The truth about pension withdrawal and tax

The truth about pension withdrawal and tax

If you’re planning to cash in your pension pot, you need to be fully aware of the tax rules or you could be in for a nasty tax shock.

From 6^th April 2015, if you’re over the age of 55, you are now free to cash in your Defined Contribution (DC) pension savings. 

Apart from a tax-free lump sum of 25%, you will be liable to pay income tax on the rest.

Also:

If the amount you withdraw takes your annual income over £42,386, you’ll pay 40% tax

So it might not be in your best interests to take out your whole pension; it could actually be better to stagger the payments.

As with any financial dealings, it’s always best to take independent advice, and we will be happy to introduce you to a financial consultant if you would like to chat to someone about your pension.

Of course, we’re always here to talk through any tax concerns and work out the best ways for you to maximise your income. 

Our tax planning services cover a range of business strategies to benefit companies, as well as specific plans to make sure individuals receive everything they’re entitled to – including pension pot tax issues.

Above all we recommend you take time to digest the changes and take expert professional advice BEFORE you make any decisions, there is no rush.

To get in touch, click here or request a free of charge call from our website www.taxandaccountancysolutions.co.uk  

Are general election worries slowing down UK business growth?

Are general election worries slowing down UK business growth?

Amidst general election and eurozone worries, it seems that UK businesses are slowing down their spending, which could be having an effect on our economic recovery. 

ICAEW lowered growth forecasts for 2015

The Institute of Chartered Accountants in England and Wales (ICAEW) has lowered its 2015 growth forecasts for the UK economy from 2.5% to 2.4%.

Compared to 2014, this is a slowdown – last year, growth achieved was 2.6%, which was the fastest rate of annual growth since 2007. It was also the strongest of all the G7 economies.

Oil company spend, eurozone and China concerns

The ICAEW downgraded its forecasts for growth in business investment this year from 7.2% to 5.2%, in part because of the fact that oil and gas companies are reducing spend due to the slump in the price of crude.

The possibility of Greece leaving the eurozone and the slowdown in China are also having an impact on UK business spending – recently, China reduced its growth target to 7%, which is its slowest expansion rate for twenty five years.

UK General election and EU

Here in the UK, our own concerns around the general election outcome in May are leaving SMEs uncertain about future government policies and also the possibility of leaving the EU after a referendum if the Conservatives win.

ICAEW chief executive, Michael Izza, said;

“The potential slowdown in GDP growth is a clear sign that UK firms are pressing the pause button on their attempts to drive economic growth. Their exposure to international risks, ranging from the eurozone crisis to China’s cooling economy, has subdued their capital spending plans for the year ahead.

“We cannot overstate the effect of the general election either. Businesses remain concerned about the potential makeup of the next government and its policy towards business. Any steer towards a potential exit from the EU is also causing anxiety. All this means consumers are key to the recovery.”

 “Low inflation is ensuring the first annual increase in employee real incomes since the financial crisis, and the average worker will have more money to spend. However, the government must ensure that growth isn’t predicated solely on a rise in household debt, otherwise we could find ourselves back where we were before the financial crisis.”

The current government has argued that to move forward, the UK economy must steer away from its reliance on consumer debt and move more towards investment, manufacturing and exports.

Do you think that the chancellor’s target back in 2012 to double UK exports to £1tn by 2020 is still within reach? Let us know your thoughts on Twitter @OmnitasTax or Facebook!

What is the best way to expand your business?

What is the best way to expand your business?

As a UK SME, getting up and running is only half the battle – at some point, when your business becomes a success, you will need to expand your operation and employ more people.

The cost of employee turnover

For this reason it is important to choose what staff roles are important and also the consideration of the extra outgoings of wages and of course, PAYE. 

Company cars may be part of the package and of course, there is the issue of pensions.

It is important to understand the cost of staff turnover; if your company changes employees regularly, this can cost valuable time and money when it comes to replacing them and training new people to carry out the role.

Inevitably, this can lead to downtime and loss of productivity during the time that the training is taking place.

Of course, offering an affordable yet enticing package to new employees will not only attract talent that could prove very valuable for your business but in the long term, it will help employee retention.

Expanding your business

If you are considering expanding your business venture, why not give us a call for a free initial consultation? Omni Chartered Accountants are specialists in helping UK businesses with their expansion plans – click here for more information, call 01902 837408 or request a free of charge call back from our website today. 

What to do if you have had a letter from HMRC

What to do if you have had a letter from HMRC

Had a letter from HMRC?

If you have received a letter from HMRC and are stressed out by it, what should you do?

What to do if you have had a letter from HMRC

1. Read it thoroughly

2. Digest and consider what is about

3. Is it asking you questions or is it stating facts?

Whatever the contents of the letter, it will certainly include advice and action needed.

DO NOT IGNORE HMRC CORRESPONDENCE

The best thing to do is to seek advice; many accountants will give you some free advice and some direction.

Regardless of whether you are an individual, a sole trader or a limited company, the letter will have been sent for a reason and it will require action to clarify, resolve or just inform.

It needn’t be stressful and you are not alone, take simple steps to understand and talk to the experts. The HMRC website contains many useful links and FAQ’s - it is a great source for getting a greater understanding and knowing what to do and when to do it.

Just don’t ignore or put off dealing with it.

Omni Chartered Accountants are here to help if you are seeking advice - request a free of charge call back from our website, call 01902 837 408 or click here and we will contact you for a free of charge informal chat.

Pre-election VAT & NI commons debate

With the election getting forever closer, David Cameron delivered a bruising commons exchange yesterday.

Labour scrambled to recover this by ruling out a rise in National Insurance.

The Political audience and the press as usual seem preoccupied by judging who is scoring the most debate points, and how are they performing in the election surveys and statistics.

The subject matters themselves that are being trivially utilised as vehicles to point score are actually being completely ignored.

VAT and NI policies do matter post election

VAT rate changes and National Insurance intentions may be the latest potential ‘point scorers’ to win over the UK voters, but both are extremely important to businesses and individuals alike.

What we need is a solid robust policy and transparency about both subjects from every party regarding their intentions post-election – what we don’t need right now is speeches that will sway people to vote based on which party or leader can fool or cajole the other into an embarrassing commons debate situation.

Or maybe that is just the real world?

What do you think? We would love to hear your thoughts @OmnitasTax or join in the conversation on Facebook – if you would like VAT & NI advice for your business then please don’t hesitate to get in touch with us.

What abolishing the  tax return means for your business

Digital tax accounts taxpayer easy guide 2015

It is nothing new for taxpayers or their agents who already use HMRC’s services to manage their tax affairs online. In fact, over 85 per cent of Self Assessment tax returns are already completed this way.

Digital tax returns to replace tax returns announced in 2015 Budget

The Government has announced their plans to update the tax system, by replacing traditional tax returns with digital tax accounts for millions of UK individuals and businesses.

From early 2016, around five million SMEs and ten million individuals will have access to their own digital tax account and by the end of the next Parliament, every individual and SME in the country will have one. But what does this mean  to you and your business?

At the moment, there is still some uncertainty as to the finer details and many sole traders and small businesses are concerned about the changes and how it will affect them.

Later this year, the government intends to publish its roadmap and further consult on the changes; some of these changes will require investment in new systems and changes to legislation.

What abolishing the  tax return means for your business

Digital tax accounts taxpayer easy guide 2015

• Businesses and individuals will be able to view and manage their tax information online
• Taxpayers will be able to see how their tax is calculated
• There will be options for paying securely online
• Taxpayers will be able to check how much tax they owe or need to be repaid online
• Businesses with more than one tax affair - like corporation tax, VAT and Pay-As-You-Earn (PAYE) - will be able to view their total liabilities across the board
• HMRC will already hold information on file along with third party data
• Those who pay tax through PAYE will have their National Insurance contributions, income tax, and pension position shown in their digital tax accounts, including any interest from banks and building societies

Although it is not exactly clear yet as to the timing or the implications, we will keep you informed with all of the latest news and developments. Losing the paper does not mean that you will no longer need an accountant – looking ahead and adapting your business to deal with any changes will be the key to making the transition smoothly. 

HMRC will be in receipt of real time data and information, it is going to be vital to ensure that all information entered is clear, correct and validated prior to updating your digital account.

In the meantime, if you would like to contact us please click here, or request a free of charge call back from our website. We are also available for online chat via @OmnitasTax or you can join in the conversation on Facebook.

Is public trust in British business still dangerously low?

Is public trust in UK business still dangerously low?

Polling and Research Company research YouGov have just released their findings following their recent survey regarding public attitude towards business.

The results do not make for happy reading.

Some six years on from the financial crisis, trust in corporate Britain remains at worryingly low levels. Asked how much they trusted various sectors and professions, the public revealed the extent to which trust between business and customers has been eroded.

Whilst 81% trust teachers and 89% trust nurses, only 49% trust managers of small firms. Entrepreneurs are trusted by just 30% of the public.

What are your own experiences and thoughts? Is trust affecting your business?

In this new economy, a positive trust rating is highly prized by both buyer and seller. Transactions are humanised and social media allows experiences – good or bad – to be shared locally and around the globe.

Addressing the lack of trust in business should be a priority for government, policy makers and, of course, for business owners themselves.

The price for not addressing this will be the emergence of a society that risks turning permanently against its wealth creators, and a society that goes down that road will very soon face a number of serious challenges.

A new economic system based upon trust, transparency and accessibility is one we at Omni strongly believe in.

We would love to hear your thoughts on the matter. If you are a business owner, how do you build trust with your clients? Is the interactive way in which we all research our purchases and decisions a good or bad thing?

Tweet us @OmnitasTax and let us know your thoughts, or join in the conversation on Facebook – we are here to help and offer impartial free of charge advice to UK businesses, however big or small they may be.