RAFFINGERS STUART NEWSLETTER SPRING 2015
SMALL DETAILS
BIG DIFFERENCE *IHT Seminar, Tuesday 3 March 2015
Budget 2015 - Taking Britain from Austerity to Prosperity
Say Hello to CrunchBoards
Get in Shape for New Pension Rules
A review of the key announcements made by the Chancellor, George Osborne, at the Budget 2015.
Analysis, forecasting, alerts - gain control of your businesses finances by getting instant, up-to-date financial information.
New pension freedoms coming into force on 6 April 2015 provide a good opportunity to revisit retirement plans.
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Contents
Welcome and Partners
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Special Feature Budget 2015 - Taking Britain from Austerity to Prosperity
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Say Hello to CrunchBoards
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Employee Spotlight
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Tax Corner - Childcare Vouchers
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Client’s Story AWD Online
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Events 2015 - The Story So Far
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Get in Shape for New Pension Rules
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Transferable Tax Allowances
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Partner’s Perspective What Accountancy Software is Best for You?
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PP SMALL DETAILS BIG DIFFERENCE
Welcome to our SPRING Newsletter Now that the dark nights are drawing to a close and the weather is a little brighter, we bring you our Spring Newsletter and with it a summary of the Budget 2015. In a Budget that proclaimed ‘we are all in this together’, George Osborne was extremely confident, declaring that the government will be doing more to back business, more to encourage manufacturing and more to support savers, pensioners and working families. To help you see if the Budget is of benefit to you, we have pulled out the key changes on page 3. Speaking of changes, there is a lot going on in the Raffingers Stuart office at the moment, specifically in regards to Xero and CrunchBoards. We are extremely excited about CrunchBoards and the potential it has, check out our article on page 5 to find out more. Also, not forgetting, our ever popular Client Story by AWD online and our Partner’s Perspective, which this month features an interview with Lee Manning on the latest pieces of accountancy software. If you would like to be featured in our next client story, or have any suggestions for topics that you would like to see discussed in the next edition, please get in touch. The Partners at Raffingers Stuart
Raffingers Stuart Partners
Gary Inglis Managing Partner gary.inglis@raffingers-stuart.co.uk
Andrew Coney Partner andrew.coney@raffingers-stuart.co.uk
Lee Manning Partner lee.manning@raffingers-stuart.co.uk 2 Adam Moody Partner adam.moody@raffingers-stuart.co.uk
Suda Ratnam Partner suda.ratnam@raffingers-stuart.co.uk
Barry Soraff Partner barry.soraff@raffingers-stuart.co.uk
Paul Dell Partner paul.dell@raffingers-stuart.co.uk
RAFFINGERS STUART NEWSLETTER SPRING 2015
Budget 2015 Taking Britain from Austerity to Prosperity SPECIAL FEATURE In what was forecast to be a bold, dynamic and breakaway Budget, George Osborne began by confirming the key achievements of his government: ● Deficit figures are the best they have been for 15 years
Budget 2015
● Unemployment has fallen by a further 100,000 and £1.9 million jobs have been created ● Living standards have improved - living standards in 2015 are now higher than they were in 2010 (OBR)
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To now build upon these successes, the Chancellor went on to outline the changes in store for both businesses and individuals.
Changes for Businesses Capital Allowances The Annual Investment Allowance (AIA) is still forecast to fall next year from £500,000 to £25,000. However, the Chancellor announced that the fall will now be set at a more generous level, although no figure was given. Corporate Tax Rate From 1 April 2015 there will be a single rate of corporation tax of 20%. This will be one of the lowest rates for a country that is not a tax haven. Research and Development (R&D) From 1 April 2015 increases will be made to the R&D tax credits. This means SMEs undertaking qualifying R&D activities can reduce their corporation tax bill by up to 230% (an increase of 5%). Larger companies will also be able to reduce theirs by 11% (an increase of 1%). Enterprise Investment Scheme (EIS) The requirement that 70% of funds raised under Seed SMALL DETAILS BIG DIFFERENCE
Enterprise Investment Scheme (SEIS) must be spent before EIS or Venture Capital funding can be raised will be removed from 6 April 2015. Furthermore, a cap of £15m will be introduced for the total investment that can be received under tax advantage Venture Capital schemes. For knowledge intensive companies this cap will be increased to £20m and the employee limit will be raised from 249 to 499. Diverted Profits Tax From 1 April 2015 multinational enterprises that make use of aggressive tax planning will be subject to a ‘Diverted Profits Tax’ (DPT). This is the so-called ‘Google Tax’ designed to discourage large companies diverting profits out of the UK. VAT From 1 April 2015 the VAT registration threshold will be increased from £81,000 to £82,000 and the deregistration threshold from £79,000 to £80,000. Capital Gains Tax From 6 April 2015, individuals, trustees and companies that are not resident in the UK and sell a UK residential
property will need to notify HM Revenue and Customs (HMRC) of the transaction.
access. This will reduce to £500 for 40% tax payers and will cease to be available for 45% tax payers.
Entrepreneurs’ Relief (ER)
Help to Buy ISA
With effect from 18 March 2015:
From Autumn 2015 anyone aged over 16 can access a Help to Buy ISA, giving much needed help to first time buyers. Maximum monthly savings are £200 per individual (plus £1,000 initial deposit) of which the government will add a 25% bonus to. Therefore, savings up to £12,000 are eligible to a bonus of £3,000.
Joint ventures and partnerships Disposals of shareholdings will only qualify for ER where at least 5% of the direct shareholding is in a trading company. Any joint venture company or partnership will need to demonstrate their trading status separately. Associated disposals
Flexi ISA
Where a personal asset, such as a building, is used in a company or partnership and is disposed of, no ER will be available unless there is an associated disposal of at least a 5% shareholding in the company or a 5% share of partnership assets.
From Autumn 2015 cash ISAs will be more flexible with savers being able to withdraw and replace money in the same tax year without it counting towards their annual limit.
Changes for Individuals
From April 2016 the Chancellor confirmed that pensioners will be able to sell existing annuity income to a willing third party in exchange for a capital sum, taxed at the pensioner’s marginal rate of income tax.
Abolishing Tax Returns This does not mean the end of Self-Assessment Tax Returns… HMRC will now be using Digital Tax Accounts (DTA) to prepare tax returns. Any information that HMRC has (bank interest, employment income, benefits) will be prepopulated on to this ‘secure digital tax account’. More information will be provided by HMRC in 2015 outlining how this will work and who it will apply to. Personal Allowance Please see below the personal allowances from 6 April 2015 (2015/16) onwards: 2015/16
2016/17
2017/18
£10,600
£10,800
£11,000
There is no change for the gradual removal of this benefit for those earning in excess of £100,000. Personal Savings Allowance From 6 April 2016 a basic rate taxpayer will be able to take advantage of a new personal savings allowance of £1,000. Those earning less than £42,700 will have full
Pension Announcements
Furthermore, from April 2016 the upper limit on tax favoured pension funds will be reduced from £1.25m to £1m. Those with pension funds already in excess of £1m will be offered some form of protection.
Tax Avoidance George Osborne used the Budget to reinforce the government’s strong stance on tax evasion. To counter evasion, the chancellor resuscitated controversial plans for a so-called “strict liability” criminal offence for taxpayers who fail to declare taxable offshore income and gains, first proposed last year. The Chancellor also reminded us that they will be continuing to clamp down on umbrella companies and those persistent users of tax avoidance schemes. If you would like any further advice on how the Budget may affect you or your business, please contact Gary Inglis on 020 8551 7200 or at: gary.inglis@raffingers-stuart.co.uk RAFFINGERS STUART NEWSLETTER SPRING 2015
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Say Hello to CrunchBoards Recently the Raffingers Stuart office has been overcome with talk of CrunchBoards. Software that we predict will change the face of reporting forever. So, what exactly is CrunchBoards? CrunchBoards was designed by business owners for business owners (not accountants). Therefore, we can guarantee that it is for you. CrunchBoards work alongside Xero, providing users with complete clarity of their data. Many of our clients have consequently said goodbye to spreadsheets and have begun to use these boards to visualise and track their financials, as well as plan for the future.
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What makes CrunchBoards so valuable is that every transaction from the beginning of time can be imported, which means absolutely any KPI can be looked at in realtime for operational, retrospective or future analysis. And, if anything is amiss you will be the first to know. We find this feature saves our client’s time as they can create anything from simple budgets to complex forecasts instantly and in a format that suits them. Ideal for any business meeting.
Sample board: your three month financial projection
The boards are also great for forecasting, helping you create goals that you can analyse and track against. Essentially, CrunchBoards give you back control. Through being connected with Xero and its live bank feeds you can log-in at any point and have instant, up-to-date financial information about your business. Through gaining complete visibility, CrunchBoards can help you grow your business and become more profitable. If you would like to see what a sample board could look like for your business, please contact Lee Manning at lee.manning@raffingers-stuart.co.uk. Sample board: your performance v budget SMALL DETAILS BIG DIFFERENCE
Tax Corner - Childcare Vouchers Childcare Vouchers are currently available to employees, including directors. The vouchers can be paid from an employee’s income before tax and National Insurance (NIC). In addition to this, you the employer can obtain NIC savings.
Employee Spotlight In this slot we like to introduce you to a valued member of our team, allowing you to put a face to a name. This quarter we are back in our accounts team with Suraj Shah. Name: Suraj Shah Nicknames: Suj DOB: 02 April 1989 Career history: I joined Raffingers Stuart in December 2014. Prior to this I worked for Methods Corporate Ltd as an assistant accountant, dealing with many aspects of the finance function, including sales, purchases, credit control and internal investigations. The experience I gained was crucial to my understanding of operations and the importance of internal controls. Currently, I am working towards my ACCA qualification. The exposure I am gaining at Raffingers Stuart enables me to put into practice what I have learnt so far, as well as to further develop my skills. Interests: I love football, both watching and playing. I have to admit, I am not very good, although I find it a great and fun way to stay fit. I also would like to live abroad somewhere for a period of time. I have already spent a year in Toronto, where I studied ACCA and carried out an internship with a not-for-profit organisation. Other interests include movies, socialising and eating. Partners Report: Suraj is a new recruit in the accounts team and he has settled in well. He has gained great experience working as an accounts assistant in industry, which comes in handy when resolving our client’s bookkeeping issues. I also hear he is an expert on the badminton court! Suraj is a pleasure to have around the office.
Conditions if an employee joined the scheme before 5 April 2011: Employees can receive up to £55 per week, or £243 each month free of tax and NICs. The NIC saving for a basic rate taxpayer is £402 a year. Conditions if an employee joined the scheme after 5 April 2011: ● Basic rate band, £55 per week or £243 per month ● Higher rate band, £28 per week or £124 per month ● Additional rate band, £25 per week or £110 per month 6
Mechanics ● Employers can operate a childcare voucher scheme in house or outsource ● Vouchers can be in paper or electronic format ● Important to check that the childcare providers accept childcare vouchers ● Unused childcare vouchers cannot be exchanged for cash ● Child tax credits may be affected from the salary sacrifice Planning point Spouses or civil partners who are both directors and employees can also benefit from the childcare vouchers scheme. The benefit here is that only employment income is considered when calculating the maximum amount of vouchers that can be claimed (Tax and NIC free). This is another way of extracting money from a company without incurring any taxes or NIC. For further information or advice contact Adam Moody at adam.moody@raffingers-stuart.co.uk. RAFFINGERS STUART NEWSLETTER SPRING 2015
Saving Companies Thousands of Pounds in Recruitment Fees Most successful businesses realise that a large part of their success is down to having great employees.
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It does not matter if you are a young start-up enterprise or a well-established global brand, having the right employees is a key element to any successful company. However, finding these key employees can be an extremely expensive and time consuming exercise. Traditional recruitment agency fees can leave a large dent in your budgets and can cost you anywhere from 15% to 25% in agency fees. Advertising your vacancies directly on one job board is definitely a cheaper option, but limits the amount of suitable candidate applications you may receive, whereas advertising on more than one site can increase your chances of finding a suitable applicant, but the costs can very quickly escalate due to the high price you need to pay for each job board. Unfortunately for many years companies did not have much of a choice when it came to successfully sourcing new employees at a reasonable cost to the business. That was until AWD online entered the recruitment market over 8 years ago. Since those early days, AWD online has created a range of three specialist, low cost, online recruitment advertising packages that cater for all industry sectors and types of employee, from junior admin staff to director level executives, covering the whole of the UK. By utilising the latest recruitment database technology that has been specially customised and the buying power they have with the job boards, AWD online has created a low cost, value add recruitment advertising proposition that can make huge financial savings to any business hiring new staff members. With over 16 years in-house recruitment experience, AWD online is well placed to provide expert advice on how to get the best out of your job advertising campaign. Before each advert goes live, AWD online will research SMALL DETAILS BIG DIFFERENCE
and recommend to you the best key words to use within the advert so that it is fully optimised to rank high in the candidate’s job search results page and reach a much larger target audience. If you do not have time to go through hundreds of CVs then AWD online can filter and shortlist the best candidates for you to review as well, in addition to carrying out multiple detailed CV database searches to find those more passive job seekers. Clients of AWD online are assigned their own Account Manager to liaise with throughout the advertising campaign and can expect their vacancies to be advertised on some of the UK’s best online job boards, such as Totaljobs, Monster, Jobsite, CareerBuilder, Indeed plus many more specialist geographic and industry related sites. One vacancy on their OPTION 1 (Multiple Online Advertising) package costs just £199+VAT, with discounts offered on their multi-job packages. If you are looking to hire new staff, but do not want to spend thousands of pounds in the process then it is worth checking out AWD online, which will save you money as well as find you some great new employees. Contact: AWD online’s web site is: www.awdo.co.uk or you can call them on: 020 7871 2959
Events 2015 - The Story So Far Preparing Your Business for Sale
Leading for Growth in Recruitment
When: Thursday 5 February 2015 Where: HSBC Global Headquarters
When: Tuesday 24th March 2015 Where: HSBC Global Headquarters
Why should you sell? How do you maximise the price of your business? How do you secure and find the right strategic purchaser?
Another successful event for the recruitment sector saw over 30 owners, managing directors and directors of recruitment agencies come together to see how they can transform their teams into ‘growth leaders’, which are essential for any agency looking to achieve collaborative teams, a shared vision and ultimately sustained business growth.
All of these topics and more were covered at another great event held at HSBC. With presentations by Precision Mergers & Acquisitions, the event brought together over 20 business owners. Watch out for our future events on this topic. Key Contact Neil Ackroyd, Precision Mergers & Acquisitions E: neil.ackroyd@precisionmergers.com
Key Contact Lee Manning, Partner E: lee.manning@raffingers-stuart.co.uk
What’s Next? Take Control of Your Recruitment Agency
Preparing for Your Future - IHT When: Tuesday 3 March 2015 Where: Prince Regent, Chigwell One of our most popular events, which saw over 30 of our clients come together to discuss the complex topic of Inheritance Tax Planning. With presentations by Old Mutual Wealth, a general overview of IHT was given with key discussions on what IHT is and what can be done to reduce its impact. Various solutions were touched upon, including life insurance policies, gifts and bona fide trusts. Key Contact Dharmesh Upadhyaya, Bradbury Hamilton E: dupadhyaya@bradburyhamilton.co.uk
Check out our YouTube channel for all of the videos from our seminars.
When: Wednesday 29th 2015 Where: Eight Members Club Bank Run your agency and nurture your client relationships like never before with Xero and CrunchBoards. This event will guide you through all there is to know about Xero and its dynamic reporting capabilities, covering: how to get paid faster, managing your cash flow on the go and quick and pain free bank reconciliations. The event will also touch upon: o CrunchBoards - an operational tool providing dynamic, real-time facts and figures so that you can make accurate business decisions o Receipt Bank – no more data entry for receipts and invoices o JobAdder – taking the hassle out of recruitment by managing job orders, tracking candidate progress, fees and forecasting If you would like to attend this event, please email lauren.aston@raffingers-stuart.co.uk. RAFFINGERS STUART NEWSLETTER SPRING 2015
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Get in Shape for New Pension Rules New pension freedoms coming into force on 6 April 2015 provide a great opportunity to revisit retirement plans. To recap on the rules, those aged 55 and over can take 25% of their pension pot as a tax free lump sum. Any further lump sums or income taken will be subject to tax. In terms of accessing your pension the main options to consider remain an annuity, which provides a guaranteed income for life, or go into new flexi-access drawdown (FAD), which allows you to access your pension when and how you wish, subject to paying tax. While there are other variations on pension access post April 2015 to consider, the key change is that more choice is available.
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Another major change is that pensions will no longer be subject to 55% tax on death, which improves the potential to pass on wealth without being penalised financially. If you die before reaching age 75 you can pass on your pension pot tax free to anyone. If you die after age 75 the beneficiary of your pension will pay tax at their marginal rate. Annuities taken out after 6 April 2015 will be subject to the same rules. Of course, as with any new rules it is never completely straightforward and the new pension rules are no exception. Those in defined benefit (or final salary) schemes will be subject to different rules and, where pensions are already in drawdown, prior to 6 April 2015, there are different options to consider. Much will depend on what
your retirement plans are and, in the light of the new rules, whether a different strategy is now more applicable. Flexi-drawdown, for example, offers some fantastic financial planning opportunities for those thinking of retiring sooner than initially planned. With flexi-drawdown there is no upper limit on how much you can withdraw, subject to tax, plus you can continue saving towards retirement. This is particularly useful as it gives those heading towards retirement the ability to reduce their hours and supplement earnings by taking an income from their pension once they are in a lower tax rate. This gives the option to draw down up to £41,450 of your pension per year, over and above the tax free lump sum, with the first £10,000 tax free and the remainder only taxed at the 20p tax rate. (Tax rates as at March 2015). By contrast, those who are currently in capped drawdown and have the ability to make large pension contributions, or company directors who take a smaller salary in order to pay the maximum into pensions, not converting to flexi access may offer more potential to build up a tax free pension pot. The key to not getting into a pension tangle in the coming months is to get to your finances in shape and understand the choices open to you. For further information contact Dharmesh Upadhyaya on 0208 418 2708 or at: dupadhyaya@bradburyhamilton.co.uk.
Transferable Tax Allowances From 6th April 2015, transferable tax allowances will finally come into place for married couples. It is hoped that this new measure will provide financial benefits for married couples through taking into account the tax liabilities of a couple together. The allowance essentially means that if you are not liable to income tax above the basic rate you can transfer up to £1,000 of your personal allowance to your spouse or
SMALL DETAILS BIG DIFFERENCE
civil partner, without having to pay a higher tax rate and providing that the recipient is not liable to income tax above the basic rate either. To qualify for the transferable allowance one of you must earn less than the basic personal allowance (£10,600). Full details concerning how to claim can be found on: www.gov.uk/married-couples-allowance.
partner perspective
What Accountancy Software is Best for You? With over 30 years of experience Lee Manning has seen many pieces of accountancy software come and go. Here he reviews two of the most popular pieces of software today. Let’s get to it, in your opinion, what is the best accountancy software? If you asked me this question a few years ago, the answer would be notably Sage 50. Sage 50 has been around for a long time and so everyone is trained on it, as a consequence we, as accountants, feel more confident recommending the software. However, in the last two years Xero has completely changed the way we think. It is extremely easy to use, which has resulted in more and more of my clients moving to the software, slowly outnumbering those on Sage 50. What has brought about this change? Advances in technology. Everyone now has a mobile and/ or tablet; therefore, with Xero being on the cloud and mobile compliant, it is more flexible and fits in with today’s lifestyle. There are also numerous add-ons that can be used alongside Xero and it is constantly evolving. Just last month it was announced that payroll can now be processed through Xero. This feature includes instant RTI reporting to HMRC and is auto enrolment compliant. What would you define as the key benefits for each? With Xero it is without doubt the fact that it can be synced with live bank feeds. This means that the data is instantly up-to-date with minimum effort required. My clients love the fact that they can log-in to the system at any time and on any day and have instant access to their figures. Sage 50 on the other hand is the industry standard. It has been around for a long time and so has a pronounced reputation in the industry; I know it is used by many
businesses based on this fact alone. How about the limitations? Xero has a very user-friendly dashboard, which means no experience is really needed. With the in-depth training videos anyone can pick up the software and get started. However, this does mean that a lot of larger companies with in-house bookkeepers do not see the need for it. Although, saying that; already I have a client with a £5m turnover that absolutely loves Xero and moved away from Sage, saving them hours in processing time every day. Sage 50 is slightly more complex. To make the most of it I would suggest you need bookkeeping experience, which is why I recommend this software to larger clients that have the bookkeeping capabilities in-house. What is the best ‘add-on’ / ‘bolt-on’? Without a doubt, it has to be CrunchBoards with Xero. It has the ability to organise data into visual graphs and tables to allow for KPIs to be monitored, instant analysis of data and accurate forecasting. It does all of this at the click of button, using the live data from Xero and the businesses bank feeds. This means any director; trustee or manager can see the information they need, without the timely process of collecting and downloading the latest data and inputting it into Excel spreadsheets. So, which piece of software do you recommend? As with anything, it all depends on the individual client’s needs and capabilities. Sage 50 has the reputation. However, more and more I find myself recommending Xero as the capabilities of the system are constantly expanding. All I can say is, watch this space. Lee Manning, Partner lee.manning@raffingers-stuart.co.uk 020 8418 2662 RAFFINGERS STUART NEWSLETTER SPRING 2015
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