Image courtesy of szeke, Flickr

Budget Snapshot Autumn 2017 – further information

We issued our Budget Snapshot – Autumn 2017 shortly after the Chancellor sat down yesterday. We are now following this up with more information on:

    • pensions
    • Stamp Duty Land Tax for first time buyers
    • income tax and National Insurance allowances
    • trusts
    • enterprise investment schemes

 

Pensions

The standard lifetime allowance will increase in line with inflation to £1,030,000 from 6 April 2018.

Clients who have uncrystallised pension funds close to or over the lifetime allowance will be better off waiting until after 5 April 2018 to take pension benefits.

Example

Amelie’s pensions are worth £1.2 million and she has no transitional protection. She decides to take the maximum tax free cash in December 2017. As the standard lifetime allowance is £1 million, the maximum tax free cash available to Amelie is £250,000. £750,000 is designated to flexi access drawdown and £200,000 remains uncrystallised. There is no lifetime allowance charge at this time but Amelie has used 100% of the lifetime allowance.

Amelie will not benefit from the increases in the standard lifetime allowance and the uncrystallised fund will be subject to the lifetime allowance charge when she decides to take benefits from it, at age 75 or if she dies before age 75.

If Amelie waits until 6 April 2018 to crystallise £1 million then she will have used 97.08% of the increased standard lifetime allowance. There will still be a lifetime allowance charge at the time benefits are crystallised if she uses more than the remaining 2.92% of the standard lifetime allowance but less tax will be payable overall.

The increase in the standard lifetime allowance means that if the excess is taken in 2018/2019 as a lump sum then there will be a saving in tax of £16,500 and if it’s taken as income then there is a saving in tax of £7500.

As the standard lifetime allowance increases this potential tax saving will also increase if Amelie does not crystallise the remaining fund.

 

Stamp Duty Land Tax (SDLT) for First Time Buyers

New rates of SDLT are being introduced for first time buyers from 22 November 2018.

From 22 November 2017 first time buyers paying £300,000 or less for a residential property will pay no SDLT.

First time buyers paying between £300,000 and £500,000 will pay SDLT at 5% on the amount of the purchase price in excess of £300,000.

First time buyers purchasing property for more than £500,000 will pay SDLT at the standard rates.

A first time buyer is someone who has never owned an interest in a residential property in the UK or anywhere else in the world and who intends to occupy the property as their main residence.

The relief must be claimed in an SDLT return.

This will not apply in Scotland and will apply in Wales until 1 April 2018 when SDLT is devolved to Wales.

SDLT rates from 22 November 2017

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Income tax and National Insurance (NI) Allowances

Income tax and NI allowances are increasing broadly in line with inflation from 6 April 2018.

The income tax personal allowance will be £11,850 in 2018/2019 and the higher rate threshold will be set at £46,350.

There is no change in the income limit for personal allowance which remains at £100,000 or the additional rate threshold which will continue to be £150,000.

More details of the rates and allowances for 2018/2019 can be found here.

 

Trusts

There will be a consultation in 2018 on the taxation of trusts.

The aim is to make trust taxation simpler, fairer, and more transparent. No details of how this will be achieved have been released.

 

Enterprise Investment Schemes (EISs)

The annual limit for investing in EISs will increase to £2 million from 6 April 2018.

This depends on any investment amount above £1 million being invested in knowledge-intensive companies. If there is no investment in knowledge-intensive companies the limit will remain £1 million.

Tax motivated investments into EISs, seed enterprise investment schemes (SEISs) and venture capital trusts are to be excluded from tax relief.

From 6 April 2018 tax relief will not be allowed where it provides most of the return to an investor with little risk to the original capital invested.

 

Should you have any queries please do not hesitate to contact Jonathan Kelly on 020 8681 4994.

Image courtesy of WooWork.com, Flickr

Budget Snapshot 2017

The Budget statement was delivered today at 12.30pm by the Chancellor of the Exchequer, Phillip Hammond.

This is the first of what will now become an annual budget held in the Autumn. From 2018 there will be a ‘Spring Statement’ but all major fiscal announcements will only be made in November.

The Budget is a report presented each year by the Chancellor of the Exchequer to Parliament and the nation. The primary role of the Budget is to control public finances by setting out how much tax the Government will collect, how much the Government will borrow and how much the Government will spend. The Budget Responsibility and National Audit Act 2011 requires the Government to produce a Budget Report (which is the formal name for the Budget) for each financial year. The Charter for Budget Responsibility sets out what the Budget Report must cover.

When the Government publishes the Budget, the Chancellor gives a speech to Parliament in which he sets out the key decisions on tax, borrowing and spending, and his reasons for taking those decisions. This speech is known as the Budget Statement.

The official forecast on which the Chancellor bases the Government’s Budget is provided by the Office for Budget Responsibility (OBR). The Budget Responsibility and National Audit Act 2011 requires the OBR to publish two economic and fiscal forecasts for each financial year, including one published at the Budget. The OBR’s duty is to examine and report on the sustainability of the public finances and it is required to do so objectively, transparently and impartially.

PLEASE NOTE: This snapshot is not intended as an in-depth analysis of the Chancellor’s speech (we will leave that to the industry commentators and experts) but we hope this brief summary helps you gain a quick grasp on the key points delivered by the Chancellor from the dispatch box.

For full details of the following headlines (and more) you may wish to visit the HM Treasury website.

 

Main Headlines from the Speech

 

Introduction

• This budget takes place mindful of the change that will happen as a consequence of Brexit, with the Chancellor determined to ensure the country is prepared for every possible Brexit outcome.

• £3bn set aside for Brexit negotiations

• The Govt to adopt a balanced approach in this budget

 

Forecasts

• The Chancellor announced adjustments to previous growth forecasts from those previously announced in the 2016 Autumn Statement.

- Growth forecast for 2017 – revised down from 2.0% to 1.5%

- Growth forecast for 2018 – revised down from 1.6% to 1.4%

- OBR borrowing forecast revised down from £58.3bn to £49.9bn for 2017/18

- OBR borrowing forecast revised down from £40.8bn to £39.5bn for 2018/19

 

Taxation / Welfare / Finance

• Tax system for single use plastic items to be investigated

• National Minimum wage to be increased from £7.50 per hour to £7.83 from April 2018

• VAT registration threshold to remain unchanged at £85,000 for the next two years.

• Business Rates – switch from RPI to CPI now brought forward to 2018

- £1,000 discount to all pubs with a rateable value of less than £100,000 extended to March 2019

- Revaluation to be extended to every three years

• Personal allowance to rise to £11,850 from 2018

• Higher rate of tax threshold to increase to £46,350 from 2018

• Universal Credit – £1.5bn package to address concerns about the delivery of Universal Credit

• Universal credit – 7 day waiting period to be removed / Full months payment can be accessed within 5 days of applying

• Income tax to be applied to royalty sales for digital businesses in the UK if payments are made to a low tax jurisdiction from April 2019

 

Housing / Infrastructure / Transport

• Ambitious plan to tackle the housing challenge

• £44bn of funding to support the housing market over the next five years

• Pledge to build and extra 300,000 homes per year by the mid 2020s (Biggest rate of house building since 1978)

• Urgent review into the gap between the number of planning permissions submitted and homes built

• New £34m fund to develop construction skills across the country

• With immediate effect, Stamp Duty for first time buyers abolished altogether (for properties up to £300,000) or first £300,000 on properties up to £500,000

• 5 new garden towns to be built

• £28m extra for pilot projects to tackle rough sleeping

• Pledge of a £1.7bn ‘Transforming Cities’ fund

• Further £300m to be invested for HS2

• £2bn more for Scottish Govt, £1.2bn for Wales and £650m for N.Ireland

• New railcard for ages 26-30

• Air passenger duty rates frozen

• £28m funding for support for victims of Grenfell Tower fire

• Councils given power to apply 100% council tax premium on empty properties

 

Health / Education / Child Welfare

• £40m to be invested to train maths teachers

• £10bn package for frontline NHS services PLUS £2.8bn to be made available for use now and next year for NHS in England (£350m of this for use in Winter 2017/18)

Technology

• EIS limits to be doubled for knowledge intensive companies while ensuring that EIS is not used as a shelter for low-risk capital preservation schemes

• £500m investment in initiatives including 5G and full fibre broadband

• £400m investment in electric vehicle infrastructure.

• No benefit in kind applying to charging electric vehicles at work.

• Trained computer teachers to be tripled in number

 

Excise Duty

• No changes to fuel duty

• Tobacco duty calculator will continue at inflation plus 2%

• Alcohol on white ciders to increase. All other alcohol to remain unchanged.

• Car tax on diesel cars only to go up one band, for those vehicles not meeting current emission limits, from April 2018

 

Should you have any queries please do not hesitate to contact Jonathan Kelly on 020 8681 4994.

 

 

Image courtesy of Flickr_Sheila Sund

Finance Bill: September 2017

Further to the Spring Budget, the Treasury has published its second Finance Bill of 2017 to legislate for proposals made in this year’s Budget that were abandoned when the Government called June’s General Election.

Key announcements include:

  • The money purchase annual allowance reduces to £4000 from 6 April 2017.
  • The dividend tax allowance reduces to £2000 from 6 April 2018.
  • The introduction of an income tax exemption to cover the first £500 worth of pensions advice provided to an employee in a tax year. The advice can cover not only pensions, but also general financial and tax issues relating to pensions.
  • A process for policyholders who have part surrendered life policies to apply to HMRC to recalculate chargeable gains where the part surrender has resulted in a ‘wholly disproportionate’ tax charge.
  • Provisions for certain non-domiciled individuals to be treated as if they were domiciled in the UK for the purposes of income tax and capital gains tax from 6 April 2017.
  • Changes to the domicile rules for IHT which come into effect from 6 April 2017:
    • Anybody who has been resident in the UK for at least 15 out of the previous 20 tax years is to be treated as UK domiciled for IHT purposes. It was previously 17 years.
    • Anybody who was born in the UK with a UK domicile of origin but has acquired a domicile of choice elsewhere is to be treated as UK domiciled for IHT purposes if at any time they are resident in the UK and have been resident in the UK in at least one of the two previous tax years.

Another Finance Bill is due at the end of November or start of December when the Chancellor delivers the first Autumn Budget.

If you have any queries or if I can be of any other assistance please do not hesitate to contact Jonathan Kelly on 020 8681 4994.

PK Partnership cost of financial advice

The importance of reviews

Several important changes to tax and benefits were introduced at the beginning of 2017/18. It makes sense to review your financial planning regularly to make sure it’s still fully effective. After all, last year’s sensible strategy could be this year’s tax trap.

Disciplined planning It’s a good idea to check your investment portfolio at pre-determined intervals. This is preferable to looking at it almost daily when markets are soaring or falling through the floor, as those are just the times when your emotions can override your good intentions to be a long term investor.

You will get more out of these reviews if you make a short list of what you want to discuss, to supplement our agenda. You can start with basic things like checking your use of the current ISA allowance. This tax year there have been two important developments to ISAs: first and most important, there has been a big increase in the annual amount you can invest in ISAs, now £20,000 – up from £15,240.

Efficient saving

The other big change is the introduction of the new Lifetime ISA or LISA (see page 3). You can start with one if you are between the ages of 18 and 40 and you can either use it for buying a first home worth up to £450,000 or leave it to be drawn till you are 60. The good news is that the contribution (up to £4,000 each tax year) qualifies for the equivalent of basic rate tax relief.

Reviews can prompt you to consider some of those things that sometimes get left undone – such as your will, which might still need to be arranged or updated. Or perhaps there is a lasting power of attorney that has not been progressed or a life assurance policy that should be placed under trust. Life has a habit of springing unpleasant surprises on us when least expected.

The Financial Conduct Authority does not regulate tax advice. The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate will writing and some forms of estate planning.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit with your overall attitude to risk and financial circumstances.

 

 

Arranging insurance for the Gumball 3000 rally from Riga to Mykonos

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PK Partnership Budget Savings and Pensions

Financial Focus: Summer 2017

In the summer issue of Financial Focus learn more about:

  • The ISA family grows again The Lifetime ISA was launched on 6 April and is an important addition to the ISA family.
  • Budget tax changes – set for a comeback? The Spring Budget contained a few surprises, but came before the big surprise – a snap election.
  • The residence nil rate band – not all it seems.  The inheritance tax residence nil rate band is now available and will potentially cut the inheritance tax bill on your estate by £40,000.
  • Just one more year.  The next increase in State Pension Age has edged nearer.
  • Diversifying your investments. How can you arrange your investments to cope with future uncertainty?
  • Think before you phase retirement Phasing retirement is not as easy as you may think.

 

Click here to download your copy.

 

Our first Gumball 3000: An Insurance Broker’s View from the Cockpit. By Amit and Anjana

Our first Gumball 3000: An Insurance Broker’s View from the Cockpit. By Amit and Anjana

We have just completed our first rally as the official insurance partner for Gumball 3000. The journey began for PK Partnership almost a year ago when we were approached to find an insurance market that would insure such a big risk and provide the widest level of cover should something go wrong.

Registration began in Riga, Latvia where we met with the drivers of 140 cars that had signed up to this year’s Riga to Mykonos Gumball 3000 rally. We had quoted and put on cover many on the drivers before the start, including vehicles such as but inevitably there were going to be a few that required last minute specialist insurance cover, a strict stipulation for the rally by Gumball 3000. This resulted in a total of £30m risk premium made up of supercars, modified and imported cars, along with celebrity status drivers.

On the rally we were joined by big names such as Afrojack, Celo Green and many other famous faces, but our eyes were on ensuring we were there throughout the rally in case of any issues or unfortunate claims along the way.

PK Partnership Team 106 passed through Croatia, Latvia, Montenegro, Dubrovnik, Athens arriving at the end of the week in Mykonos. We were driving 12 hour days in our Mercedes-Benz AMG GT S amongst the other cars we arranged insurance for including modified and highly sought after models such as McLaren 675 LT Spyder, Porsche 918 Spyder, Lamborghini Aventador, Ferrari 488 GTB, Ferrari 599 GTO, Rolls-Royce Phantom Drophead and Twisted Land Rover.

It was a full jam-packed week and we are already planning the insurance risk aspect of next year’s rally, a 20th anniversary celebration of Gumball 3000.

If you have any insurance requirements that you don’t think will fit standard insurance please feel free to contact us as specialist and unusual risks are our specialism.

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We’re excited for Gumball 3000 Riga to Mykonos

PK Partnership are excited to be heading off to Riga later this week and look forward to meeting Gumball teams at the Drivers Registration on Saturday.

We are team 106 on the grid and will be piloting a Mercedes-Benz AMG GT S.

It has been a busy month for us talking to many Gumballers about their rally insurance and we’re pleased to say a large number of entrants have already been put on cover.

If you haven’t yet sorted your insurance, there is still time. Your Gumball insurance policy needs to be effective from 1 July 2017 and will cover your vehicle for the entire duration of the rally. It is advisable to have cover in place prior to travel. If you haven’t already contacted PK Partnership to arrange your insurance for Gumball 3000, it is important to do this as soon as possible.

Upon registration this Saturday 1 July you will be required to present proof of insurance that matches the required limits to take part in the rally. PK Partnership, the appointed insurance broker to Gumball 3000, can provide you with a tailored quotation to meet your personal requirements.

If on the day you don’t have the correct level of cover this can delay you for up to an hour whilst documentation is processed. For an insurance quotation from our appointed broker please contact PK Partnership on 020 8681 4994

We look forward to meeting Gumballers on Saturday!

 

Image courtesy of szeke, Flickr

The Triggers for writing your Will

Is age or life changes the more significant factor?

To some extent, the age at which someone should write a Will very much depends on individual circumstances. You can make a Will any time after you are 18 years old, but there are some life events that you might think of as triggers for the preparation of a Will.

Financial Independence

Some people find that they become financially independent from their parents quite quickly, whereas others continue to be dependent on them well into their twenties, perhaps because they are attending university or are in post-graduate study.

Under the intestacy rules, if an unmarried person without children dies without writing a Will, their assets will go to their parents (or other relatives if the parents are deceased). This might not be a problem while you continue to be dependent on your parents, but, on achieving financial independence and acquiring some assets of your own, you may begin to think differently. Perhaps there are other people or groups you’d like to leave assets to?

Getting Married

Marriage, civil partnership or even the recognition that a couple is in a long-term relationship might be a trigger for the making of a Will. Those triggers may have less to do with age than an acknowledgement that you want to provide for your spouse or partner in a manner that is different to what the intestacy rules would dictate. That might be especially true for long-term couples who are not married or in civil partnerships, but who own a house together or otherwise have arrangements that would be disrupted if the intestacy rules were to apply.

According to the Office for National Statistics, the average age for first marriage is around 30 for men and 28 for women. That, of course, can vary enormously, but it would seem reasonable for people in their late 20s or early 30s to consider making a Will.

Having Children

When you have children, you are likely to have two main concerns about what happens if you should die. First and foremost, who will look after them? And secondly, what assets will be available to provide for their welfare? A Will enables you to address both these points, as you can use it to appoint guardians for your children and to allocate money and other assets (by way of a trust or otherwise) for the benefit of your children.

Re-marriage

A person who re-marries, either after a divorce or the death of a spouse, will want to make a new Will, as any prior Will (other than one made in anticipation of the new marriage) will be automatically revoked by the new marriage. This applies equally to civil partnerships.

Terminal Illness

A person with a terminal illness who does not have a Will may want to make one rather than have their entire assets pass under the intestacy rules. It sometimes happens that people with terminal illnesses have a particular desire to make a charitable bequest to a hospice, a charity related to their disease or to the care and treatment they have received.

How can we help?

Although a mentally competent person can make a Will any time after the age of 18, it is more likely to be a life event, rather than attaining any particular age, that will lead him them to write a Will. When anticipating events involving family relationships, children or an unmarried partner in a long-term relationship, one will want to consider making a Will. To find out how we can help, please contact us today – we look forward to hearing from you.

 

Image courtesy of WooWork.com, Flickr

Estate planning for unmarried couples: what you need to know

There is a misconception that unmarried couples who have lived together for a long time – and maybe even had children together – will, for legal purposes, be treated as a married couple. However, this simply isn’t true. And when it comes to estate planning, the ‘default’ legal positions for married and unmarried couples are very different.

In general, unmarried couples who do not have Wills and do nothing about estate planning can expect to pay a higher rate of Inheritance Tax (IHT) and may face intestacy rules that force the disposition of their assets in a way that they might not want or intend.

Why it’s important for unmarried partners to have wills

Consider, for example, an unmarried couple who have lived together for many years and who have several children.

If one of them were to die without a Will, the intestacy rules would apply. Under those rules, the deceased’s entire estate would go to the children in equal proportions. The surviving partner would have no automatic right to any part of the estate and would need to make an application to the court in order to claim some share of the deceased’s estate.

If the couple had no children, then the deceased’s estate would go to other family members of the deceased. Again, the surviving partner would have to apply to the court to make a claim against the estate for financial provision*.

So it’s easy to see why it is particularly important for unmarried partners to have Wills, at least where they are concerned about making financial provision for the surviving partner when one of the partners dies.

The good news is that where both unmarried partners are still alive, they can plan for the disposition of their respective states by making Wills, and by getting appropriate tax advice and putting it into effect.

They can also consider items such as living Wills and lasting powers of attorney, which may assist one partner in caring for a partner who becomes incapacitated.

*The legislation governing such applications applies only in England, Wales and Northern Ireland. In Scotland, there may be remedies for a surviving cohabitee under the Family Law (Scotland) Act 2006.

 

 

 

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