Trusts

Choosing the right structures to protect assets and give your family lasting benefits

One of the most effective ways you can manage your estate planning is through setting up a trust. The structures into which you can transfer your assets can have lasting consequences for you and your family, so it is important that you obtain professional financial advice as the right structures can protect assets and give your family lasting benefits.

A trust is a legal arrangement where one or more trustees are made legally responsible for assets. The assets – such as land, money, buildings, shares or even antiques – are placed in trust for the benefit of one or more beneficiaries. They are not the sole domain of the super-rich. Trusts are incredibly useful and flexible devices that people employ for all sorts of different purposes, including Inheritance Tax planning.

Simplest form
In its simplest form, a trust is just a legal mechanism for separating the ownership of an asset into two parts: the ‘legal’ ownership (or title to the asset) on the one hand, and the ‘beneficial’ ownership on the other hand.

It is in the course of Inheritance Tax planning, though, that people are most likely to come face to face with trusts and seek to get an understanding of what they are and how they work. Their use is widespread and, despite some recent adverse changes in tax law, they remain an important tool in estate planning.

More flexibility
The trust is created when the settlor transfers assets to the trustees, who hold the assets in trust for the beneficiaries. The main reason a person would put assets into a trust rather than make an outright gift is that trusts offer far more flexibility than outright gifts.

The trustees are responsible for managing the trust and carrying out the wishes of the person who has put the assets into trust (the settlor). The settlor’s wishes for the trust are usually written in their Will or given in a legal document called the trust deed.

The purpose of a trust

Trusts may be set up for a number of reasons, for example:

•    To control and protect family assets
•    When someone is too young to handle their affairs
•    When someone can’t handle their affairs because they are incapacitated
•    To pass on money or property while you are still alive
•    To pass on money or assets when you die under the terms of your Will – known as a ‘Will trust’
•    Under the rules of inheritance that apply when someone dies without leaving a valid Will (England and Wales only)

There are several types of UK family trusts, and each type of trust may be taxed differently. There are other types of non-family trusts. These are set up for many reasons, for example, to operate as a charity or to provide a means for employers to create a pension scheme for their staff.

When you might have to pay Inheritance Tax on your trust

There are four main situations when Inheritance Tax may be due on trusts:

•    When assets are transferred – or settled – into a trust
•    When a trust reaches a ten-year anniversary of when it was set up
•    When assets are transferred out of a trust or the trust comes to an end
•    When someone dies and a trust is involved when sorting out their estate

Trust solutions for managing wealth
We can advise you on a range of different trust solutions, each designed with a particular purpose in mind.

Some types of trust are treated differently for Inheritance Tax purposes.

Bare trusts
These are where the assets in a trust are held in the name of a trustee but go directly to the beneficiary, who has a right to both the assets and income of the trust.
Transfers into a bare trust may also be exempt from Inheritance Tax, as long as the person making the transfer survives for seven years after making the transfer.

Interest in possession trusts
These are trusts where the beneficiary is entitled to trust income as it’s produced – this is called their ‘interest in possession’.
On assets transferred into this type of trust before 22 March 2006, there’s no Inheritance Tax to pay.
On assets transferred on or after 22 March 2006, the 10-yearly Inheritance Tax charge may be due.
During the life of the trust, there’s no Inheritance Tax to pay as long as the asset stays in the trust and remains the ‘interest’ of the beneficiary.

Between 22 March 2006 and 5 October 2008:

•    Beneficiaries of an interest in possession trust could pass on their interest in possession to other beneficiaries, like their children
•    This was called making a ‘transitional serial interest’
•    There’s no Inheritance Tax to pay in this situation

From 5 October 2008:

•    Beneficiaries of an interest in possession trust can’t pass their interest on as a transitional serial interest
•    If an interest is transferred after this date, there may be a charge of 20% and a 10-yearly Inheritance Tax charge will be payable unless it’s a disabled trust

If you inherit an interest in possession trust from someone who has died, there’s no Inheritance Tax at the 10 year anniversary. Instead, 40% tax will be due when you die.

Information is based on our current understanding of taxation legislation and regulations. Tax assumptions are subject to statutory change and the value of tax relief (if any) will depend upon your individual circumstances. The Financial Conduct Authority does not regulate Taxation and Trust Advice or Will Writing. The value of your investment can go down as well as up and you may not get back the full amount invested. Levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor. The treatment of Trusts for tax purposes is the same throughout the United Kingdom. However, Scottish law on Trusts and the terms used in relation to Trusts in Scotland are different from the laws of England and Wales and Northern Ireland. This information does not constitute advice and should not be used as the basis of any financial decision, nor should it be treated as a recommendation for any product. Although endeavours have been made to provide accurate and timely information, Professional Practice Services cannot guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough review of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions.

Professional financial advice you can trust
Do you need someone to manage money for you – for example, to use it to help someone after your death, or to pay for your care later on? One way to do this is to put the money into a trust. To discuss your requirements, please contact us for more information – we look forward to hearing from you.

Call our friendly, knowledgeable team for a confidential, no obligation discussion:
01527 880345
 

Visit our Website at:
www.pps-vet.co.uk
 

Professional Practice Services is a Veterinary Business Consultancy and Independent Financial Advisory Firm. Professional Practice Services is authorised and regulated by the Financial Conduct Authority
The Financial Conduct Authority does not regulate finance, will writing, commercial lending, taxation or trust advice.
Article Reference: PPS062014.GM23

Inheritance Tax Matters

Not quite the ‘voluntary’ tax it was once considered

Effective estate planning is about getting the right balance between maintaining access to your money when you need it and saving tax. This is because, in general, the more tax efficient a solution is, the less access you have to your assets. Safeguarding your own financial future is very important, and giving too much away could put this at risk.

Inheritance Tax is the tax that is paid on your estate, chargeable at a current rate of 40%, and is now perhaps not quite the ‘voluntary’ tax it was once considered. However, careful planning to ensure you take advantage of all the allowances and reliefs available could save you a lot of money relatively easily. It’s never too early to start.

Broadly speaking, this is a tax on everything you own at the time of your death, less what you owe. It’s also sometimes payable on assets you may have given away during your lifetime. Assets include property, possessions, money and investments, and life insurance policies not written in an appropriate trust. One thing is certain: careful planning is required to protect your wealth from a potential Inheritance Tax liability.

Not everyone pays Inheritance Tax on their death. It only applies if the taxable value of your estate when you die (including your share of any jointly owned assets and assets held in some types of trusts) is above the current £325,000 threshold (frozen until 6 April 2017 to 5 April 2018) or ‘Nil Rate Band’. It is only payable on the excess above this amount.

Inheritance Tax exemptions and reliefs

Sometimes, even if your estate is over the threshold, you can pass on assets without having to pay Inheritance Tax. Examples include:

•    Spouse or registered civil partner exemption: Your estate usually doesn’t owe Inheritance Tax on anything you leave to a spouse or registered civil partner who has their permanent home in the UK – nor on gifts you make to them in your lifetime – even if the amount is over the threshold
•    Charity exemption: Any gifts you make to a qualifying charity – during your lifetime or in your Will – will be exempt from Inheritance Tax
•    Potentially exempt transfers: If you survive for seven years after making a gift to someone, the gift is generally exempt from Inheritance Tax, no matter what the value
•    Annual exemption: You can give up to £3,000 away each year, either as a single gift or as several gifts adding up to that amount – you can also use your unused allowance from the previous year, but you use the current year’s allowance first
•    Small gift exemption: You can make small gifts of up to £250 to as many individuals as you like tax-free
•    Wedding and registered civil partnership gifts: Gifts to someone getting married or registering a civil partnership are exempt up to a certain amount
•    Business, Woodland, Heritage and Farm Relief: If the deceased owned a business, farm, woodland or National Heritage property, some relief from Inheritance Tax may be available

Transfers of assets into most trusts and companies will become subject to an immediate Inheritance Tax charge if they exceed the Inheritance Tax threshold (taking into account the previous seven years’ chargeable gifts and transfers).

In addition, transfers of money or property into most trusts are also subject to an immediate Inheritance Tax charge on values that exceed the Inheritance Tax threshold. Tax is also payable ten-yearly on the value of trust assets above the threshold; however, certain trusts are exempt from these rules.

Gifts and transfers made in the previous seven years
In order to work out whether the current Inheritance Tax threshold of £325,000 has been exceeded on a transfer, you need to take into account all chargeable (non-exempt, including potentially exempt) gifts and transfers made in the previous seven years. If a transfer takes you over the nil rate band, Inheritance Tax is payable at 20% on the excess.

Information is based on our current understanding of taxation legislation and regulations. Tax assumptions are subject to statutory change and the value of tax relief (if any) will depend upon your individual circumstances. The Financial Conduct Authority does not regulate Taxation and Trust Advice or Will Writing. The value of your investment can go down as well as up and you may not get back the full amount invested. Levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor. This information does not constitute advice and should not be used as the basis of any financial decision, nor should it be treated as a recommendation for any product. Although endeavours have been made to provide accurate and timely information, Professional Practice Services cannot guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough review of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions.

Professional financial advice you can trust
We will assess your situation and provide advice on a number of tax migration solutions bespoke estate protection planning strategies that are tailored to suit you and your circumstances. To review your particular situation, please contact us for further information. Don’t leave it to chance.

Call our friendly, knowledgeable team for a confidential, no obligation discussion:
01527 880345
 

Visit our Website at:
www.pps-vet.co.uk
 

Professional Practice Services is a Veterinary Business Consultancy and Independent Financial Advisory Firm. Professional Practice Services is authorised and regulated by the Financial Conduct Authority
The Financial Conduct Authority does not regulate finance, will writing, commercial lending, taxation or trust advice.
Article Reference: PPS062014.GM21

Professional Practice Services at London Vet Show 2014 - Stand A21

 

Practice Makes Perfect!

Find out how we can help you and your practice realise your true potential. Come and speak with the PPS Partners at London Vet Show Stand A21, Olympia Grand, 20-21 November 2014 

Established in 1998, PPS now represents more than 2,500 veterinary practices and veterinary practitioners across the UK. We take pride in our reputation as Financial Services specialists to the Veterinary sector and value the strong long-term relationships we forge with clients.

As proud supporters, Professional Practice Services are back again for the two day event in November, bringing with us a host of information and resources to help you take back control of your financial future.

 

Dr Paul Jackson, Partner, said 'PPS is the only Financial Services specialist in the UK working exclusively for the Veterinary sector. We model ourselves on being an extension of your business and an integral strategic partner helping you to achieve your life goals – ultimately our success is dependent on yours.'

Visit our stand for an informal, no obligation chat on anything financial including:

·         Retirement/Succession Planning

·         Practice Finance
·         Partnership/Share Protection
·         Tax Planning
 
·         Investment/Pension and Wealth Management
·         Family Protection
·         Income Protection
·         Estate Planning
·         Mortgages

·         Employee Benefits

·         Workplace Pensions & Auto-Enrolment

·         Business Consultancy

 

Alternatively do let us know if you would like a more in depth conversation as we are offering 1-2-1 meetings throughout the Show with Amira, David, and Paul.

Visit Stand A21 to enter our prize draw to win a luxury hamper just in time for the festive season and as always we'll have our ever popular fuzzy bugs and goodies to help yourself to!

Call our friendly, knowledgeable team from a confidential, no obligation discussion:

01527 880 345

 or email us on:

enquiries@pps-vet.co.uk

 

Visit our Website at:

www.pps-vet.co.uk  

 

We'll also be tweeting throughout the show from @ppsvet

 

Professional Practice Services is authorised and regulated by the Financial Conduct  Authority. 

The Financial Conduct Authority does not regulate finance, will writing, commercial lending, taxation or trust advice

Growing your wealth over time

Choosing investment vehicles that match your feelings and preferences is the key

It may no longer be enough to simply preserve what you have today; you also have to build what you will need for tomorrow. When deciding whether to invest, it is important that any investment vehicle matches your feelings and preferences in relation to investment risk and return.

Market volatility in recent years may have left some investors feeling uncertain and many have stepped away from investing in the stock markets. But not all stocks and shares are the same. For those seeking long-term total returns, there still are some high-quality companies – at attractive prices – offering the potential to grow wealth over time.

Long-range financial goals
Diversification is a term that can be summed up with this phrase: ‘Don’t put all your eggs in one basket’. Diversification is a technique that reduces risk by allocating investments among various financial instruments, industries and other categories. It aims to maximise return by investing in different areas that would each react differently to the same event. Diversification is the most important component of reaching long-range financial goals while minimising risk.

Hence your asset allocation needs to be commensurate with your attitude to risk. Another key question to ask yourself is: ‘How comfortable would I be facing a short-term loss in order to have the opportunity to make long term gains?’ If your answer is that you are not prepared to take any risk whatsoever, then investing in the stock market is not for you.

Asset allocation
If you are going to invest, you need to be prepared to take some calculated risk in the hope of greater reward. Risk is an implicit aspect to investing: shares can fall, economic conditions can change and companies can experience varying trading fortunes.

The process of deciding what proportion of your investment portfolio should be invested in the different types of investment is called ‘asset allocation’.

Asset classes
The various asset classes come with different levels of risk (volatility of returns) and thus deliver different expected returns over the medium to long term. But, no one asset class always performs best over an investment period. Asset classes consist of a group of securities with varying degrees of risk.

There are three main asset classes:

•    Equities
•    Bonds (also referred to as fixed income)
•    Cash

Each asset class has different investment characteristics, for example, the level of risk and potential for delivering returns and performance in different market conditions

Equities
Equities (also known as ‘ordinary shares’, or ‘shares’) are issued by a public limited company and are traded on the stock market. When you invest in an equity, you buy a share in a company and become a shareholder. Equities have the potential to make you money in two ways: you can receive capital growth through increases in the share price, or you can receive income in the form of dividends. Neither of these is guaranteed, and there is always the risk that the share price will fall below the level at which you invested.

Bonds
Bonds, also referred to as fixed income securities, are issued by companies and governments as a way of raising money and are effectively an ‘I.O.U.’ Bonds provide a regular stream of income (which is normally a fixed amount) over a specified period of time and promise to return investors their capital on a set date in the future. Once bonds have been issued, they’re bought and sold between investors without the involvement of the issuer. Bonds are generally considered to offer stable returns and to be lower risk than equities – and hence deliver lower returns than equities.

Cash
Cash tends to be held within a bank account where interest can be gained. Alternatively, cash funds use their market power to get better rates of return on deposits than you would get in an ordinary bank account. They often invest in very short-term bonds known as ‘money market instruments’, which are essentially banks lending money to each other. In addition, cash funds can provide exposure to global currencies, which may not be easy to purchase on the open market and could be costly transactions.

Different characteristics for risk
These asset classes have different characteristics for risk. When you are young you may want to invest in assets with a higher potential for growth but greater risk, because you have the time to benefit from their long-term growth. As you get closer to retirement you may want to choose more conservative investments that are steadier in both risk and return.

There is a wide variety of different asset classes available to invest in and commensurate risks attached to each one. While these implicit risks cannot be avoided, they can be mitigated as part of the overall investment portfolio by diversifying.

Different ‘styles’ of investing
Some assets are said to be ‘negatively correlated’, for instance, bonds and property often behave in a contrarian way to equities by offering lower, but less volatile, returns. This provides a ‘safety net’ by diversifying many of the risks associated with reliance upon one particular asset. It is also important to diversify across different ‘styles’ of investing, such as growth or value investing, as well as across different sizes of companies, different sectors and different geographic regions.

Growth stocks are held as investors believe their value is likely to grow significantly over the long term, whereas value shares are held because they are regarded as being cheaper than the intrinsic worth of the companies in which they represent a stake. By mixing styles that can out- or under-perform under different economic conditions, the overall risk rating of the investment portfolio is reduced. Picking the right combination of these depends on your risk profile, so it’s essential to seek professional advice to ensure that your investment portfolio is commensurate with your attitude to investment risk.

A ‘paper loss’
The important thing to remember with investments is that even if your investment goes down, you will only actually make a loss if you cash it in at that time. When you see your investment value fall, this is known as a ‘paper loss’ as it is not a real loss until you sell.

If you are going to invest, you need to be prepared to take some risk and to see at least some fall in the value of your investment.

While all investments carry an element of risk, the amount of risk you take directly affects any potential returns and losses. Generally speaking, if there is less risk to your investment, your money will grow more slowly, and with more risk, your investment may fluctuate more.

Currency risk
You should also be aware of currency risk. Currencies (for example, sterling, euros, dollars and yen) move in relation to one another. If you are putting your money into investments in another country, then their value will move up and down in line with currency changes as well as the normal share price movements.
Another consideration is the risk of inflation. Inflation means that you will need more money in the future to buy the same things as now. When investing, therefore, beating inflation is an important aim. Investing in cash may not beat inflation over the long term.

Professional financial advice you can trust
Our goal is to help you grow your wealth even in difficult market conditions. The objective of our advisory approach is to ensure that you find the right financial solutions for your situation and to provide you with full access to our investment expertise. To discuss your requirements, please contact us.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of and reliefs from taxation are subject to change. Tax treatment is based on individual circumstances. The value of investments and the income from them can go down as well as up and investors may not get back the amount invested. This information does not constitute investment advice and should not be used as the basis of any investment decision, nor should it be treated as a recommendation for any investment. Although endeavours have been made to provide accurate and timely information, Professional Practice Services cannot guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough review of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions.

Call our friendly, knowledgeable team for a confidential, no obligation discussion:
01527 880345
 

Visit our Website at:
www.pps-vet.co.uk
 

Professional Practice Services is a Veterinary Business Consultancy and Independent Financial Advisory Firm. Professional Practice Services is authorised and regulated by the Financial Conduct Authority
The Financial Conduct Authority does not regulate finance, will writing, commercial lending, taxation or trust advice.

PPS Group at the London Vet Show 2013

Professional Practice Services and PPS GI are pleased to confirm we will be exhibiting again this year at the London Vet Show held at Olympia, London on 21st and 22nd November 2013.

 

Please do come and visit us at Stand A31 for an informal chat about your Practice needs.

 

Alternatively do let us know if you would like a more in depth conversation as we are offering 1-2-1 meetings throughout the Show with Amira, David, Laura and Paul.

Your Success is Our Business
The PPS Group provide personal expert financial advice and consultancy services exclusively to the veterinary profession.  We've been providing successful financial solutions since 1997. Our team of experienced and knowledgeable staff can guide you through a sometimes unexpected financial minefield.

With personal visits to your practice, no call centres or push button phones, you can speak directly to the people who matter.

Financial Services through Professional Practice Services

• Independent Financial Advice for Practice Owners and Staff
• Practice Finance
• Consultancy Services
• Business Protection
• Employee Benefits and Workplace Pensions

General Insurance through PPS GI

• Market Leading Surgery Insurance
• Locum & Group Personal Accident Insurance
• Private Medical Insurance
• Motor Fleet & Home Insurance
• Veterinary Professional Indemnity Insurance
• Equipment Financing

Call our friendly, knowledgeable team from a confidential, no obligation discussion:

01527 880345

 

Or for general insurance enquiries please call:

01527 832394

 

Visit our Website at:

www.pps-vet.co.uk

The PPS Group relates to Professional Practice Services, our Business Consultancy and Independent Financial Advisory arm, and PPS GI, our specialist insurance brokerage.

PPS Group is a trading name of Professional Practice Services which is authorised and regulated by the Financial Conduct Authority.  PPS GI is an appointed representative of Professional Practice Services, which is authorised and regulated by the Financial Conduct Authority.

The Financial Conduct Authority does not regulate finance, will writing, commercial lending, taxation or trust advice

Bringing Clarity to Pensions

The Lifetime Allowance - Fixed Protection 2014 explained

Before we go into the details of Fixed Protection 2014 it’s important to understand the background and terminology involved.

The lifetime allowance (often referred to as LTA) is the maximum amount of pension saving you can build up over your working life. If you build up pension savings worth more than the lifetime allowance you'll pay a tax charge on the excess when you start to draw your benefits.

The lifetime allowance tax charge is paid on any excess over the LTA. The rate depends on how this excess is paid to you. If the amount over the lifetime allowance is paid as:

·         A lump sum - the rate is 55%

·         A pension - the rate is 25% (with the taxed amount also being subject to income tax at your highest applicable rate)

The lifetime allowance has been as much as £1.8m in 2010-11 and 2011-12, but it reduced to £1.5m in April 2012 and is set to fall to £1.25m for 2014-15.

When the lifetime allowance was first introduced, and when it was later reduced, individuals who thought they might be affected were able to apply for primary or enhanced protection or Fixed Protection 2012 (either to keep their LTA at a higher level or to fully protect their benefits in the case of enhanced protection).

Similar arrangements are in place for next year’s reduction in LTA – these are called Fixed Protection 2014 (FP14) and Individual Protection 2014 (IP14). You can’t have FP14 or IP14 if you already have primary or enhanced protection.

Fixed Protection 2014

Individuals who’ve already built up tax-relieved pension rights of more than £1.25m, or who think they may have more than that by the time they take their pension, can apply for FP14.

If you want to apply, you must notify HMRC by 5 April 2014. Individuals with FP14 will be entitled to a personal LTA of the greater of £1.5m and the standard LTA (which will be £1.25m from 6th April 2014).

In order to maintain FP14 individuals must not:

·         Have a contribution paid to any of their money purchase schemes (examples include a SIPP, Personal Pension or Stakeholder Pension)

·         Build up new benefits in a defined benefits scheme (such as Universities Superannuation Scheme) above a set amount

·         Join a new pension scheme, unless you are only transferring pension savings from one of your existing schemes into the new scheme

·         Start saving in a new pension pot either under a new or an existing pension scheme, including Auto Enrolment (see overleaf)

Individual Protection 2014 (IP14)

IP14 is an additional protection which is expected to be introduced. To be eligible for Individual Protection 2014 individuals must have already built up tax-relieved pension rights of over £1.25m by 5 April 2014.

Unlike Fixed Protection, people who secure Individual Protection 2014 will be allowed to continue pension saving after 5th April 2014 while protecting tax relieved pension savings that have been accrued up to that date.

Individual Protection 14 will enable individuals to protect the value of their savings as long as they are above £1.25m but subject to a maximum of £1.5m. However any savings accrued above £1.5m will be subject to the lifetime allowance tax charge.

Applying for FP14 and IP14

The Government intends to allow a three-year period from 5th April 2014 for people to apply for Individual Protection 2014 with the final date for applications being 5th April 2017.

However, if you’re applying for Fixed Protection 2014 you’ll need to apply by 5th April 2014 at the very latest.

Application forms for both types of protection will be made available on the HMRC website.

Risks for Active Defined Benefit scheme members (Fixed Protection or Enhanced Protection)

Examples of Defined Benefits Schemes include the Universities Superannuation Scheme (USS). The problem with defined benefit accrual is that it often happens in the background. You might not be aware that a pay rise, or the addition of another year’s service, could take you over the allowed accrual rate. And by the time it has happened, the damage is done and your protection will have been lost.

The calculations to work out the acceptable level of DB scheme accrual are quite complex, so if you’re an active member of a defined benefit scheme you should seek advice as soon as possible to establish whether you’re likely to be affected.

Auto-Enrolment Risk

Those who secure Fixed Protection 2014, or who already have Enhanced Protection or Fixed Protection 2012, must take great care to ensure that they opt-out of any pension scheme into which they’re automatically enrolled.  This must be done within the opt-out window.

Failure to do so would breach the fourth bullet point above and consequently the loss of Fixed or Enhanced Protection probably resulting in a hefty tax bill.

And finally…

As is always the case with complex legislation such as this, it pays to seek advice and to do it early.

A professional financial planner will be able to advise you whether you should consider applying for lifetime allowance protection.

And don’t delay - April 2014 might seem like a long way off but contributions you make now are counting towards that lifetime allowance calculation.

The contents of this article are for guidance only and do not constitute financial advice. If you have any questions about the issues features please contact us.

Call our friendly, knowledgeable team for a confidential, no obligation discussion:

01527 880345

Visit our Website at: www.pps-vet.co.uk  

The PPS Group relates to Professional Practice Services, our Business Consultancy and Independent Financial Advisory arm, and PPS GI, our specialist insurance brokerage.

PPS Group is a trading name of Professional Practice Services which is authorised and regulated by the Financial Conduct Authority. PPS GI is an appointed representative of Professional Practice Services, which is authorised and regulated by the Financial Conduct Authority.

The Financial Conduct Authority does not regulate finance, will writing, commercial lending, taxation or trust advice.

PPS Budget Snapshot 2013

The 2013 Budget statement was made yesterday at 12.30pm by the Chancellor of the Exchequer, George Osborne. 

About the Budget
The Budget is a report presented each year by the Chancellor of the Exchequer to Parliament and the nation. The primary role of the Budget is to control public finances by setting out how much tax the Government will collect, how much the Government will borrow and how much the Government will spend. The Budget Responsibility and National Audit Act 2011 requires the Government to produce a Budget Report (which is the formal name for the Budget) for each financial year. The Charter for Budget Responsibility sets out what the Budget Report must cover.

When the Government publishes the Budget, the Chancellor gives a speech to Parliament in which he sets out the key decisions on tax, borrowing and spending, and his reasons for taking those decisions. This speech is known as the Budget Statement.

The official forecast on which the Chancellor bases the Government’s Budget is provided by the Office for Budget Responsibility (OBR).  The Budget Responsibility and National Audit Act 2011 requires the OBR to publish two economic and fiscal forecasts for each financial year, including one published at the Budget. The OBR’s duty is to examine and report on the sustainability of the public finances and it is required to do so objectively, transparently and impartially.

PLEASE NOTE: This update is not intended as an in-depth analysis of the Chancellor’s speech but we hope this brief snapshot helps you gain a quick grasp on the key points delivered by the Chancellor from the dispatch box.

For full details of the following headlines (and more) you may wish to visit the HM Treasury website BUDGET 2013

MAIN HEADLINES FROM THE SPEECH

Forecasts

·         Due to the current economic climate the Chancellor announced adjustments to previous growth forecasts from those previously announced.

• Growth forecast for 2013 –  revised down to 0.6%
• Growth forecast for 2014 – revised down to 1.8%
• Growth forecast for 2015 – remains unchanged at  2.3%
• Growth forecast for 2016 – remains unchanged at 2.7%
• OBR expects 600,00 more jobs in 2013
• Deficit  forecast for 2013/2014 is 7.4%
• Borrowing forecast for 2013 - £114 billion reducing to £97 billion in 2014/2015
• Likelihood of meeting debt target has deteriorated.

Taxation

• Personal tax allowance – to increase to £10,000 from April 2014
• Corporation tax to be reduced by a further 1% in 2015 to 20%
• Schedule 19 tax for UK domiciled funds to be abolished
• Stamp duty on shares trading on growth markets (e.g. Alternative Investment Market (AIM)) to be abolished
• Major tax avoidance and evasion measures to be introduced, including naming and shaming of firms promoting tax avoidance schemes
• Tax free child care vouchers to be introduced – 20% off first £6,000 per child
• Beer duty escalator scrapped altogether and beer duty to be cut on Sunday 24TH March by 1p – all other alcohol duties to increase as planned

Transport/Fuel/Energy

 

• Fuel – Car fuel duty rise due in September 2013 cancelled indefinitely
• Commitment to low carbon energy via plans to develop major carbon capture and storage projects
• New generous tax regime for early investment in shale gas

Small Business / Business in General

• Capital Gains tax relief for firms sold to employees
• Employment allowance to be introduced  – Worth up to £2000 for every business – effective from 2014 to help small and medium size enterprises

Public Sector

• Schools and health departmental budgets to remain protected
• Public Sector pay rises limited to 1% for a further year

Housing

• Help to Buy Scheme introduced - £3.5 billion given to shared equity loans – loan can be provided up to 20% of the value of a new build home – 5% deposit required. – interest free for first 5 years – repaid when home is sold – available to anyone – home can’t be more than £600,000
• New mortgage guarantee to be provided to lenders – available to all homeowners subject to responsible lending requirements being met – This will support £130 billion worth of mortgages – starts in 2014 – Designed to help support people without large deposits
• 15,000 more homes to be built and Right to Buy scheme to be extended further
• Government to accept recommended pay increases for armed forces

Other Points

• New single tier pension brought forward to 2016 - worth £144 per week in today's terms
• Equitable Life With Profit policies sold before 1992 – Government to pay £5000 ex gratia payment to policyholders
• Cap on social care costs to be introduced in 2017 and will protect savings above £72,000
• Residential care threshold for means testing to increase to £118,000 from £23,000 in 2017

If you have any questions about the issues features please contact us.

Call our friendly, knowedgeable team from a confidential, no obligation discussion:

01527 880345

Or for general insurance enquiries please call:

01527 832394

Visit our Website at:

www.pps-vet.co.uk

The PPS Group relates to Professional Practice Services, our Business Consultancy and Independent Financial Advisory arm, and PPS GI, our specialist insurance brokerage.

PPS Group is a trading name of Professional Practice Services which is authorised and regulated by the Financial Services Authority. PPS GI is an appointed representative of Professional Practice Services, which is authorised and regulated by the Financial Services Authority.

 

The Financial Services Authority does not regulate finance, will writing, commercial lending, taxation or trust advice

 

Check out our YouTube Channel: Paul Jackson discusses our Veterinary Business Consultancy and the impact of Workplace Pensions on Practices

Financial Advice is Changing......

On 31 December 2012, the Financial Services Authority is changing the rules about how financial advisers run their businesses, how they provide their services and the way consumers pay for them. These changes are commonly known as the Retail Distribution Review (or RDR for short).

It is likely that you have heard about this in the media over the last few weeks and months but we also wanted to make sure you heard about it from us, specifically so that we can outline how our business has changed to meet the new regulations and so that you can understand what it will mean to you as our client. We are therefore attaching our Guide to the RDR for your information and safe keeping.  Please follow the link below to access our Guide:

 

PPS RDR Announcement - Financial Advice is Changing

 

All our existing clients will also need to complete and return the new personalised Client Agreement which clearly details the Adviser charges applicable to your investment and/or pension portfolio.  We will be issuing this document in phases throughout January 2013.

 

As always, if you have any queries regarding the issues surrounding RDR and how it will impact on you personally, please do not hesitate to contact us and we would be happy to discuss this with you further.