For those of
you watching the Glastonbury Festival over the weekend.
It was a
great boost to our UK economy. Some £40
million turnover taken over the 5 day event. Over 200,000 people attended and 3 million
people tuned in to see Kylie Minogue, with Stormsy and The Killers pulling in
great ratings too.
Donations to
Oxfam, Green Peace and Water Aid were the main charities benefiting from the
event.
The area I
want to draw to your attention was over 200,000 attended the event this year,
and over 400 small food and merchandise providers helped make the event a great
success.
Whether you
love it or hate it, its provided a
great boost to what has been so far quite a difficult 2019 for many retail and
service outlets.
Those 400
food and merchandise providers will be providing jobs to thousands of people,
creating work for not just the Somerset area but all over the UK, as a lot of
the suppliers would have travelled to the area for work.
There was
also 2,000 volunteers mainly representing and supporting the three main
charities.
With our
continuing confused political market at the moment, with uncertainty with what
is happening with Brexit. A lot of
small businesses are struggling to keep a float, they are finding it harder to gain long term
contracts, and being able to gain fixed prices for goods that may be coming
from overseas. The uncertainty affects everything. The exchange rate of the Pound Sterling to Euro is also
still highly volatile.
Please keep
supporting your local businesses, they are keeping millions of people employed
at the moment, we most definitely need them into 2020.
We never
hear about them in the news when they suffer, they just go about their business
quietly. We only hear about the larger companies
finding things tough at the moment.
Our economy
and stability we all like to take for granted heavily relies on them.
Give your
local business whoever they are your full support in 2019 regardless of the
political outcome. Lets keep our
economy robust to ride the storm.
We’re in the full swing of the Summer Holidays, as a business owner this can be a very busy time if youre in the food and leisure industry, it can also be a quieter time as many owners see because everything appears to be put on hold when suppliers and customers take time off and are on holiday.
How does Summer affect you? I see many business owners not taking time away from their business and carrying on regardless. Its important to have time away to recharge the batteries and to re-evaluate where you are going with it.
A lot of my clients are small micros businesses who might not have an army of staff to take care of things whilst theyre away. Heres a few tips they’ve shared with me on how they still manage to run their business but still take some important r & r.
Plan the diary around their holiday, do the bigger more important jobs in the run up to the holiday then plan the next jobs to be in the diary when they return.
Take small breaks so time away isn’t too dramatic and they don’t face backlogs coming back. Ie a long weekend away a couple of times a year.
Use a subcontractor to keep things ticking over until they come back.
Those companies with staff, leave clear instructions on what is to be done whilst theyre away.
Others leave the mobile phone on in case of emergencies but limit their workload reduced over the time period.
Whatever your business please take that rest time, you will read time and time again, those owners who take time away and have the rest are far more likely to succeed, than someone who never takes time away.
Work life balance is important to keep in the mind, we all like to think of ourselves as workaholics, and fully committed. Our health and wellbeing, and feeling motivated and energised is important too.
This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.
1. Stamp duty will be cut for 98% of people who pay it
only the highest value residential properties will pay more Under the old rules, you would have paid Stamp Duty Land Tax at a single rate on the entire property price. Now, you will only pay the rate of tax on the part of the property price within each tax band – like income tax. Under the old rules, if you bought a house for £185,000, you would have had to pay 1% tax on the full amount – a total of £1,850. Under the new rules you don’t start paying tax until the property price goes over £125,000, and then you only pay tax on the price of the property within the tax bands over that price. Under the new rules, you’ll pay nothing on £125,000 and 2% on the remaining £60,000. This works out as £1,200, a saving of £650. This will make the system fairer, and means stamp duty will be cut for 98% of people who pay it. Our stamp duty factsheet explains this policy in more detail. You can also access our infographic which gives some examples of how the new system will work.
2. The tax-free personal allowance is being increased by a further £100 in April 2015, to £10,600 The personal allowance
the amount you earn before you have to start paying income tax – will be increased again from £10,000 to £10,600 in 2015 to 2016. Typically, someone earning between £10,600 and £42,385 will be £825 better off by 2015-16 as a result of increases in the tax-free personal allowance since 2010. Even while making difficult decisions to fix the economy, since 2010, the government has cut income tax for 26.7 million taxpayers. Read the Chancellor’s Autumn Statement speech in full.
3. Children will be exempt from tax on economy flights This will apply for under 12s on flights from 1 May 2015, and for under 16s from 1 March 2016
saving an average family of four £26 on a flight to Europe and £142 on one to the US. The government expects these changes should be clear to consumers, and will consult on making sure that the tax is displayed on ticket prices.
4. Spouses will inherit their partner’s individual saving account (ISA) benefits after death
Currently, if someone passes away they can’t pass on their ISA to their spouse, even if they have saved the money together. 150,000 people a year lose out on the tax advantages of their partner’s ISA when their partner passes away. From 3 December 2014, if an ISA holder dies, they will be able to pass on their ISA benefits to their spouse or civil partner via an additional ISA allowance which they will be able to use from 6 April 2015. The surviving spouse or civil partner will be allowed to invest as much into their own ISA as their spouse used to have, in addition to their normal annual ISA limit.
5. Business rates will be cut and capped
with extra Help for the High Street To support small businesses in local communities, the ‘high street discount’ for around 300,000 shops, pubs, cafes and restaurants will go up from £1,000 to £1,500, from April 2015 to March 2016. This is in addition to doubling Small Business Rate Relief for a further year which means 380,000 of the smallest businesses will pay no rates at all. The government will also continue to cap the annual increase in business rates at 2% from April 2015 to March 2016 – this will benefit all businesses paying business rates. Finally, the government will extend the transitional arrangements for smaller properties that would otherwise face significant bill increases due to the ending of ‘transitional rate relief’. Access our infographic on full employment, and the government’s long term economic plan.
6. No more employer National Insurance contributions (NICs) on apprentices under 25
To make it cheaper to employ young people, from April 2016 employers will not have to pay National Insurance contributions (NICs) for all but the highest earning apprentices aged under 25. This is in addition to the announcement made at Autumn Statement last year that employers won’t have to pay NICs on under 21s from April 2015. These are part of the government’s wider ambition to have the highest employment rate in the G7.
7. Creative sector tax reliefs will be extended to children’s TV
Following on from the success of the film, high end TV, animation, video games and theatre tax reliefs, a new children’s TV tax relief will be introduced from April 2015. This will counteract a decline in investment in children’s TV in the last decade. Eligible companies will be able to claim 25% of qualifying production spending back through the relief. The government will also consult on introducing a new orchestra tax relief in April 2016.
What to do with your business if things have quietened down over summer
This may not be affecting you, but a lot of businesses suffer at some point during the year from seasonality or the great British weather affecting the productivity of their business.
Ive worked in the travel industry where if the weather is too good the telephone stops ringing, but Boxing Day the phone lines are maxed out.
Manufacturing tend to have a shut down over Christmas etc.
Everybody seems to be on holiday in July and August!
This might be adhoc or happens the same time every year, you know its going to happen, so planning ahead for that potential sales fall is vital to keep the operation moving and generating income for when the good times come back.
Keeping a buffer in the bank account certainly helps, you may need to scale back for a short period of time.
But for an ever growing business you are not going to want to scale back you want to keep on going.
Increase the marketing, do a special offer to either get things moving again in the Autumn, or get things moving now. The choice is up to you, but you are going to have to do something about it. Sitting on your laurels will not generate that income.
Use the time to look at your operation, are there systems you can tighten up on, costs to trim down. Think efficiency all the time, if you can do it better, add value, or save some time, its all a good thing.
Or a topical word at the moment, Collaboration. Get together with your network, maybe a couple of you have connected skills, and can promote each other, or do an event together and share the proceeds. What have you got to lose.
The important thing is to not sit back and wait for it to come, you make it happen.
This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.
Most business owners don’t realise that unless you have secured your name and logo through registering a trademark that you may not actually own your own brand.
Registering at Companies House is not enough to stop somebody else using your logo and claiming it as their own.
The Intellectual Property Office, are spending time informing business owners of the benefits of registering their business logo as a Trademark,. If you get the opportunity to go along to one of their seminars it is highly recommended.
Business Wales have advisors that can also help you with Intellectual property or patents as it was formerly known. http://business.wales.gov.uk/
To register a trademark is quite simple and costs £170 for 10 years, then you renew after that. You don’t need to be Kellogg’s or Tesco to see the Importance of this registration, the trade mark registration will increase the value of your business should you wish to sell it, plus you will definitely need it if you have planned to set up a franchise of your business, again this increases the value of the business.
If you have ever watched Dragons Den, it is one of the first questions the Dragons will ask the owner of the business. There are many options for you to protect but starting with your name should be the first point for increasing your business success, and definitely its value.
This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.
When you are running a business whether a new company or a well established one, getting the costing of your products or services costed correctly is crucial to your success.
Service Companies
Creating the Sales price.
Your main component of cost is going to be heavily on labour. You’re going to have to make sure that not only have you covered your labour cost, ie Cost plus employers NI. Contribution to overheads plus that all important profit.
A service company needs to have a mechanism for keeping track of those labour costs versus quoting for a job, at the fingertips at all times. The easiest and simplest route to finding this out is to keep timesheets, or cost the time of every element of each procedure. You always compare the timesheet for a particular job, ie the project, versus the original sales price. This will give you an average hourly rate of the job as a whole. You very importantly need to know the average hourly cost of your overheads. Basing this on the number of hours you have available as a maximum for every member of staff.
Ie You have two members of staff, each work 40 hours per week for 5 days work. As a yearly average that’s 4,160 hours at your disposal or 347 hours per month. Your overhead for example is £2,000 per month which equates to £5.76 per hour. A cost of this nature would be labour cost per hour, plus £5.76 overhead plus % profit.
Every business and industry is different, and you’re dictated quite a lot of the time by market rates, or competitors. By knowing your average overheads and labour costs, you will know the price you cant go below or face making a loss.
Hotels have this down to a fine art. They are mainly in the services industry again heavily focused on labour costs. When you have booked your room for the night. They will know ahead of time, the number of rooms they have, the cost of an empty room, and the cost of a full room. They will have broken down in their costing mechanism
The length of time to make a bed!
Cost of cleaning the room, length of time for each room!
Cost of washing the bedding/ towels!
Cost of the tea/coffee facilities!
Heating and lighting for each room!
Your breakfast cost!
Plus a contribution to fixed overheads, and % profit
Whether your service business is hourly project based or procedure based, you need to know the cost of each element.
Manufacturing and product based sales
Again as above you are dictated to by market rates, you might be a low volume business that can charge a premium fee for your product ie Apple Iphone. Or a high volume business that charges sales at lower margins of profit but has to sell a lot of them. Ie Walkers selling crisps
When costing a product you need first know
Cost of the materials for the product!
Labour time to make it!
Cost of energy to make the product!
The more volume you make the cheaper it should be per product as you will become more automated in your processes plus you are likely to have more negotiation power with supplier costs. You need to build in a little slack as no-one or machine can work at 100% capacity all of the time. You do need to track efficiencies and always look at how you can make things better and demonstrate you are always trying to reduce inefficiencies. This is usually where profit can go down, if a business does not look to always improve its offering.
Supermarkets have just done this in the last 18 months, by offering the self checkout facility, they’ve saved both wages cost, time and rates bills.
The main thing to realise that this is not a static job to do, as you grow and develop or change your product offering you will need to keep monitoring these costs, or you could end up working twice as hard, for a lower gain.
Always be one step ahead.
This blog is intended for information only, you may have other suggestions of your own. Please treat this as a guide only.
So in this Budget we make sure hardworking people keep more of what they earn – and more of what they save. Yesterday we set out our support for parents with tax free childcare. Today support for savers is at the centre of this Budget, as we take another step towards our central mission: economic security for the people of Britain.
OBR and economic forecasts
A year ago at the Budget the OBR forecast the economy to grow by just 0.6% in 2013. They now confirm that it grew by three times as much. At the Autumn Statement, they significantly revised up their expectations for future growth.
Today I can tell the House they are revising up their forecast again. A year ago, they predicted growth in 2014 would be 1.8%. At the Autumn Statement, 2.4%. Today the OBR forecast growth in 2014 of 2.7%. That’s the biggest upward revision to growth between Budgets for at least 30 years. Growth next year is also revised up to 2.3%. Then it’s 2.6% in 2016 and 2017. And with the output gap closed around a year earlier than previously predicted, growth returns to around its long term trend, at 2.5% in 2018. Taken together, these growth figures mean our economy will be £16 billion larger than was forecast just four months ago. Employment forecasts At home the biggest risk is clear: abandoning the economic plan that is working. And nowhere is the success of that plan more evident than in job creation. 1.3 million more people in work. The latest figures today show a staggering 24% fall in the claimant count in just one year, and the fastest fall in the youth claimant count since 1997. The OBR today forecast one and a half million more jobs over the next five years. Unemployment down from the 8% we inherited to just over 5%.
£1 coin
Of course, the prerequisite of sound money is a sound currency. And, Mr Deputy Speaker, the £1 coin has become increasingly vulnerable to forgery. Now among the oldest of coins in circulation; one in thirty pound coins are counterfeit – and that costs businesses and the taxpayer millions each year. So I can announce that we will move to a new, highly secure, £1 coin. It will take three years. We will consult with industry. Our new pound coin will blend the security features of the future with inspiration from our past. In honour of our Queen, the coin will take the shape of one of the first coins she appeared on – the threepenny bit. A more resilient pound for a more resilient economy.
Fiscal policy
We are taking further difficult decisions now so we can reduce the deficit and protect our NHS and schools and meet our obligations to the world’s poorest by contributing 0.7% of our national income to help them. On public service pensions, we implement the reforms proposed by John Hutton. We will ensure schemes are properly valued, saving the taxpayer over £1 billion a year. We are continuing with pay restraint in the public sector – an essential part of maintaining sound finances and economic stability. We will also insist on the prudent management of departmental finances. Thanks to the efforts of my colleagues in Cabinet, these now regularly come in under budget. In order to lock-in these underspends, I said in December that we would reduce spending by £1 billion in 2015-16. Today, I am making that overall billion pound reduction permanent. And I look forward to the work my excellent colleague the Chief Secretary is now doing, with the Cabinet Office, to find further efficiencies. Difficult decisions on public service pay and pensions. Further savings in departments. A cap on welfare bills. None of these decisions are easy, but they are the right thing to ensure Britain lives within her means.
Welfare
We set out today the details of that welfare cap – and we will seek the support of Parliament for it next week. From housing benefit to tax credits, the full list of benefits included in the cap is published in the Budget document today. Only the State Pension and the cyclical unemployment benefits are excluded. I am setting it at £119 billion in 2015-16. It will rise, but only in line with forecast inflation, to £127 billion in 2018-19. Britain should always be proud of having a welfare system that helps those most in need. But never again should we allow its costs to spiral out of control and its incentives to become so distorted that it pays not to work. In future, any government that wants to spend more on benefits will: have to be honest with the public about the costs, need the approval of Parliament, and will be held to account by this permanent cap on welfare.
Tax avoidance
Thanks to my Right Honourable Friend the Prime Minister’s leadership we have driven the international efforts to develop tough, new global tax rules that stop rich individuals hiding their tax and companies shifting their profits offshore. And the number of registered tax avoidance schemes has fallen by half. And while the vast majority of wealthy people pay their taxes, there is still a small minority who do not. We will now require those who have signed up to disclosed tax avoidance schemes to pay their taxes, like everyone else, up front. I am increasing HMRC’s budget to tackle non-compliance. We will block transfers of profits between companies within groups to avoid tax. We will increase tax credit debt recovery rates for those with sufficient earnings. We will give HMRC modern powers to collect debts from bank accounts of people who can afford to pay but have repeatedly refused to, like most other Western countries. We will increase compliance checks to catch migrants who claim benefits they aren’t entitled to, saving the taxpayer almost £100 million. We will take action to curb potential misuse of the EIS and VCT schemes. And we are expanding the new tax we introduced to stop people avoiding stamp duty by owning homes through a company. We will expand the tax on residential properties worth over £2 million to those worth more than £500,000. And from midnight tonight anyone purchasing residential property worth over half a million pounds through a corporate envelope will be required to pay 15% stamp duty. None of this applies to homes that are rented out. Many of these are empty properties held in corporate envelopes to avoid stamp duty.
So I will continue to direct the use of the LIBOR fines to our military charities and our emergency service charities too. Because the sums continue to grow, I can today extend that support to our search and rescue and lifeboat services – and provide £10 million of support to our scouts, guides, cadets and St John’s Ambulance. I am also today waiving inheritance tax for those in our emergency services who give their lives protecting us. I will also relieve the VAT on fuel for our Air Ambulances and Inshore Rescue boat services across Britain, and provide a new air ambulance for London – all in response to huge and heartfelt public demand and the campaigning of my Hon. Friends for Hexham, Brentford & Isleworth, and Argyll & Bute. Further, this summer, many services of remembrance will be held in our cathedrals to mark the Great War, so we are providing £20 million to support the repairs needed to these historic buildings.
Exports
Mr Deputy Speaker, We’re not going to have a secure economic future if Britain doesn’t earn its way in the world. We need our businesses to export more, build more, invest more and manufacture more. First, exports. Our exports have grown each year and the OBR today forecast rising export growth in the future. Our combined goods exports to Brazil, India and China have risen faster than those of our competitors. With Stephen Green, and now Ian Livingston, we’re expanding the reach and support UKTI offers British businesses. But for many firms the truth is you can only win the contract if you are backed by competitive export finance. Today we fundamentally change that. And we’re going to start with the finance we provide our exporters. We will double the amount of lending available to £3 billion. And I can announce that from today the interest rates we charge on that lending will be cut by a third. We will also reform Air Passenger Duty to end the crazy system where you pay less tax travelling to Hawaii than you do travelling to China or India. It hits exports, puts off tourists and creates a great sense of injustice among our Caribbean and South Asian communities here in Britain. From next year, all long haul flights will carry the same, lower, band B tax rate that you now pay to fly to the United States. Private jets were not taxed at all under the previous government. Today they are, and I’m increasing the charge so they pay more.
One key British export is the North Sea’s oil and gas. We will take forward all recommendations of the Wood report. And we will review the whole tax regime to make sure it is fit for the purpose of extracting every drop of oil we can. We will introduce now a new allowance for ultra high pressure, high temperature fields to support billions of pounds of investment, thousands of jobs and a significant proportion of our energy needs. Even with these measures, the North Sea is a mature basin – and the OBR have today revised down the forecast tax receipts by a further £3 billion over the period. Britain is better together.
Housing
Mr Deputy Speaker, our country needs to export more – and it also needs to build more. House building is up 23%. But that’s not enough. That’s why we’re making further reforms to our planning system and offering half a billion pounds of finance to small house building firms. And it’s why we’re giving people a new Right to Build their own homes and providing £150 million of finance today to support that. It’s why we’re funding regeneration of some of the urban housing estates that are in the worst condition, and we’re extending the current Support for Mortgage Interest Scheme to 2016. And it’s why we’ve got Help to Buy. We’re extending the Help to Buy equity loan scheme for the rest of the decade, so we get 120,000 new homes built. In the South East where the pressure is greatest we’re going to build new homes in Barking Riverside, regenerate Brent Cross, and build the first new Garden City in almost a hundred years at Ebbsfleet. We’re going to build 15,000 homes there, put in the infrastructure, set up the development corporation and make it happen. Taken all together, the housing policies I announce today will support over 200,000 new homes for families.
Investment
Today I have approved a £270 million guarantee for the Mersey Gateway Bridge thanks to the hard work of my Honourable Friend for Weaver Vale.
Tomorrow we introduce legislation to give new tax and borrowing powers to the Welsh Government to fund their infrastructure needs, and they can start now on work to improve the M4 in South Wales. Because of the exceptionally poor weather this winter, I am making an additional £140 million available, on top of that already provided, for immediate repairs and maintenance to damaged flood defences across Britain. Our roads too have taken a battering.
My Honourable Friend for Northampton North has been a persistent campaigner for resources to repair the pot-holes in his constituency and across the country. His persistence has paid off and I’m making £200 million available which local authorities can bid for. I trust Northampton will be making an application. Modern infrastructure is part of a successful economy. So too is a modern industrial strategy.
If Britain isn’t leading the world in science and technology and engineering, then we are condemning our country to fall behind. So we will establish new centres for doctoral training, for Cell Therapy and for Graphene – a great British discovery that we should break the habit of a lifetime with and commercially develop in Britain. To make sure we give young people the skills they need to get good jobs in this modern world, we’ve doubled the number of apprenticeships and I will extend the grants for smaller businesses to support over 100,000 more. And we’ll now develop new degree level apprenticeships too.
Business tax
Today we accept their recommendation to move the collection of Class 2 NICs into self-assessment, abolishing for 5 million people this wholly unnecessary bureaucracy. And we’ve cut business tax rates.
Corporation tax was 28% when we came to office. In just two weeks corporation tax will be down to 21%, high street stores will get £1,000 off their rates, and every business in the country will get the Employment Allowance – a £2,000 cash-back on jobs. Next year, corporation tax will reach 20% and we take under 21s out of the jobs tax altogether. Businesses keeping more of their money to create jobs and invest in the future. Today I want to go further. Many of the enterprise zones we created are now flourishing – so the business rates discounts and enhanced capital allowances will be extended for another three years.
And I can confirm that with the Northern Ireland Executive we’ll establish the first enterprise zone there near Coleraine. I’m raising the rate of the R&D tax credit for loss-making small businesses from 11% to 14.5%.
Two years ago, I launched the Seed Enterprise Investment Scheme to help finance start-ups. It’s been a great success and I’m making it permanent. We’re backing investment into social enterprises with a Social Investment Tax Relief at a rate of 30%. And we’re supporting our creative industries too.
The European Commission has today approved the extension of our film tax credit – and I will apply the same successful approach to theatre, especially regional theatre. From this September there will be a 20% tax relief for qualifying productions, and 25% for regional touring.
And we’re expanding by a third the size of the cultural gift scheme. But I want to do something today that helps all businesses invest.
In 2012 I increased the Annual Investment Allowance ten-fold to £250,000. This generous allowance was due to expire at the end of this year – and all the business groups have urged me to extend it. So we will. But we’ll do more. We’re going to double the Investment Allowance to £500,000, extend it to the end of 2015, and start it next month. 99.8% of businesses will get a 100% investment allowance.
Manufacturing Today, by tilting the playing field – extending the 2% increase in company car tax in 2017-18 and 2018-19 while increasing the discount for ultra low emission vehicles – and reducing the rate of fuel duty on methanol. But above all we are going to have a £7 billion package to cut energy bills for British manufacturers – with benefits for families and other businesses too. First, I am capping the Carbon Price Support rate at £18 per ton of CO2 from 2016-17 for the rest of the decade. This will save a mid-sized manufacturer almost £50,000 on their annual energy bill. Duties So we’re backing exports, backing manufacturing, backing a Britain that builds. And
Mr Deputy Speaker, we also want to help hardworking people keep more of what they earn and of what they save. That’s what we’ve done by freezing council tax, freezing fuel duty and raising the personal allowance to £10,000. And from next year tax free childcare – 20% off, for up to £10,000 of childcare costs for parents.
I can confirm that the fuel duty rise planned for September will not take place. Petrol will be 20 pence lower per litre than it would have been.
Let me turn now to tobacco and alcohol duties. Tobacco duty has been rising by 2% above inflation and will do so again today. Today, I am scrapping that escalator for all alcohol duties. They will rise with inflation, with these exceptions:
Scottish Whisky is a huge British success story. To support that industry, instead of raising duties on whisky and other spirits, I am today going to freeze them. And with some cider makers in the West Country hit hard by the recent weather, I am going to help them by freezing the duty on ordinary cider too. And then there’s beer. I know the industry, led so ably by my Honourable Friend for Burton, have been campaigning for a freeze. But beer duty next week will not be frozen. It will be cut again by 1 pence. Pubs saved. Jobs created. A penny off a pint for the second year running.
Personal allowance
Mr Deputy Speaker, it is a central part of our long term economic plan that people keep more of the money they have earned. When we came to office, the personal tax allowance was just £6,500. In less than three weeks time, it will reach £10,000. That’s an income tax cut for 25 million people. Today, because we are working through our plan, we can afford to go further. Next year there will be no income tax at all on the first £10,500 of your salary.
I can also confirm today that the higher rate threshold will rise for the first time this Parliament, from £41,450 to £41,865 next month, and then by a further 1% to £42,285 next year.
And because I am also passing the full benefit of today’s personal And I am linking the rate of the transferable tax allowance for married couples to the personal allowance, so it will also rise to £1,050.
Savings And we are going to make the New ISA more generous by increasing the annual limit to £15,000. £15,000 of savings a year tax free – available from the first of July. And I’m raising the limits for Junior ISAs to £4,000 a year too.
So we will launch the new Pensioner Bond paying market leading rates. It will be issued by National Savings and Investments, open to everyone aged 65 or over, and available from January next year. The exact rates will be set in the autumn, to ensure the best possible offer - but our assumption is 2.8% for a one year bond and 4% on a three year bond. That’s much better than anything equivalent in the market today. Up to £10 billion of these bonds will be issued. A maximum of £10,000 can be saved in each bond.
And because 21 million people also invest in Premium Bonds I am lifting the cap for the first time in a decade from £30,000 to £40,000 this June, and to £50,000 next year – and I will double the number of million pound winners.
The tax rules around these pensions are a manifestation of a patronising view that pensioners can’t be trusted with their own pension pots. I reject that. People who have worked hard and saved hard all their lives, and done the right thing, should be trusted with their own finances. And that’s precisely what we will now do. Trust the people. Some changes will take effect from next week. We will:
• cut the income requirement for flexible drawdown from £20,000 to £12,000
• raise the capped drawdown limit from 120% to 150%
• increase the size of the lump sum small pot five-fold to £10,000
• and almost double the total pension savings you can take as a lump sum to £30,000 All of these changes will come into effect on 27 March.
Pensioners will have complete freedom to draw down as much or as little of their pension pot as they want, anytime they want. No caps. No drawdown limits. Let me be clear. No one will have to buy an annuity. But instead of the punitive 55% tax that exists now if you try to take the rest, anything else you take out of your pension will simply be taxed at normal marginal tax rates – as with any other income. So not a 55% tax but a 20% tax for most pensioners. But there is one final reform to support savings I would like to make. Mr Deputy Speaker, There is a 10 pence starting rate for income from savings. It is complex to levy and it penalises low income savers.
Today I am abolishing the 10 pence rate for savers altogether. No tax on those savings whatsoever. And we will almost double this zero-pence band to cover £5,000 of saving income.
This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.
I have recently been on a seminar for auto enrolment the new pension scheme which is affecting large companies now, but is being rolled out to all employers and employees over the next couple of years.
The timeline which keeps changing is
Small companies particularly
30-49 employees August 2015 to October 2015
Less than 30 employees January 2016 to April 2017
For your own specific deadline dates, go into the following link And put in your PAYE reference number.
I know these dates look so far away but they will be here before you know it, a letter will arrive on your doorstep one year before your staging date. You have a year to act, but as you can imagine just like Real Time Information if everybody applies for a pension scheme at the same time, which you and many thousands of companies will be doing. You could find yourself in the middle of a queuing system that could take you past the deadline date.
The financial advisors we use have told us that a pension scheme of this nature can take up to six months to be set up, so you really do have to be reactive and deal with it straight away.
This is not going to be like the stakeholder schemes there was no real policing of it and no real fine system. The government are very serious about this and will be issuing fines, one off fines of £400 and daily fines depending on your size of business of more than £50 per day rising to £10,000 per day for the larger companies.
We have a pension black hole which has been put off for many years, now is the time to fill the gap, this system is compulsory and to opt out is going to be very difficult. There some very serious rules that go with it. One of which is to not discourage members of staff to stay opted in. Heavy fines and prison sentences have been communicated more than £1,000 fixed penalty up to £5,000 for the larger companies not complying.
Each and every employer be it large or small, unlimited or limited companies will have to set up their own pension scheme that is compliant with the governments rulings. You can set it up yourself but it is advisable to use a financial advisor. Costs of which do vary.
You are able to set up these schemes ready for the deadline date now, and not have it go live until the deadline timings, worth knowing if you want to plan ahead.
There are some people who are exempt which are self employed with no staff, directors and some low paid earners, but you need to check the criteria nearer the time as this could change by the time 2017 comes along.
There are currently staged percentages for schemes already in place, rising to 5% for employees and 3% for employers by October 2018.
There will need to be changes to contracts of employment for every employee to take into account these new changes too.
I am sure it is not the best news to be hearing when times are still tough for a lot of people, but forewarned is better than not knowing at all.
Be prepared and plan for it in your budgets, you need to be thinking about how you will pay for it, be it pay freeze, increasing prices, or absorbing it into your normal overheads.
This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.
