Do you own property that you rent out? Have you borrowed money to buy property - expecting that the rental income will cover the cost of borrowing? Then you need to read this article NOW.
Property business owners, particularly buy-to-let landlords, have been hit with a number of quite dramatic changes in their tax status.
One of the biggest problems to many landlords who have borrowed against rental income is the gradual disallowance of tax relief for finance payments that starts this April.
Biggest Impact on Borrowers
The changes in tax relief will have the most impact on landlords who have borrowed heavily to grow their property portfolio, with a possible two-fold, and negative impact on their property business.
Firstly, if their present claims for mortgage interest and other finance charges are reducing the amount of higher rate tax they are required to pay, once the present changes are fully implemented by 2020, tax bills will increase as tax relief will be limited to the basic rate.
Secondly, if their present claims for mortgage interest and other finance charges are reducing their taxable property income, such that they pay no higher rate tax, when these charges are disallowed their taxable income will increase – possibly into the higher rate bands – and for the first time they may become higher rate tax payers. They will still get some relief for finance charges paid but only at the basic rate.
In both cases, the amount of cash generated, after tax, will reduce. If landlord’s occupancy rates fall, the loss of cash flow will be exaggerated by increased tax bills and investors may face tough choices.
To Fail to Plan is to Plan to Fail…
Planning is absolutely key. If you feel you may be affected, and have not taken professional advice so far, please get in touch with us here at Jones Harris for a no-obligation chat.
We would be delighted to both quantify the effects on your property business cash flow and to offer strategic ideas to minimise the downside consequences.
Burying your head in the sand won’t make this particular issue go away…
Impact of Local Bank Closures
The world is changing – and things that we used to do in ‘real life’ are now often done on the internet – like shopping and banking – but what difference does a loss of the high street bank make?
Well to an ordinary member of the public who is internet savvy probably not much. You can get your cash from a cash-point or at the supermarket checkout and check your balance online and even on a phone. Older people who aren’t internet savvy will obviously struggle with the closures, and unfortunately the elderly will probably be the hardest hit.
Local Bank Closures
However, as accountants and business advisors, here at Jones Harris we’re concerned with the impact of the closure of high street banks on your business – especially following the announcement that NatWest in Fleetwood, Yorkshire Bank and Yorkshire Building Society in Cleveleys and HSBC in Blackpool and Lytham are all set to close at various points during 2017.
So what can you do?
Use the internet. If you haven’t already done so, sign up for online banking. It sounds obvious, but fears of internet safety might have put you off, or structural protocols regarding who in the organisation has access to the business account. These are all issues which can be solved – don’t forget it you need any specialist advice about IT or organisational management, Jones Harris can link you up with our network of trusted professionals.
Ask customers to pay by BACS. Where you are trading with other businesses, request that they pay you by bank transfer. That way you reduce the number of cheques which your business receives and therefore the number of trips to a bank branch.
Cash Banking. This is a more difficult one. If you’re the owner of a retail business or your customers pay you in cash, you’ve not got much choice about paying it into the bank.
It might be time to invest in a good safe and a good cash-in-transit bag so that you make fewer trips to the bank with more money. Could you also recruit the assistance of a strong person to accompany you and act as a bodyguard?! Joking apart, you should always be careful about carrying cash to a bank and consider the safety of your employees in this circumstance. If you trade in large amounts of cash it might be worth considering a cash transit service.
Or, if you do have a high cash turnover, you might consider using it in different ways, for example making payments with it, or you could even look at a scheme to put a cash machine in your shop or public place, in which case the cash from your shop would be used to fill it.
Using other banks. For a member of the public, swapping banks might be a good short term solution to a branch closure – but for a business it’s just not that simple.
Local Post Office Counter
You could, however, use the services of the local Post Office – there’s still one in most towns.
The Post Office website states that “You can access your high street bank account at one of our 11,500 branches.” You can withdraw and deposit from the counter or cash machine free of charge. More information about Post Office branch banking services here
Don’t forget, if you’d like our opinion or advice on any of these areas, you’re always very welcome to get in touch with us here at Jones Harris for a no-obligation chat.
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The Cost of Fuel for Private Mileage
Because tax on private fuel provided with company cars is so high, many employers now have an arrangement whereby they no longer pay for private fuel.
If this is the case for you, you must pay back your employer for any private fuel which they pay for as part of your fuel bills - or face a tax charge (which could be quite hefty).
Consider the following example - even if you don't follow how it's calculated, note the final payment at the end!
If your private mileage is currently 560 miles a month, and you drive a 1900cc diesel engine car, the rate per mile to cover fuel charges, as quoted in the latest rates published by HMRC, is 11p per mile. Accordingly, you should repay £61.60 a month to your employer.
Based on the above example, if the vehicle’s list price when new was £25,000, and the car benefit charge rate was 26% (based on a 130g/km CO2 rating) the benefit in kind charge for the year would be £6,500.
With no repayment of private fuel, there would also be a £5,772 car fuel charge.
Both these amounts would be added to your taxable income for the year. If you were a higher rate tax payer the car fuel charge would cost you £2,308.80 a year in additional tax (£5,772 x 40%). This amounts to £192.40 per month.
If your actual private mileage proved, on average, to be 560 miles a month, you would therefore save £130.80 per month (£192.40 - £61.60) by repaying the cost of your private mileage.
You'll definitely need a calculator to work it out (or an accountant) but it is worth crunching the numbers.
Obviously, the lower your private mileage, the more likely a repayment system will save you money, but you will need to take action before the 5 April 2017.
If you'd like some advice about your own circumstances - whether that's as an employee or an employer - then by all means get in touch with us here at Jones Harris for a no-obligation chat.
Salary Sacrifice Schemes Set for the Chop
Changes are ahead to various benefit schemes - take action if you think you could be affected.
'Salary sacrifice' is a term applied to benefits taken in place of salary. In many respects these benefits provide you with a higher “take home” value than if the benefits were treated the same as cash income. The government are planning to curb this practice in the expectation that it will add £1bn a year to tax revenues by 2020.
No definitive list has been published yet of which benefits will be affected, but it's expected to affect:
- Mobile phones and tablets
- Car parking
- Gym membership, and possibly
- Health check-ups
There are a number of benefits that will not be affected by these changes. They are:
- Child care
- Cycle to work schemes
- Ultra-low emission cars (CO2 emissions up to 75g/km)
Benefits which were in place before April 2017 will be protected for 1 year, and arrangements in place before April 2017 for cars, accommodation and school fees will be protected for up to 4 years.
For those who contribute towards or make-good their benefits to reduce the taxable amounts, they will have until the 6 July after the tax year to do so – starting 6 July 2017. This only applies to benefits not already taxed as income through payroll.
If you are concerned that you will be affected by these changes, you should consider a review of your salary sacrifice/benefits arrangements prior to the April 2017 cut-off date.
If you are in receipt of this type of benefit and think you might be penalised when the changes come into force, Jones Harris recommends that you should check with your employer now about what the impact might be. If you've got a business and you give your employees this kind of benefit and you'd like some advice about how to continue to offer them the facility in the most tax efficient way, then by all means get in touch with us here at Jones Harris for a no-obligation chat.
When is a Hobby a Taxable Trade?
How to work out whether your hobby is in fact a business which generates taxable income
Many people have hobbies like car-booting, or crafting, or buying and selling on eBay - often you start out by attending events and then catch the bug and join in by making and doing things which could earn you a bit of extra cash.
It's surprising how much this all can add up, especially if you are particularly good at it - you might have a fantastic eye for a bargain and a knack for making money!
At some point though, if you have got that knack for turning base metal into gold, your hobby will pass over the line from a 'bit of pin money' into a regular source of income and being classed as a 'trade' - which you should be declaring to HMRC and paying tax on.
How do you know when you're running a business?
HMRC follows the guidelines below called “the badges of trade” which helps them to decide whether you're running a part-time hobby that creates an income stream, or a business that needs to be declared on an annual tax return:
1. An intention to make a profit supports trading, but by itself is not conclusive.
2. Is the asset of such a type or amount that it can only be turned to advantage by a sale? Or did it yield an income or give ‘pride of possession’, for example, a picture for personal enjoyment?
3. Transactions that are similar to those of an existing trade may themselves be trading.
4. Was the asset repaired, modified or improved to make it more easily saleable or saleable at a greater profit?
5. Was the asset sold in a way that was typical of trading organisations? Or, did it have to be sold to raise cash for an emergency?
6. Was money borrowed to buy the asset? Could the funds only be repaid by selling the asset?
7. Assets that are the subject of trade will normally, but not always, be sold quickly. If the intention is to resell an item shortly after purchase that's trading. Or if you're going to keep it indefinitely, it's much less likely.
8. An asset that is acquired by inheritance, or as a gift, is less likely to be the subject of trade.
These are some of the ways in which HMRC will decide whether or not you are running a business or passing your time on a Sunday.
One thing that will probably help you to decide whether your income should be declared is to know that from April 2017, the government is to introduce a new £1,000 allowance for property income and a £1,000 allowance for trading income.
If you've got property/rental income or your 'hobby' earns you an income below £1,000 you will no longer need to declare or pay tax on that income.
If your income is over £1000 then you do need to declare it. Don't forget that your income is the amount of profit which you've made, so take off all your expenses and the cost of buying things which you then sell to find out just how much money you've made.
If you'd like some advice just get in touch with us here at Jones Harris for a no-obligation chat. We help all kinds of individuals and businesses large and small with their accounts and financial queries, and we're sure to be able to help you.
Tax and your Home
Do you use your home to make money? For example renting a room, or do you work from home? Have a look at what you can do tax free - and what you have to pay tax on.
If you use your home for business purposes, rent out parts of it while you live there or if you rent out your home while you live elsewhere, there might be tax consequences that you're best knowing about before you put your plans into action.
Use of home for business purposes
If the amount of space you use is limited to say one room, and if there is a duality of use (for example you may have a home office in the corner of a spare bedroom or your office may double as a hobbies room), then you should be able to charge your business a nominal amount to cover the “running costs” of the space occupied. You need to restrict your claim to so many hours a day, to allow for the dual use of the room.
If you've got this kind of circumstance it shouldn't cause you any personal tax issues as long as you make a realistic claim for costs and make a discount for private use.
It will also be unlikely that you will have to pay any Capital Gains Tax when you sell your home.
Renting a room
From 6 April 2016, you can let out a room or rooms in your house as furnished accommodation (not an office) and as long as the yearly rent that you receive doesn't exceed £7,500 per year (prior to 6 April 2016 the annual limit was £4,250) you won't have to pay Income Tax. If the rent is more than the limit, then only the excess is taxable.
If two people are entitled to share the rental income, these annual tax-free limits are halved.
Longer term lets when you're not in residence
If you let out your home, for example if you work abroad for a period of time, you will have to pay Income Tax on your rental profits.
When you subsequently sell your home you might also have to pay Capital Gains Tax. When you sell, a proportion of any gain that relates to the period (or periods) of letting may be taxable.
However, provided the property was your home at some time, you can claim reliefs, including principal private residence relief for the time it was your main residence, plus the last 18 months of ownership. Also, there may be some “lettings relief” relating to periods your home was let as above.
Homeowners’ private residence relief (for CGT purposes) is worth protecting. If you are considering any financial transaction concerning your home that you are concerned may have Income Tax of CGT implications, please get in touch with us here at Jones Harris.
It's always better to sound out professional advice before the event… whatever the nature of your query we're always happy to talk to you first.
A Minute with your Tax Code
We've published articles before, advising that people should check that their tax codes are correct, and with the revelation that around 3.2m are incorrect, you can see how it really could be you.
A report from the National Audit Office revealed that between April 14 and October 2015, 3.2m people were issued with an incorrect tax code – which a minute or two of checking could pick up. Some of these inaccuracies will mean that people have a nice surprise ahead in the form of a refund. However, if you are in the ‘nasty shock’ category after having paid too little tax, it’s best to know about it sooner rather than later and reduce the size of the back payment…
Don’t think you’ll get away with it if you owe HMRC money through a mistake which they’ve made in your tax code as it’s your legal responsibility to make sure that you pay the right amount of tax. If you owe them less than £50 they may write it off. An amount of less than £3000 would be collected via your pay packet with a tax code adjustment. If you are one of the really unlucky ones (or have had your head in the sand for a very long time) and you owe HMRC more than £3000 you should ask for a repayment plan.
Where you or your employees rarely change jobs and have steady personal circumstances, the tax code will tick along from year to year, requiring little more than a cursory glance to make sure that the figures are consistent.
However, errors can be common when people change jobs or maybe do more than one job, after retirement if some employment continues or where a personal pension is received, if there are other personal circumstances where additional payments are collected through your tax code, or even if someone has just typed in the wrong figures.
If you operate a payroll department, the accuracy of the deductions which you make are based on the accuracy of the employees tax code - so while you will have knowledge about who is in receipt of work based benefits like company cars, it's also important that they check other aspects of their code which you wouldn't have knowledge about. Otherwise, small errors in the digits of the tax code can lead to significant errors in the money which they pay.
The Money Saving Expert website has a free, handy online tax code checker which gives you an overview of whether your tax code is likely to be right for your age, earnings and personal circumstances. It’s worth having a look at your own, and sending out a reminder to employees to have a look at theirs.
One final word on our favourite subject about scams – HMRC will never send you an email to say that you are due a tax rebate, so any which you do receive will be a scam. Normal rules apply – whatever you do, don’t click on any attachments or links, and under no circumstances send a reply or any personal details.
Here at Jones Harris we like to make sure that you are kept up to speed with different kinds of business and financial advice. If you aren’t already a client and you've got a business, or maybe you are retired but have complicated financial affairs, in which case why don't you get in touch for a no-obligation chat?
Cyber crime is now the biggest form of crime in the UK.
How to check if you've fallen foul of data breaches, with advice from Jones Harris Accountants.
We could write an article about online fraud every week, as an astonishing variety of scams and downright horrible offences are reported daily. It’s not surprising, as cyber-crime is now the biggest source of crime in the UK with 6 million people affected last year alone – that’s one in 10 of us.
However, in the same way that you would instinctively try to protect yourself and your business in real life, some basic, sensible steps will help you to avoid being the next easy target on the internet.
You can start by looking to see if you’ve been exposed to one of the data breaches that are reported from time to time. Even though large companies spend huge fortunes on data security sometimes it’s just not enough, and some of the biggest names have been targeted, including LinkedIn.
Go to the HaveIBeenPwned website and enter the email address that you use to log in with.
The site has been checked out by Money Saving Expert and Troy Hunt, the chap who set the site up, has been recognised by Microsoft for his work.
It won't tell you everywhere that your data might have been stolen from, but it's another stark reminder that we all need to be vigilant and remain as aware and safe online as we would do in real life. You wouldn't open your door and invite someone dodgy in, so don't do the equivalent online.
If your email address has been compromised, you should:
1. Change your passwords
It's standard practice to use different passwords on different accounts and to change them every so often. DON'T use the same one for everything - use a system that works for you to keep track of which password is for which site. If you think that your own password security is lax you should read up about it on the internet and/or take further advice to keep yourself safe.
2. If your financial details have been exposed, check for fraud
Check all of your bank statements regularly and ensure that you recognise all of the transactions on there. It's a good habit to get into - you can get statements with online banking, from the cash-point, in the bank or through the post.
3. Watch out for Spam emails
The general rule of thumb is to be suspicious and if something arrives in your inbox with attachments or links, just don't click on them. Always make sure that you've got up to date anti-virus software on all of your computers too. If in doubt, take the advice of an expert.
4. Never disclose details
If you are contacted by telephone or email by people requesting your bank details or passwords never give them out without rigorously checking first. It's a known ruse that in the wake of data breaches that scammers will do this.
Remember the rule: you'd never cough up your password to someone who knocked on the door and asked for it, so don't do it online/on the phone.
The Money Saving Expert website is full of useful information and tips if you want to read up on scams, data security and sensible tips. You can also read more about the HaveIBeenPwned website.
If you're an individual and would like some help with internet security you could pop into your local library for some help and advice. They have volunteers on hand who can give you assistance.
If you're also running a business you might want to have a chat with our nice people here at Jones Harris. We appreciate that you have to be an expert at so many things when you’re running a small business - and that there aren't enough hours in a day for the amount of multi-tasking that you have to do.
That’s why we share a broad range of business information through our website and newsletter, and we can always provide more detailed advice or sign post you to a specialist for further support in any particular area. Just get in touch for a no-obligation chat.
Get the latest updates
Make sure that you're following our website and sign up for the Jones Harris enewsletter here
Don't forget we're also on Twitter @JHAccountants and you can follow our LinkedIn business page, Jones Harris Accountants
Have you got an Old Pension Pot?
Have you got some money stowed away in a pension that you've lost track of?
Here's another top financial tip from the repository of useful information at Jones Harris - a quick search which could make you that little bit richer in old age.
It's estimated that four out of five people have lost track of at least one pension pot - at that rate it could very well be you!
According to the Department for Work and Pensions (DWP) there's a good £400 MILLION floating about in unclaimed pensions and the new Pension Tracing Service enables you to track down your share of it reasonably easily.
Previously, if you wanted to check, it was a more complicated system that involved completing and submitting paperwork and then a wait for a reply. The new system lets you track down the administrators of your lost pensions online and immediately points you in the right direction of what to do next. Although it won't tell you whether you do have a pension or its value, it will tell you who to check with.
There are full details of the service and how to use it on the Pension Tracing Service
Did you really start a business because you wanted to keep accounts?
If the answer to that question is yes, your business has to be either in bookkeeping or accountancy!
However, if yours is one of the 4.1 million UK businesses which don’t employ people it’s likely that you started a business for freedom, flexibility, the ability to float your own boat, do things your way, work around the kids/granny/dog… but not to sit for hours on end each week, keeping accounts and doing paperwork!
Whether you want your business to grow at the speed of light, or whether you just want to earn enough to live, good bookkeeping and accounts are vital to making sure that you are actually on the right path and making a profit for your efforts.
Not only does good paperwork enable you to complete your year-end returns to the tax man efficiently, accurately and without penalty, it also allows you to follow and understand the health of your business, flagging up any timely adjustments to products/pricing/procedures which you need to make.
How much is your time worth?
You should know how much your time is worth when it comes to working out how much to charge your customers. Have you ever looked at how much time it takes you to do your books and worked out how much your time is costing you?
How much would you be willing to pay to release the time you spend doing your bookkeeping to get your evenings or weekends back? Or how much more could you earn if they were able to use the time released to concentrate on the parts of your business which generates income?
As much or as little help as you need
Here at Jones Harris we can provide a seamless bookkeeping-service from receipt to tax return and everything else in between.
How much support you choose to access is entirely up to you - with cloud based software that our bookkeepers are now using, you can still keep abreast of your bank balances, who you owe money to – and perhaps more importantly who owes money to you!
We can also remove the stress of VAT returns and payroll, all carried out under one roof with named individuals to speak to who are familiar with your business. It’s likely that you haven’t had such detailed information before, and it could make a significant difference to the health of your business.
Not as expensive as you might think
With online cloud based software starting from as little as £10 a month, and our Sole Trader Compliance service from just £35 a month (which includes calculating and submitting your self-assessment tax return) you’ll get the experience and ability of a large firm of accountants from Jones Harris without paying an eye watering price. And you can pay by monthly direct debit too and spread the cost.
Why don’t you get in touch for a no-obligation chat about Jones Harris could help your business? (If you do, please mention that you saw it on this website!)
Child Tax Credits – Register or Lose Out
Are you one of the million people who could be claiming working or child tax credit but aren't?
You might have heard about Universal Credit which has already been phased in for single, unemployed people, but with thresholds much higher than you might have expected, you're being advised to act NOW to investigate whether you would be eligible for working or child tax credits – before universal credit is phased in for everyone else.
Universal credit will be paid to all benefit claimants by June 2018 and will replace all existing forms of social security including working and child tax credit.
More than a million people in England are currently eligible for it but aren’t currently claiming – you should check now and apply now if you think you might be eligible, or risk losing out when universal credit does come into force.
Why Should You Claim Now?
Well for a start if you are entitled to the money you should claim it.
If you are claiming working or child tax credit when the new universal credit is fully introduced, ‘transitional protection’ means that you will stay on that rate until your circumstances change, so you won't be worse off.
However, if your universal credit turns out to be higher you will move to the higher payment and be better off, so it is a win-win situation.
The only way to lose is to make your initial claim AFTER universal payments have been introduced, and then you'll get whatever the new system says you should get.
Who Might be Eligible?
More than a million people in England are currently eligible for working or child tax credits but aren't currently claiming them. Including:
- Parents with household income up to £47,000 or £73,000 if you're paying for childcare for four children.
- A working couple with household income under £18,000 even without children
- Single people without children and earning less than £13,000 a year
There's a full explanation on the Money Saving Expert Website here, along with a calculator so that you can work out whether you are entitled to claim. There’s a whole raft of factors which affect whether or not you are entitled to claim, so you do need to check with the online calculator before you apply.
If you have a business and could make good use ofthe advice of a good accountant, by all means get in touch with us at Jones Harris for a no-obligation chat.
Financial News in Brief
Increase in Stamp Duty on Additional Properties
From 1 April 2016, anyone who purchases additional residential properties, second homes or buy-to-let properties will pay an additional 3 percentage points above the existing Stamp Duty (SDLT) rates. Find out more here
Reduction in Capital Gains Tax Rates
The Budget didn't bring all bad news - CGT rates have been significantly reduced from April 2016. Find out more here
Lifetime Individual Savings Account (Lifetime ISA)
Get into the habit now, and be ready to start saving for your future with a new Lifetime ISA. More here
Married Tax Allowance
Did you know that you can gain an extra £212 a year if you are a) married (of course) and b) qualify for Married Tax Allowance.
Here at Jones Harris we discovered that 3.6 million couples nationally are still missing out on claiming this benefit, so logically there must be a lot of you here on the Fylde Coast who could be so much better off a year.
To claim the Married Tax Allowance, you must be married or in a civil partnership, and both born after 6 April 1935.
One of you should be earning less than £10,600 a year (not including tax free savings interest), and the other one should be a basic rate tax payer (sorry, higher rate tax payers don't qualify).
The partner who is on the lower income can transfer £1060 of their unused allowance to the higher earner, thereby increasing the amount which they can earn before tax by an extra £1016 a year. That equates to an extra £212 cash in the hand.
You can take advantage of the scheme by applying direct to HMRC.
You can apply online at this link https://www.gov.uk/marriage-allowance or over the phone on 0300 200 3300. You can apply at any time during the tax year, and retrospectively for the 2015/16 tax year.
You will need both your own and your partners National Insurance numbers, and the transferring partner will also have to confirm their identity with bank information or details from a P60.
There's a full round-up of all the details of the scheme, complexities, how to apply and faq's on the Money Saving Expert website at this link
Vehicle Excise Duty changes from April 2017
Generous car tax rates for low CO2 vehicles are set to largely disappear across the board, which will affect many drivers.
Volkswagen cars with the EA189, 2.0 litre TDI engine are affected by the emissions rigging software, which appeared in a number of Volkswagen Group cars.
According to The Guardian, the problem engines were also fitted to cars in the wider VAG group – including Audi, Seat and Skoda. Among the big sellers are the VW Golf and Passat, Audi A4, Skoda Octavia.
If you drive one of these brands of car you can read The Guardian article about what might happen next, in full here.
More Vehicle Excise Duty Changes on the Horizon
If you are concerned about the annual cost of a VED license with generous car tax rates for low CO2 vehicles due to be phased out, you may want to consider your car replacement options before the new VED regime starts in April 2017. It will apply to all cars first registered after 1 April 2017.
From this date, VED will still be based on CO2 emissions, but the present generous rates for low CO2 vehicles will largely disappear. The only exception is zero emission vehicles which will continue to have a £0 charge.
VED will be split into two bands: a starter band, which will apply for the first year, and a standard rate, which will apply to subsequent years of ownership.
The rates gradually increase for the initial starter band. For emissions between 1 to 50g/km the starter rate is just £10. At the other extreme, cars with a CO2 rating in excess of 255g/km, the starter rate is a significant £2,000.
Owners of all vehicles with a CO2 emission rate in excess of 0g/km will then pay an annual, standard rate of £140 for the second and subsequent years of ownership.
Finally, cars with a list price above £40,000 will pay a supplement of £310 a year for the first 5 years at which the standard rate is applied. i.e. the annual standard rate for these vehicles will be £450 not £140.
This could create a significant increase on your car tax for the family car and a potentially big increase for businesses with fleets.
Pension Auto Enrolment - Here for Everyone but Who’s Exempt?
If you work alone, or in a small family business you may be questioning whether your own company is exempt from auto-enrolment for workplace pensions.
With new legislation having come into force, it’s now the duty of all employers with at least one employee between 22 and state pension age, earning £10,000 a year or more, to auto-enrol all staff into a workplace pension scheme if they aren’t already in one.
Notification has been issued in stages, and letters from the Pensions Regulator are currently advising employers with fewer than 30 employees that the very latest date by which they must be compliant is April 2017 where a PAYE scheme was in place in March 2012.
If you work alone, or in a small family business you may be questioning whether your own company is exempt.
TPR has stated that you will not have any duties if the only people working for you are:
• you as the sole director, or
• a number of directors, none of whom has an employment contract, or
• a number of directors, only one of whom has an employment contract (N.B. automatic enrolment will apply if more than one director has a contract of employment).
You, or your agent, must write to TPR to advise them of your status and get their acknowledgement in writing that you do not have any duties under this legislation. You must also advise them should your circumstances change.
Please don’t bury your head in the sand and try to ignore auto-enrolment. There are fixed penalties for non-compliance along with daily penalties depending on the number of employees.
Of course here at Jones Harris we'd be more than happy to provide you with guidance on auto enrolment, simply get in touch for a no-obligation chat.
Important Warning on Pension Scams
Here at Jones Harris we’ve already provided some basic information to our clients about the new changes to pension rules and there will be more to come.
New Government guidelines allow savers over the age of 55 the opportunity to release up to 25% of their pension savings as a tax free, lump sum. The remainder of the fund can be released; however, this will be taxed according to their income tax rate.
As you might expect, the changes are not only giving individuals greater flexibility, they’re also opening up a new opportunities for those who are unscrupulous and this week Blackpool Council is the latest organisation warning the community to be on their guard against possible pension liberation scams.
If it sounds to good to be true... it probably is
Victims are often approached either by cold-calling over the telephone or door-to- door, where insistent advisers may make reference to catchy slogans such as “legal loopholes” or “investment opportunities” in order to encourage victims into transferring their pension fund. Most of these companies are based outside of the UK, meaning the way they operate is not subject to the UK’s jurisdiction and, as such, the risk of being scammed out of most, if not all of the fund is increased.
Scammers lure savers by claiming they can release funds before the recipient is 55 years of age. Such practices are illegal and the person involved may be left liable for hefty tax bills, amounting to over half the total amount. Consumer protection experts are concerned that vulnerable people may be targeted and left without money to protect them after retirement.
Avoid cold callers in person or on the phone
Tim Coglan, Blackpool Council’s Head of Public Protection said “People should never even entertain cold-callers and remember that Blackpool is a no-cold calling zone.
“If you are considering any changes to your pension use one of the many Independent Financial Advisors who can offer impartial, independent advice on such matters, but we still advise people to check the legitimacy of the company they are using with the Financial Conduct Authority.
“We do not want to see anyone struggle during their retirement so it’s important for people to be extremely careful and follow this advice.”
Normally, pension unlocking is only available to those under the age of 55 in extreme circumstances such as terminal illness. It is perfectly legal for those over the age of 55. However, this will almost inevitably result in having less income during retirement.
If you think that you or someone you know has been targeted by a scam, or require any further information, contact Action Fraud on 0300 123 2040 and specific questions regarding pensions can be directed to the Pensions Advisory Service on 0300 123 1047.
Ask for help
Of course if you would like Jones Harris to help with your pension arrangements, or any of your other financial matters, then all you need to do is get in touch with us for a no-obligation chat.