THE SHARP EDGE ISSUE 08 THIS ISSUE 2. PENSION REFORM: WHAT DOES IT MEAN FOR YOU? 3. STAFF PROFILE 4. TOP TIPS: VAT 6. WHAT S YOUR UNIQUE SELLING PROPOSITION? 7. BUSINESS COMMUNITY 8. DATES FOR YOUR DIARY Sharp Edge - October 2014
PENSION REFORM: WHAT DOES IT MEAN FOR YOU? 2/8 At the 2014 Budget, Chancellor George Osborne announced a package of measures set to radically overhaul the pension rules and provide people with much greater flexibility as to how and when they take their pension savings. Some of the changes took effect from 27 March 2014, while others are set to be introduced from April 2015 following a period of consultation. Here is an introduction to the key areas of change: Lump sums Under the current rules, people aged 55 and over are able to take a tax free lump sum of 25% of their pension pot. Any lump sum withdrawn in excess of that is an unauthorised payment and subject to tax charges on the pension scheme member of 55% and potential charges on the pension scheme administrator as well. The remainder in excess of the tax free lump sum can be taken in various ways. Flexible drawdown More flexibility Significant plans for further flexibility have been announced, but remain subject to finalisation after the current period of consultation and discussion. In his 2014 Budget Speech the Chancellor said that key to this flexibility will be an option for many pension savers to draw their accumulated pension pot at any time from age 55, subject only to an income tax charge. Under flexible drawdown, defined contribution scheme pension savings can be withdrawn however the member wishes, provided the member demonstrates that he or she has guaranteed minimum income in retirement. This is set at 12,000 p.a. from 27 March 2014. Prior to that date it was necessary to have a guaranteed minimum income of 20,000 p.a. Some pension schemes may not allow flexible drawdown due to the rules of the scheme. Capped drawdowns and annuities A member who is unable to meet the guaranteed minimum income requirement can either enter a capped drawdown or take an annuity. A capped drawdown allows income to be taken from the pension each year up to a maximum amount. From 27 March 2014 this is set at 150% of an equivalent annuity. Prior to 27 March, the figure was 120% of an equivalent annuity. Although there is now no requirement to purchase an annuity with the balance of the pension pot, most people do. Pensions paid either by drawdown or from an annuity are taxed at the member s marginal rate of tax. Small pension pots Regardless of your pension wealth, under the small pots rules, up to three personal pension pots and any number of occupational pension pots worth less than 10,000 ( 2,000 prior to 27 March 2014) can be taken as a lump sum. Again, the first 25% is tax free and the remainder is taxed at the member s marginal rate of tax. Trivial commutation Under the trivial commutation rules, those aged 60 or over who have total pension savings of 30,000 or less ( 18,000 prior to 27 March 2014) can take the whole amount as a lump sum. The first 25% is tax free and the remainder is taxed at their marginal rate. Exactly what form the rules will take is currently unknown, so please contact us before taking any action.
STAFF PROFILE 3/8 INTRODUCING MARGARET BATTLE POSITION: ADMINISTRATION MANAGER Margaret is the administration manager for Harold Sharp Financial Limited. Her main role is to support the two Independent Financial Advisers, Heather Cunningham and Sue Farrington. She deals with all new business processing, obtains quotes and information needed for reports, prepares valuation schedules for annual reviews, liaises with clients and insurance/pension companies, maintains data on the back office system and manages any ad-hoc queries and tasks that arise. Margaret enjoys the ambiguity of what each day will hold and although she prioritises her day the night before, she often ends up dealing with much more than is on her list. She deals with around 140 clients and loves the direct contact she has with them. She takes pride in doing a good job and providing trustworthy customer service. What you might not know... Margaret lives in Saddleworth with her fiancé, Stuart. As such, she spends a lot of her time outside of Harold Sharp enjoying long walks in the countryside. She also spends time gardening and entertaining her grandchildren. She would like to spend more of her time travelling and seeing more of the world. Something you may not know about Margaret is just before she joined Harold Sharp 9 years ago she fulfilled her childhood ambition by walking on the Great Wall of China. MARGARET S MAIN ROLE IS TO SUPPORT THE TWO INDEPENDENT FINANCIAL ADVISERS, HEATHER CUNNINGHAM & SUE FARRINGTON.
TOP TIPS: VAT 4/8 Recent research suggests that many small businesses are missing out on valuable opportunities to reclaim VAT. Here we consider some of the key areas relating to VAT reclaims. Value Added Tax (or input tax ) is payable when you buy goods or services for your business. VAT-registered businesses can generally reclaim the input tax paid regardless of the VAT rating of the goods and services (i.e. standard, reduced or zero-rated). You cannot normally reclaim on goods and services that are exempt from VAT. Business versus personal use VAT cannot be reclaimed on goods and services used solely for non-business activities, including those bought for personal use. There are some specific exemptions for charities please contact us for further information. If your purchase is for both business and personal use, you can reclaim only the business proportion of the VAT. Staff expenses You can normally reclaim VAT on employee expenses if they relate to business travel and subsistence (e.g. meals, canteen facilities or accommodation), unless you pay your employees a flat rate for subsistence when no VAT is recoverable. Mobiles and tablets HMRC allows 100% recovery of VAT on the line rental and cost of mobile phones, but not on the cost of private calls exceeding the contracted allowance. You can also recover all of the VAT on IT equipment and tablets provided to employees if they need it for their job. Where it s a perk, if you charge a small fee for private use you can recover all of the VAT. Business entertainment While you cannot generally reclaim VAT on business entertainment, you can recoup the VAT on entertainment for staff, such as parties and team building exercises, as long as the entertainment is provided for employees only. If you entertain both employees and business contacts, you can only reclaim the proportion of expenditure that is not used for business entertainment. However, if the employees present are also acting as host to the business contacts, VAT will not be recoverable.
TOP TIPS: VAT 5/8 Car expenses You cannot reclaim VAT when you purchase a new car, unless it is used exclusively for business purposes. However, you can generally reclaim 50% of the VAT when leasing a car. VAT on repairs and maintenance can be reclaimed as long as your business pays for the work. Generally all other business motoring expenses, such as fleet management or off-street parking, are VAT-reclaimable. Fuel Fuel used by a self-employed individual, business partner, director or employee for business use only is also VATreclaimable. Fuel used for private journeys is not. Where a business pays for fuel used for private use, it has four options to deal with the VAT: 1. Don t reclaim VAT on any fuel purchase 2. Reclaim VAT only on fuel used for business mileage (must keep strict mileage records) 3. Reclaim all VAT and repay the VAT in respect of private mileage (must keep strict mileage records) 4. Reclaim all VAT on fuel and account for VAT using the optional flat rate charge Customer discounts At present, if businesses offer their customers a discounted rate for early payment of an invoice, the VAT is charged on the discounted rate irrespective of whether early payment is made or not. From 1 April 2015 this rule will change. For supplies made after this date, VAT must be charged on the amount the customer actually pays, i.e. if early payment is made then they pay VAT on the discounted amount, if not VAT must be charged on the full amount. Record keeping HMRC have become increasingly tough on the quality of accounting records kept for VAT. HMRC can fine you up to 500 for not keeping proper VAT records. In addition to general records you must keep:- A VAT account (record of how the figures on each VAT return are arrived at Copies of VAT sales invoices Copies of VAT purchase invoices Credit notes or other documents that alter the value of a supply Any documents relating to overseas trad The rules are complex and liable to change, so contact us for the most up to date advice. We can help make sure you re paying the correct amount of tax and reclaiming the amounts you are entitled to. MANY SMALL BUSINESSES ARE MISSING OUT ON VALUABLE OPPORTUNITIES TO RECLAIM VAT.
WHAT S YOUR UNIQUE SELLING PROPOSITION? 6/8 What singles you out from the crowd, and makes customers choose you over the competition? We all know we should take the time out to consider our Unique Selling Propositions (USPs), but too often we get bogged down in everyday processes. Here are some tips to help you refocus... Your USP defines the core of your business, allowing employees and customers alike to understand exactly what it is you do. This isn t so much a strapline or slogan although some of the most famous are also that. It s not a mission statement. This is a chance to point out to existing and potential clients exactly what it is you offer that s better than the rest. The difficulty comes when everyone is claiming to have the best customer service or the lowest prices. These can sound like hollow words compared to a USP which not only identifies your strengths but directs them at the individuals or businesses you wish to attract. YOUR USP DEFINES THE CORE OF YOUR BUSINESS 1. Who is your target customer? Write down your ideal client, being as specific as possible. Trying to be all things to all people will not help you stand out in your area of expertise. 2. How can you help them? What problem do you solve for these prospective clients? Again be as specific as possible, but there s no need here to list every service you provide. 3. Why should they come to you instead of a similar company? This is the heart of your USP. There may be a dozen local or national companies targeting the same customers with the same services. Differentiation could save you from falling behind in the marketplace. 4. What can you guarantee your customers? A promise can have a big impact on how people perceive your company. Can all your competitors go the extra mile like you do? With these answers in hand, try combining them into a short paragraph. Once you have your short paragraph, think about how you can reduce it into one concise sentence. You now have a succinct statement which accurately describes your business and why customers should choose you. Testing this on a few individuals first should help you gauge its effectiveness. Use it in the office to reinforce your goals, introduce it into your promotional materials or email signature wherever you can, always make sure you emphasise what makes your business unique. Sharp Edge - October 2014
BUSINESS COMMUNITY 7/8 AEQUITAS FORENSICS Aequitas Forensics is an expert witness organisation specialising in digital media, cell site analysis, DNA profiling, firearms and trace evidence. We assist commercial organisations, defence solicitors, law enforcement agencies and other investigating bodies in a wide range of civil (including corporate in-house) and criminal investigations. Our services are tailored to the requirements of the instructing party and to the highest evidential standards. A list of services can be found at www.aequitasforensics.com or call 0800 023 2083. BrightNewMe BrightNewMe is a specialist skin clinic in Altrincham, providing prescription strength skincare and non-surgical cosmetic procedures. All consultations, advice, and treatments are provided by Dr Sarah Norman of the British College of Aesthetic Medicine. Sarah takes a very conservative approach with her patients, promoting a very natural look. Most people aren t trying to look twenty years younger, they just want to look great for their age, and I take great pleasure in helping them achieve this. For more information on Sarah s services visit www.brightnewme.co.uk, or call 0161 926 3629 for a free initial consultation. DW MOTORS MANCHESTER Need a professional approach to the service, maintenance & repairs of your vehicle(s) at a fraction of the dealer price? DW Motors Manchester Ltd is the onestop facility for all of your vehicular needs (from a tiny body scratch to a new engine!). Please visit our website www.dwmotorsmanchester.co.uk for more information or please call us directly on 0161 865 4272 for an informal chat. Happy Motoring! FEATURE ON THIS PAGE... In every issue of The Sharp Edge we publicise our client s businesses in our Business Community pages. To feature in one of our upcoming issues, please email tn@haroldsharp.co.uk Sharp Edge - October 2014
REMINDER DATES FOR YOUR DIARY 8/8 NOV 100 penalty if 2014 paper Tax Return not yet filed. Additional penalties may apply for further delay. No penalties will apply if online return filed by 31 January 2015. Submission date of P46 (Car) for quarter to 5 October. 1 st 2 nd DEC Last day for online submission of 2014 Tax Return for HMRC to collect tax through 2015/16 tax codes, where less than 3,000 is owed. Last day for non EU traders to reclaim recoverable UK VAT suffered in the year to 30 June 2014. 30 th 31 st 1 st 14 th JAN 2015 Due date for payment of Corporation Tax for period ended 31 March 2014. Due date for income tax for income tax for the CT61 quarter to 31 December 2014. End of relevant year for taxable distance supplies to UK for VAT registration purposes. End of relevant year for cross border acquisitions of taxable goods in the UK for VAT registration purposes. 19/20 th 31 st Quarter 3 2014/15 PAYE remittance due. First self assessment payment on account due for 2014/15. Capital gains tax payment on for 2013/14. End of CT61 quarterly period. Balancing payment 2013/14 income tax/class 4 NICs Filing date for Company Tax Return Form CT600 for period ended 31 December 2013. Last day to renew 2014/15 tax credits. First payment due date for 2014/15 Class 2 NICs Deadline for amending 2012/13 tax return. Sharp Edge - October 2014 Holland House, 1-5 Oakfield Sale, Cheshire M33 6TT t 0161 905 1616 f 0161 973 6750 w www.haroldsharp.co.uk e intouch@haroldsharp.co.uk