Archive for July, 2009

Changes to the State Pension

Thursday, July 23rd, 2009

The State Pension is still a fundamental part of peoples’ retirement plans. Over the last two years a number of changes to the basic State Pension have been announced. These include:

• increasing the basic State Pension in line with earnings, rather than prices, which means it should rise more quickly each year than it does now. This change will happen from 2012 at the earliest and by 2015 at the latest and will also apply to people currently getting their State Pension or who reach State Pension age before 6 April 2010;

• both paid and credited National Insurance Contributions (NIC) will count towards the basic State Pension in the same way; 

• reducing the number of qualifying years needed for a full basic State Pension to 30 for people who will reach State retirement age on or after 6 April 2010; 

• any number of qualifying years will give an entitlement to at least some basic State Pension;

 

• replacing the system of Home Responsibilities Protection with a weekly NI credit for people caring for children or severely disabled people and converting past years of HRP into years of credits.

• changing the way the State Second Pension (S2P) builds up, so that it will provide a simple, flat-rate weekly top-up to the basic State Pension; and 

• increasing the State Pension age for both men and women from 65 to 68 in stages between 2024 and 2046. 

It is not unknown for errors to occur due to difficulties linking national insurance contributions with pension records. However, there is any easy way to check your current pension entitlement – ask for a pension forecast. If you would like to know more about the changes or ask for a forecast, visit www. pensionsservice.gov.uk

Wills …. Wills ….. Wills

Thursday, July 23rd, 2009

Change in intestacy rules in England and Wales

 

Where a person dies intestate (ie without having left a Will) the law prescribes how the estate of the deceased is to be divided. The rules are different around the UK with England & Wales, Scotland and Northern Ireland all having different provisions.

For deaths on or after 1 February 2009 the limits to be used in England & Wales have changed. Under the new limits where the deceased leaves a spouse (or registered civil partner) and children, the surviving spouse will receive everything up to £250,000 plus all personal possessions. Anything remaining is divided equally with one half going to any children of the deceased and the other half being left so that the surviving spouse receives the income and on their death the capital passes to the children.

Where the deceased leaves a spouse but no children, the spouse will now receive the first £450,000 plus personal possessions. Anything above that will be split equally with one half to the spouse and the other half to the parents. If there are no parents there is a specified order of relatives to consider. If there are no relatives still alive the surviving spouse will take the whole estate. If there is no surviving spouse (or registered civil partner) but a surviving unmarried (unregistered) partner, they are entitled to absolutely nothing under the intestacy rules. Where the deceased has children they would take the whole estate. If there are no children the estate would pass to the parents etc of the deceased. 

It is vital that if you want to direct where your estate will go that you make a valid  Will to achieve that.

Reduce your business rates

Thursday, July 23rd, 2009

Many businesses pay more business rates than they need to because they don’t realise they could claim a discount through the small business rate relief scheme (SBRR). This scheme has been poorly promoted by the billing authorities, but it is worth applying for relief as you could reduce your rates bill by up to 50%. 

It is the size of the property occupied that determines the discount not the size of the business. Generally business properties in England with rateable values of less than £15,000 (£21,500 in Greater London) qualify for some discount. However, where one business occupies several properties, the SBRR will only apply to one main property and then only if the total rateable value of all the properties occupied is less than £15,000 (with each property having a rateable value of less than £2,200).

 

All business properties pay rates according to their rateable value multiplied by a set multiplier, which is 48.5p for 2009/10. The English SBRR applies a lower multiplier (48.1p for 2009/10) to qualifying properties, plus the following additional reductions:

Rateable value of building Relief givenLess than £5,000 Lower multiplier, then 50% reduction in resulting figure£5,000 – £9,999 Lower multiplier, then 1% reduction from 50% for every £100 of rateable value above £5,000.£10,000 – 14,999 (£21,499 in London) Lower multiplier only

 Example

Your office has a rateable value of £5,500. You are sent a business rates bill of £2,668 (£5,500 x 0.485) for 2009/10. You apply for the SBRR and receive a refund of 1,213, calculated as follows:

Rateable value at lower multiplier rate: £5,500 x 0.481 £2,645Discount for value less than £5,000: 50%Reduced by 1% x (£5,500 – £5000) 5%Final discount for small property 45% x £2,645 £1,190Final business rates for 2009/10 £1,455 

Original rates bill £2,668 

Reduction achieved: £1,213 

You need to apply for the SBRR from the billing authority that collects your business rates, but you only have to complete one form to cover all the years from 2007/08 to 2009/10. A new claim will be required from April 2010. The extended deadline forclaims for these years is now 30 September 2010. 

Vacant properties 

If your business property is vacant you can claim an exemption from business rates, but only for restricted periods, known as permitted void periods. From 1 April 2008, the permitted void period is six months for industrial properties, and three monthsfor other commercial properties. Full business rates are due on all empty properties when the permitted void period comes to an end, subject to any SBRR reductions due. However, for just one year from 1 April 2009 all empty properties with a rateable

value of less than £15,000 are fully exempt from business rates.

High Earners and “HOT” Buget topics

Thursday, July 23rd, 2009

Alistair Darling presented his second Budget on Wednesday 22 April 2009.

Having acknowledged the depth of the recession, he hinted that the Budget measures would enable the UK economy to begin to grow ‘by the end of the year’. Our round up highlights the key budget headlines likely to affect you and your business.

• From 6 April 2010 there will be a 50% top rate of tax for those with taxable income over £150,000 and in the following tax year the government has also announced its intention to restrict tax relief on pension savings for this group.

• A phased reduction of personal allowances for those with income over £100,000 is also due to impact from 6 April 2010. 

• The amount which can be invested in an ‘ISA’ account the tax free savings vehicle

is to increase by £3,000 to £10,200.

• The ability to use trade losses through relief in earlier years by both an unincorporated business and a company has been enhanced. 

• There is a temporary additional capital allowance on plant expenditure which may benefit those with higher levels of spending on plant and machinery. 

• Changes to the rules for Furnished Holidays Lettings Losses and CGT as well as a extension of the furnished holiday lettings scheme to properties in the European Economic Area.

Please contact us for further advice on any matter which may affect you.