17 minute read
If You Ask Me
FINANCIAL HEALTH BY RAJ SHAH, DIRECTOR AND PRINCIPAL OF BLUE WEALTH CAPITAL The financial planner on the important role life (or 'human') insurance plays
'HUMAN INSURANCE' - A CASE STUDY
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In last month’s article I wrote about the importance of business succession planning and ensuring the wishes of shareholders are properly documented.
Life insurance (I prefer to call it human insurance) can play an important role when it comes to underpinning your wealth/ succession planning and if you own your own business there can be a highly tax efficient way of organising this through your company.
Case Study
Sarah Owens is a founder and managing director of a user experience design consultancy in South Yorkshire. After leaving her previous employer and setting up her own company, Sarah has lost her death-inservice benefit. Her high quality financial planner suggests she purchases life insurance through her company, and after comparing relevant life insurance to standard life insurance, it appears relevant life insurance is a more beneficial option for Sarah.
Example: Sarah would like £1 million of cover. She is a higher rate taxpayer (40%) and pays National Insurance at 2% on the top end of her income. The company pays National Insurance at 13.8% (this assumes that the employee is not contracted out of the Additional State Pension). Corporation Tax is calculated
Cost to employee
Cost to employer
Monthly premium (from net salary)
Employee National Insurance contribution (2%)
Employee Income Tax (40%)
Total cost to employee
Monthly premium
Employer National Insurance contribution (13.8%)
Total gross cost
Less Corporation Tax relief (19%)
Personal life insurance Relevant life insurance
£50.00
£1.72
£34.48
£86.20
N/A
£11.90 N/A
N/A
N/A
N/A
£50.00
N/A
£98.10
£18.64 £50.00
£9.50
Tax adjusted total cost £79.46 £40.50
With Relevant Life Insurance the total saving is £38.96 (49%) per month, which is £467.52 per annum.
at a rate of 19% since April 2017. This illustration shows the difference in the gross cost of an employer providing life cover for an employee through a Relevant Life insurance policy compared to a personal policy Sarah could take out herself.
Any tax and National Insurance is calculated based on the cost to the employee, i.e. how much it would cost an employee in total to pay a premium taking account of Income Tax, National Insurance and the premium. For example, in order for Sarah to be able to pay a premium of £50.00, she would need to earn £86.20 on which she would have to pay Income Tax of £34.48 and National Insurance of £1.72.
To get the total net cost to the employer you would need to add the employer’s National Insurance contribution costs and then deduct Corporation Tax Relief. The information provided in these examples is for illustrative purposes only; the examples are purely fictitious and individual circumstances should be thoroughly assessed to calculate potential savings to the employer/employee.
The illustrations are based on my understanding of current law and HM Revenue & Customs practice as at October 2019 which may change in the future. Tax calculations are based on 2019/20 tax rates and may also change in the future. The calculations assume that the same rate of Income Tax/ National Insurance applies to the whole of the premium or sums used to fund the premium.
Consulting a high quality financial planner could not only help you increase your wealth, but could save you a few precious pounds in human insurance premiums.
Raj Shah is founder of Blue Wealth capital and has been shortlisted for Financial Planner of the Year and Investment Adviser of the Year. www.bluewealthcapital.com
With the COVID-19 crisis continuing to impact on businesses across the Sheffield City Region, we asked a number of organisations to tell us how it was affecting their sector, the changes they’ve made to operations and how they are planning to make the best of an undoubtedly challenging situation COVID-19 RESPONSE TO
JAMES GODSELL, DIRECTOR OF EMPLOYER PARTNERSHIPS, RNN TRAINING RNN Training is part of RNN Group working in partnership with Rotherham College, North Notts College, Dearne Valley College and University Centre Rotherham to deliver training to, and recruit, apprentices across the Sheffield City Region and North Nottinghamshire.
The biggest challenges we’ve had to overcome has been the closure of our Colleges and campuses and restrictions on access to our apprentices’ business premises.
We work with a wide range of businesses from the construction, education, engineering, hospitality and healthcare sectors that are either closed or their staff are operating as key and essential workers, which has meant that our work-based learning tutors are unable to meet and teach their apprentices.
The current situation, and the surrounding uncertainty, has also meant that many businesses have been unclear as to whether apprentices can continue to progress on their apprenticeship. We’ve, understandably, seen a hesitance from employers to advertise new apprenticeship vacancies.
To overcome these challenges, we have had to adapt quickly and effectively to our ‘new normal’. That has meant a rapid shift to online and digital learning solutions for our current apprentices.
Our use of OneFile, an e-portfolio that staff and apprentices usually access to set and complete tasks, has meant that we weren’t starting from zero in our move to remote and distance learning. However, a large proportion of our training has always been through face-to-face teaching, which isn’t currently possible.
Our teaching staff have responded exceptionally to the change to remote and distance learning. They have embraced the challenge of delivering training remotely and have used many different tools to keep our apprentices and employers engaged in their programmes. Training
has been delivered over Skype, Zoom and Google Hangouts and Google Classroom to ensure that our apprentices continue to progress.
Until social distancing measures are relaxed we will continue to embrace remote and distance learning.
We’ve also been able to dedicate more time to our existing distance learning offer. We offer maore than 20 distance learning courses in a wide range of subjects including Mental Health, Lean Business Techniques and Social Care which have been particularly popular with employers who have furloughed staff. The variety of courses offer the opportunity for staff to update or upskill from the comfort of their own home.
We’ve had important conversations with employers about their future plans – we’ve been able to highlight the versatility of apprenticeships, particularly higher and degree apprenticeships, that can be used to upskill existing staff.
Our message to everyone is stay safe, stay home and stay smart and remember we’re still here, whenever you need us.
STEVEN BARKER, MANAGING DIRECTOR, ARDEN WINCH
COVID-19 has come with many challenges – the biggest at the beginning of the crisis was the fact that unfortunately around 60 per cent of our customers had to temporarily close their businesses.
A large proportion of the work we did at Arden Winch was embroidery work and with these businesses no longer open, we have had to change the direction and focus of our business strategy.
We have spent the last couple of months specialising only in Personal Protective Equipment (PPE) and hygiene to supply hospitals, care homes and local councils.
As a company, we have had to adapt quickly and therefore be flexible across all areas of the business. Our first point of call was to ensure that all members of staff were protected so we offered voluntary furlough and made those who could, work from home.
On site, we added hand sanitiser, medical guard face screens and masks. All our delivery drivers now have their vehicles cleaned daily and are provided with disposable gloves, goggles, masks and hand sanitiser.
By implementing these changes, we were able to reduce any risks within this business which was paramount to us moving forward and changing our direction to continue throughout COVID-19.
Most PPE is made in the Far East so it is extremely hard to access supplies. However, we have been able to make fast decisions due to the fact we own all of our sites, have a strong balance sheet and extensive experience.
By modifying the business throughout COVID-19 we have been able to keep up with demand and keep supplies going out fast to the companies that need them.
I strongly believe that as a business we have a moral obligation to help the fire, police and health services by supplying PPE to these frontline, key workers.
In this unprecedented time, we have had to make the biggest decisions in our history and place orders with suppliers in as little as just five minutes of stock becoming available. We have also, in many cases, had to pay
upfront to enable us to secure critical PPE and hygiene products.
We have supported the Sheffield City Region by providing PPE and hygiene products to Sheffield City Council, Rotherham Borough Council, South Yorkshire Police, South Yorkshire Fire and Rescue and Sheffield Teaching Hospitals.
As a business the safety of our staff was crucial to moving forward throughout this difficult period but we came together using our expertise and speed to help as many key workers as possible and we will continue to do so.
Back to work essentials
www.ardenwinch.com
ROB SHAW, MD, GLU RECRUIT Like most industries we’ve been adversely affected by COVID-19. It’s mainly hit the permanent side of our business as most of our clients put their recruitment plans on hold, understandably due to the market uncertainty.
The temporary side of our business, however, has been buoyant and we’ve re-strategised to focus on growth and fulfilment in that area which is holding us up during these very strange and challenging times.
It’s been interesting to see how adaptable the team has been to the new working from home life and I’ve been impressed with and proud of how hard they’ve all continued to work, how productive they’ve been and how they’ve focused their activities on helping candidates that have sadly found themselves looking for a new job in the most challenging time.
We’re focusing on those jobs that you don’t get the chance to do when you’re operating at full speed and taking some time back by working reduced hours and enjoying some precious time with our families.
We’ve looked at the business costs and cut anything that’s unnecessary and re-negotiated where possible. In a time where there is little you can control – costs are one of them!
We’re cleansing and updating our candidate database, keeping in touch with our lovely clients and on top of the new candidates that are coming on to the market, so that when we come out of lockdown we are well positioned to help as many of those people get into a job quickly.
We’re waking up a little later than normal, working in our pyjamas and focusing on what’s really important! Having some down time has given plenty of opportunity to reflect and look at our short and long-term strategies which will see us become even more efficient.
We’ve set up a weekly quiz on Zoom for our clients, contacts and those in our networks as a way to keep in touch and provide some fun in this tricky time. We also use MS Teams and have a daily catch-up with each other. I think it’s made all of us appreciate the small things, the things you (without intention) take for granted, and each other more. We miss working together collectively in one place, but we hope that it’s not for long.
We’re conscious not to bombard businesses with too many sales focused messages. It’s always been part of our strategy to educate and offer advice where possible, and we’re focusing most of our client communications around this.
If we can provide some useful advice that will really help local businesses and people within their networks, we’re hopeful that this will stand us in good stead once the market picks back up again.
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MARTIN FILLEUL, SALES AND MARKETING DIRECTOR, TINSLEY BRIDGE
Tinsley Bridge operates in several global markets. Whilst some are disrupted due to the COVID-19 crisis, for other markets it has become important the company operations remain open; • Tinsley Bridge supply safety critical track switch systems to Network Rail and are Key Worker status supporting the national rail infrastructure • Our Project Engineering company supplies the nuclear, steel manufacture, rail and chemical industries. Retaining engineering support to these essential industries is vital as part of the UK response to the virus outbreak • N eed to ensure we do this in a safe manner following the government guidelines and advice on working practices, social distancing and PPE. The workforce has been very responsive to the challenge and working within new H&S guidelines. The company has been able to remain open and continue operations.
The Project Engineering operation is in a strong position with the biggest order book for over two years and still has spare capacity. This is also due to the work done positioning this business and developing capabilities which offer real benefits and engineering excellence to customers.
A wide range of large scale manufacturing is available from a single site including Project Management, Design for Manufacture, Fabrication, Machining, Fitting, Assembly, Reverse Engineering, On Site Installation and Site Services.
Our track record demonstrates proven reliability for time critical delivery of technical challenging projects. These are typically complex and large scale, requiring expertise in Design for Manufacture and delivery against demanding Technical Compliance Accreditations. Although customer site restrictions have been in place during recent weeks a lot of work has been completed within our internal workshops and is now customer ready.
CHRIS DAYKIN, CORPORATE FUNDRAISING MANAGER, SUPPORT DOGS
It’s had a huge impact on how we operate – the families we are supporting are most at risk and so we are having to increase the amount of support and care we give them.
It has meant losing out on vital income for a small charity like ours that receives no government funding.
We have expanded our services to help ensure the individuals and families we support receive the care they need, especially our most vulnerable clients.
These new clients are finding themselves adapting to life with a support dog whilst also adapting to life under lockdown. Our dedicated trainers work with each client to provide daily support.
We are using new digital programmes to run online training sessions and share our 30 years of assistance dog knowledge and experience. This is helping to ensure COVID-19 does not delay their progress to becoming a fully trained life-saving support dog.
We have used this time to develop skills and platforms we will continue to use even after the lockdown.
By the end of day one of lockdown, we had created a digital fundraising programme offering ways for people to continue
supporting our work which has been a huge success. We’ve also been hosting virtual events to raise money.
I am incredibly proud of the resilience, adaptability, and positivity we have shown as a charity.
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If your buildings are now at low or no occupancy, our engineers can use the opportunity for easier and safer access and will also be providing documented and dated disinfection services at no additional cost.
In coordination with our very own in house fully accredited TM44 Air conditioning energy assessor we can also help with.
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A MESSAGE FROM BARNSLEY & ROTHERHAM CHAMBER
Andrew Denniff, chief executive of Barnsley & Rotherham Chamber of Commerce, shares a message of support and engagement during the COVID-19 crisis – and for the ‘new normal’ future
It will never be the same again.
The number of times I have heard this said over the past few weeks can almost lead you to despair. We have to acknowledge that the impact and consequences of COVID-19 has been huge and, in many cases, led to very sad outcomes.
The way many businesses and indeed day-to-day lives have been changed will without doubt be a lasting outcome of 2020.
The realisation of what really does matter and more importantly, who really does matter in our communities and in the relationships we have with each other should be a huge positive we can take from our experience of these unprecedented times.
Others will be left to comment on the effect this will have on society, both nationally and indeed globally, but be in no doubt the way we do business and the responsibility we have to each other in the commercial world will have changed for the better.
All of us have had to adapt to continuously changing circumstances, even the way we talk and engage with each other has had to become more efficient and focussed on what really matters.
I have been incredibly surprised, by not only the number of people I have had the opportunity to speak with directly, but who are simply pleased to know that someone is genuinely interested in their business and is prepared to offer a little bit of appropriate advice and guidance where needed.
The access we have at a strategic level is envied by many, but this has to be more about simply talking about problems, or indeed providing feedback and information from the “sharp-end”, we have to get real solutions to the many challenges that our members are experiencing at the moment.
So, it really is important that you continue to engage with us and, of course, maintain those links within your own networks as well. We will keep talking to our local authorities, our Local Enterprise Partnership and indeed our MPs as regularly as possible and keep feeding back your views and your issues as best we can.
Your responses to our weekly ‘Tracker Surveys’ have been nothing short of impressive and, for such a small chamber, our members continue to head the respondents list for the Yorkshire and Humber region, giving us a very clear picture of what is truly happening on the ground.
Whatever the new normal is going be in the future, it is crucial that as your Chamber of Commerce we continue to focus on the things that really matter and keep you as up to date and as informed as possible.
The value for the Chamber is having a truly engaged and responsive network – and when it really matters it seems that is exactly what we have.
