LinkedIn details and other social media sites can give you a feeling for that person. You may not feel like you are in a position to be picking and choosing your clients and customers, but there is a virtue to exercising a little bit of caution that can save a whole lot of pain later on.

Check your own vulnerability

When you’re busy getting business in, it’s sometimes hard to take a step back to see if your business is under threat from lack of cashflow.

The following are some of the symptoms that could indicate it’s time to take stock:

  • running out of working capital
  • relying on your overdraft
  • finding it difficult to pay salaries each month
  • not paying your tax, rent or other regular costs
  • a lack of profitability.

Time for a check-up?

If you recognise this it would certainly be worth asking us for help before the symptoms become terminal or public knowledge. We can help you get your internal processes in order and advise you on any external action you can take in order to tip the scales back into your favour.

Talk to one of our experts today about your options.

Prompt payment code

The Prompt Payment Code is a government initiative administered by the Chartered Institute of Credit Management. It is designed to encourage, promote and set an example of best practice between organisations and their suppliers. Companies that sign up for it undertake to:

  • pay suppliers on time
  • give clear guidance to suppliers
  • encourage good practice.

Following industry feedback, the code is in the process of being strengthened and is now asking signatories to pay their suppliers within 30 days as the norm.

Mobile phones & company tax Mobile phone

Mobile phones & company tax

Mobile phones have become increasingly important both in and out of the workplace. With more features than ever, if used properly they can effectively act as little mobile offices. Many employers know that providing mobile phones as part of employee salaries can be tax-efficient, with their provision being both a tax and national insurance-free benefit. Here we outline some strategies to get the most rewards at minimal cost.

For many years company mobile phones (or SIM cards) for employees have been a tax-free benefit. In 2006 the exemption was limited to one mobile phone provided to each employee for private use and specifically excluded the employee’s family and household. In 2012 HM Revenue & Customs (HMRC) decided that smartphones were technically mobile phones rather than computers and thus potentially qualified for the mobile phone exemption.

The exemption covers the phone itself, any line rental and the cost of private calls paid for by the employer on that phone.

One of the key requirements in order to qualify for tax exemption is that the mobile phone contract must be in the company name. This means employer reimbursement for personal mobiles does not count, nor does simply adding the company name and address to the invoice of a personal phone.

There is no taxable benefit on an employee if an employer reimburses them for the cost of any business calls made on their personal mobiles.

Limited contracts

To make sure employees do not excessively use their mobiles to the point where it becomes too expensive for the business, consider a limited contract with a set number of free call minutes per month. Should an employee exceed their limit, the business can request them to pay back any additional charges.

Any reimbursements they make will, however, come from their net pay. One way around this is to set up an employee salary sacrifice scheme for mobile phones, although the administrative burden of setting this up may make it an unattractive option.

Salary sacrifice

While salary sacrifice is not a tax-free benefit in kind, it may be another option to consider since it can help reduce employee tax and national insurance contributions (NICs). Much like salary sacrifice for pensions, an employee chooses to give up the cost of the mobile phone contract from their salary. This means no cost for you and an increase in net pay for the employee.

Current income tax and NIC levels mean salary sacrifice offers a saving of £32 for every £100 spent for basic rate taxpayers. This figure is £42 for higher rate taxpayers. This may prove to be enough of a benefit for your employees.

Salary sacrifice arrangements are effective when the contractual right to cash remuneration has been reduced. So, for example, the employee does not have the right to give up the benefit and revert to the original salary at any time. This does not stop employers and employees reviewing and adjusting the contractual arrangements at a later date.

ABG joins forces with Auerbach Hope We a

ABG joins forces with Auerbach Hope

We are delighted to announce that we have joined forces with fellow London-based firm Auerbach Hope. Auerbach Hope like Arram Berlyn Gardner, serve SME’s and high net worth clients across many industry sectors.

The Auerbach Hope team have moved to our office in City Road but have retained some West End meeting facilities for convenience. Auerbach Hope will now trade under the ABG name.

This merger will enable the enlarged practice to continue to provide imaginative and proactive services to our clients with the expertise you would expect of a large firm but with the care and attention of a smaller one.

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Pension Reforms explained It’s been ove

Pension Reforms explained

It’s been over a year since the Chancellor first announced reforms to how people can access their pension savings. We look at what you need to know about the changes:

Flexibility in retirement

From this April, people aged over 55 will be able to take their defined contribution pension funds in multiple cash lump sums. The first 25% of your pension will remain tax-free and the rest will be taxed at your marginal rate. No tax will be charged if you withdraw less than the annual personal allowance.

Independent guidance

Retirement savers will be able to access free and impartial guidance from The Pensions Advisory Service and Citizens Advice, under the guise of Pension Wise, from April 2015. Guidance will be available online, via telephone or at face-to-face meetings.

Inherited pensions

The 55% tax charge on inherited pensions will be abolished from April 2015. Instead, individuals will be able to transfer defined contribution pension pots tax-free to a chosen beneficiary when they die. Whether or not the beneficiary will pay tax will depend upon the owner’s time of death:

if they die before 75: the funds will be transferred tax-free and the beneficiary will pay no tax if they die after 75: the beneficiary will pay income tax at their marginal rate.

If you would like to discussion your retirement options with us please contact us on 020 7330 0000.

New ISA to help first time buyers A new

New ISA to help first time buyers

A new type of ISA will provide a financial boost to people saving to buy their first home, the Chancellor has announced during his 2015 Budget statement.

For every £200 deposited into a Help to Buy ISA, the government has pledged to boost it by 25%. This means that first time buyers will receive £50 for every £200 they save towards their house.

There will be a maximum savings limit of £12,000 which would result in account holders receiving a savings bonus of up to £3,000.

Key information:
there is no minimum monthly deposit amount
the maximum monthly deposit amount is £200
account holders will be able to make a £1,000 initial deposit
accounts are limited to 1 per person rather than 1 per household.

Accounts will be available from autumn 2015 and will be open to first time buyers over 16 years-old.

Budget 2015 – Highlights

Budget Highlights

  • Income tax personal allowance to reach £11,000 by 2017
  • ‘Radical’ business rates review before 2016 Budget
  • New Personal Savings Allowance from April 2016
  • Digital tax accounts to replace annual tax returns
  • New Help to Buy: ISA for first time buyers
  • Increased flexibility for cash ISAs from Autumn 2015
  • Rules on annuities to be relaxed from April 2016
  • Pension lifetime allowance to fall to £1m from April 2016

If you wish to download our full 2015 Budget Report please visit our website