Many businesses recognise the need to insure their company property, equipment and fixed assets. However, they continually overlook their most important assets – the people who drive the business.
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Following any Budget, and certainly during this period of economic downturn, it’s crucial that all businesses consider their corporate financial planning requirements. Talk to us about our comprehensive planning service designed to meet the distinct and changing needs of you and your business.
We can assess and recommend planning actions to enhance and protect your business interests.
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Directors’ Pensions and Small Self-Administered Schemes
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Loss-making companies can reclaim taxes paid on profits made in the past three years to November 2010.
Extension of scheme allowing businesses to defer tax bills.
Support for companies’ cashflow, with a top-up trade credit insurance scheme to match private sector trade credit insurance provision.
Businesses’ main capital allowance rate doubled to encourage firms to bring forward investment.
New £750m investment fund to provide financial support to emerging technologies and regionally important sectors in advances businesses.
Enhanced tax relief to support investment of £50bn this year, including £10bn to support the communications sector and extend the broadband network.
Incentives to encourage smaller North Sea oil fields to be brought into production.
The chancellor Alistair Darling unveiled plans during his second Budget speech on April 22, that he would increase taxes for the highest paid, rein in public spending and substantially increase borrowing to restore the public finances.
The economy is forecast to contract by 3.5pc in 2009, but growth is expected to resume “towards the end of the year” according to the chancellor.
Growth is predicted at 1.25 pc in 2010, and the chancellor said he expected the economy to grow at a 3.5 per cent rate from 2011 onwards. The current public deficit was “set to halve within four years”, he said. He said the Budget cut growth in real spending on public services from 1.2 per cent to 0.7 per cent from 2011.
Public borrowing is set to reach a post-war high of £175bn this financial year, or 12.4 per cent of gross domestic product, falling to £173bn next year and £130bn the year after. The public sector net debt will almost double to 79pc of national income by 2013. After that it is expected to stabilise and then start to fall only from 2015/16.
The previously planned introduction of a new 45pc income tax rate from April 2011, on income over £150,000 will now be brought forward by a year and the rate will increase to 50pc.
In addition, the personal tax allowance will be withdrawn for those earning more than £100,000 from next April, instead of a year later. From April 2011, the exchequer also intends to restrict pension tax relief for those with incomes above £150,000.
Other measures included the introduction of a car scrappage scheme next, paying buyers of new cars £2,000 if they got dispose of cars that are more than 10 years old. The scheme will run until March 2010.
The government aims to cut carbon emissions by 34pc by 2020, and will offer additional funding for energy efficient homes and buildings. There was also funding for green manufacturing.
The chancellor also doubled capital allowances for businesses this year to 40pc, in an effort to encourage companies to bring forward investment.
For savers, the annual Individual Savings Account limit has been increased from £7,200 to £10,200, half of which can be invested in cash. The new limit applies this year for the over-50s, and next year becomes available for all other savers.
The current economic climate could offer an opportunity for people to limit their tax bills and crystallise losses by turning them to their advantage and passing on share portfolios and property to children to help avoid capital gains tax (CGT).
Gifts from parents to children usually incur CGT if they have risen in value, but no tax is levied if the value falls, meaning families are able to give away second homes and shares without having to pay tax.
If your profits have fallen below the CGT allowance or fallen into negative territory, crystallising them could reduce your tax bill.
If you have made a capital loss on your share portfolio, this can generally be carried forward indefinitely to offset against future gains, however, you must notify HM Revenue & Customs of losses within five years.
The technical definition of a recession is when the economy has shrunk for at least six months, as measured by negative Gross Domestic Product (GDP) figures for two successive quarters. There is often debate about when precisely an economy is in recession, as it is possible for certain business sectors such as manufacturing to be in recession when other sectors aren’t.
If the recession is directly affecting your personal finances, one way to cut your monthly expenditure, if appropriate to your particular situation, is to remortgage. This could reduce the cost of your single biggest debt and protect you against the risk of future rising repayments by locking into a fixed or capped rate deal. Some lenders are also offering discount deals with no penalties for switching at the end of the special rate period.
If you are coming to the end of your current fixed or discounted deal, moving to your lender’s variable rate paradoxically may mean that you benefit from a lower rate due to the spate of interest rate cuts by the Bank of England in an attempt to curb inflation. However, this could leave you exposed to future rate increases.
You need to consider any high arrangement charges, lengthy lock-in periods and high exit fees that may apply to any new deal. However, a higher fee can be worth paying if you make savings on interest payments over the term of your mortgage. As a rule of thumb, the bigger the mortgage the more important the rate, rather than the fee, becomes.
Conversely, the fee assumes more importance than the rate on smaller mortgages. But the longer you are tied in, the more important the rate becomes as the impact of extra interest increases. Stepped rates are also worth watching out for. These mortgages offer a competitive low rate in year one before it is ratcheted up in the following years, when you may be locked in to the higher rate.
Flexible mortgages allow you to make overpayments when you can, reducing your overall debt and interest bill, as well as enabling you to take payment holidays if you needed to. In the event that you were made redundant, you may also be able to stop your mortgage payments for an agreed period of time, or draw down a lump sum to help you out until you found new work. But even if your lender allows you to take a payment holiday, you should remember that the unpaid interest will still be rolling up, increasing the overall debt you owe.
Your property may be repossessed if you do not keep up repayments on your mortgage.
Individual Savings Account (ISA) limits have been increased from £7,200 to £10,200, following the chancellor Alistair Darlings Budget 2009 announcement. The news that will be very welcomed by savers who have seen their savings income fall due to repeated cuts to the UK base rate in the past nine months.
The amount that can be put in to a cash ISA each financial year will be increase from £3,600 to £5,100. The increased ISA limits will currently only apply to those aged over-50 during this year. However, these savers will not be able to take advantage of the new limits until October 6 to give providers the chance to adjust their systems. All other savers will be able to from the start of the next tax year on April 6, 2010.
This is only the second time the limit has been increased since ISAs were introduced 10 years ago. The overall ISA limit was raised to £7,200 from £7,000 last year, with a larger increase in tax-free entitlement given to cash ISAs.
Although the ISA increase is higher than expected, the maximum tax-free entitlement will remain unequal for those depositing savings and those investing in shares, up to £10,200 can be invested in share ISAs, whereas the maximum cash ISA deposit is £5,100.
The value of investments and the income from them can go down as well as up and you may not get back your original investment. Past performance is not a guide to future performance. Tax benefits may vary as a result of statutory change and their value will depend on individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent finance acts.
Grandparents who look after their grandchildren so that the parents can go out to work will be able to claim credits towards the basic state pension.
The move means people who choose to give up work to provide childcare for their grandchildren will no longer miss out on national insurance contributions, which allow them to qualify for a full basic state pension.
Grandparents and other adult family members who care for members of their family aged 12 or younger for more than 20 hours a week will qualify for national insurance credits towards the basic state pension from 2011.
Families on lower incomes will see the child tax credit increase by an extra £20 above indexation from 2010.
A change in the penalty you will pay if you are late in notifying HM Revenue & Customs (HMRC) that you have commenced self-employment was introduced from April 6.
Up until this date, the penalty was £100 and you had 3 months following the commencement of trade to let HMRC know that you have become self employed.
New penalties for late notification of self-employment
From April 6 the rules have been changed as follows:
Anyone who ceases or becomes liable for Class 2 or Class 3 contributions must notify HMRC immediately.
A penalty may be levied (between 30pc and 100pc of the “lost contributions”) if notice is not given by 31 January following the end of the tax year in which you become liable.
There will be no penalty if you have a reasonable excuse for the late notification.
The new HMRC penalty system has been drawn up to encourage people to take more care when submitting tax returns and other documents, as well as to deter deliberate under-assessment of tax liabilities.
The chancellor Alistair Darling unveiled plans during his second Budget speech to increase taxes for the highest paid, rein in public spending and substantially increase borrowing to restore the public finances.
The economy is forecast to contract by 3.5pc in 2009, but growth is expected to resume “towards the end of the year” according to the chancellor.
Take a look at our guide and see how your finances could be affected by Budget 2009.
Budget 2009 highlights
The Economy – Growth
The UK economy contracted by 1.6pc in the last quarter of 2008. GDP growth for the year as a whole expected to be -3.5pc.
Growth forecast of 1.25pc in 2010. From 2011, the economy will continue to recover with growth of 3.5pc from then on. In future years the economy will recover towards a trend rate of growth of around 2.75pc.
Inflation is expected to reach 1pc by the end of this year. The Bank of England inflation target remains unchanged at 2pc. RPI inflation is forecast to remain negative, falling to minus-3pc by September, before moving back above zero next year.
The Economy - Borrowing
UK figures for public sector net borrowing will be £175bn this year, 12.4pc of GDP. From 2010, borrowing will fall to £173bn, then £140bn, £118bn and £97bn.
As a share of GDP, borrowing will be 11.9pc next year, 9.1pc in 2011/12, then 7.2pc in 2012/13 and 5.5pc in 2013/14.
UK net debt, including the cost of stabilising the banking system, will as a share of GDP increase from 59pc this year to 68pc next year, 74pc in 2011/12, then 78pc and 79pc in subsequent years. It will stabilise and then begin to fall in 2015/16.
The UK’s current deficit is expected to halve within
four years.
Income tax
New 50pc tax rate introduced for those earning more than £150,000 to take effect from April 6, 2010.
Personal allowances to be fully withdrawn for those with incomes over £100,000 from April 6, 2010.
No income tax increases this year.
Pensions
From April 2011, pension tax relief for those with incomes over £150,000 will be restricted so it is gradually tapered to the 20pc rate.
Basic state pension increased by at least 2.5pc, regardless of the Retail Price Index.
Capital disregard on Pension Credit is to be raised from £6,000 to £10,000 from November 2009.
Education
£250m will be provided this year and £400m in 2010/11 for an additional 54,000 places in sixth form and further education colleges, with consequential provisions for Scotland, Wales and Northern.
Housing
The stamp duty holiday on properties sold for less than £175,000 will be extended until the end of 2009.
An extra £80m is to be given to the HomeBuy Direct, the government’s shared equity mortgage scheme.
An extra £1bn will be provided to help homeowners and boost housing.
A scheme will be introduced
to guarantee securities backed by mortgages in a bid to
increase lending.
£500m of extra financial support will be provided for housing projects, including £100m for councils to build new energy-efficient housing.
£50m to accelerate the modernisation of housing for military families.
Environment
£435m extra support for energy efficiency measures for homes, businesses and public places.
Additional £1bn to help combat climate change by supporting low-carbon industries and green jobs.
£525m of new support will be given over the next two years for offshore wind projects.
£405m to encourage
low-carbon energy and advanced green manufacturing in Britain to drive new technology and investment in small-scale projects.
Most energy-efficient new power stations using combined heat and power (CHP) technology to be exempt from climate change levy.
Jobs
An additional £1.7bn for Job Centre Plus and the New Deal is to be provided.
Additional support for people who have been out of work for 12 months.
From January everyone under the age of 25 who has been jobless for 12 months will be offered a job or a place in training.
£260m of new money allocated for training and subsidies for young people to help them gain skills and experience.
Statutory redundancy pay
will increase from £350 to £380 a week.
Welfare
The child element of the Child Tax Credit to increase by £20 from April next year.
£100 extra for child trust fund vouchers for new babies with disabilities, extra £200 for
those with severe disabilities.
State redundancy pay to rise from £350 to £380 a week.
Grandparent care for young relatives to count towards basic state pension.
Last year’s increase in winter fuel allowance to be extended for another year, £250 for over-60s and £400 for over-80s.
Savings
Annual Individual Savings Account limit to be increased from £7,200 to £10,200, half of which can be invested in cash. New limit introduced this year for over-50s, next year for all other savers.
Pensioners
Pensioners’ Winter Fuel Allowance is to be kept at the higher level of £250 for over-60s and £400 for over-80s for another year.
Tax avoidance
The aim is to raise £1bn of extra revenue over the next three years by closing tax loopholes and schemes.
Government
Efficiency savings from 2011 are expected to give a further £9bn of additional savings a year by 2013/14.
Financial services
Treasury paper to be published with recommendations for wide-ranging reform of financial services, including action to reduce the impact of the failure of financial firms.
Motoring
A car scrappage scheme introduced from this May to provide motorists with a £2,000 discount on new vehicles bought when they trade in cars over 10 years old. The scheme will end in March 2010.
Other announcements
Alcohol duties increased by 2pc.
Tobacco duty increased by 2pc.
Fuel duty will increase by 2p per litre in September and then by 1p a litre above indexation each April for the next four years.