31 Oct 2013
The value of traditional inheritance lump sums is falling as older generations choose to give away more of their wealth during their lifetime, new research suggests.
According to figures from the Office for National Statistics (ONS), nearly one in 10 over-55s regularly give money to family members in order to avoid a potential inheritance tax bill. A further 20% of those studied said they would do the same if they could afford to do so.
Experts claim older generations are also giving away more money to help their children deal with costs such as university fees, or to assist them to purchase their first property.
‘It is implied that the inheritance they were planning to leave will be compromised as they are choosing to dip into their savings and give money to younger family members while they are still alive,’ said a spokesman for the ONS.
The data reveals that some 3.6% of UK adults – or 1.6 million – received an inheritance valued at more than £1,000 in a two-year period. Of this figure, more than half of inheritors received less than £10,000.
However, one tenth is believed to have inherited a sum of £125,000 or more.
The ONS found that nearly half of inheritances (46.8%) came from a parent or parent-in-law, whilst 22.5% came from grandparents. Perhaps surprisingly, just over one in 10 inheritances (11.1%) were bequeathed by an uncle or aunt.
We can advise on strategies to help keep your inheritance tax liability to a minimum – please contact us for advice tailored to your circumstances.
30 Oct 2013
Pension scheme charges could be capped at 0.75% under new plans unveiled by the Government.
The Pensions Minister Steve Webb has launched a new consultation that proposes capping management scheme charges at between 0.75% and 1%, in a bid to help people save for their retirement.
The Office of Fair Trading estimates that there are more than 186,000 pension pots with £2.65 billion worth of assets subject to an annual charge of more than 1%.
Any small variation in fees can make a significant difference to the value of an individual’s final pension pot.
According to government calculations, someone who saves £100 a month over a typical working lifetime of 46 years could lose almost £170,000 from their pension pot with a 1% charge and over £230,000 with a 1.5% charge.
As pension auto-enrolment continues to be rolled out over the coming years, industry experts are being urged to give their opinions on a range of possible options for a proposed limit on scheme charges.
However, any cap would only apply to funds held in auto-enrolment schemes.
Announcing the proposals, Pensions Minister Steve Webb said: ‘The Government believes that enough is enough on charges. People need to know they are getting value for money when they save into a pension and not being ripped off by excessive charges.
‘We are consulting on a cap on pension charges. A range of options will be on the table including an outright ban on all charges above 0.75% per year.’
Yet the National Association of Pension Funds described the proposed cap as a ‘blunt tool that would inhibit innovation’.
29 Oct 2013
The big six energy companies will today meet with MPs at the Energy and Climate Change Committee, to explain the escalating prices of electricity and gas and to discuss how transparency can be achieved.
David Cameron said he was ‘frustrated about the big six’ and wanted to see competition in the sector increase.
Labour MP John Robertson, who will be one of the MPs at today’s meeting at the Energy and Climate Change Committee, agrees that energy prices should be more competitive. He believes that pricing strategies similar to those in our supermarkets should be adopted by the energy companies in order to increase competition. He said, ‘You have never ever seen an energy company take on the rest of its competitors to try to undercut them […] when one puts the price up, they all put the price up.’
The big six control 99% of the retail energy market, and it is expected that they will say that the price rises are mainly due to increased wholesale costs. However, Andrew Wright, the acting chief executive of the energy regulator Ofgem, is expected to tell MPs that wholesale prices have risen by less than the rate of inflation.
If it is found that price rises are more than the increases in their costs, Ofgem may be asked to investigate competition in the sector, with the aim of easing the financial strain for the consumer.
The regulator claims that energy prices have risen by 24% over the past four years, putting increased financial pressures on small businesses and households alike.
28 Oct 2013
Business leaders have declared that Britain’s economy is ‘moving in the right direction’ after new figures revealed that UK GDP has risen at its fastest rate in three years.
According to the latest quarterly figures from the Office for National Statistics, UK economic output increased by 0.8% between July and September, with growth recorded across every sector.
The data surpasses the 0.7% rate of growth recorded in the previous quarter, and is the strongest performance since 2010.
However, the UK economy is still 2.5% below the level recorded before the start of the recession.
The British Chambers of Commerce (BCC) welcomed the latest figures, but it warned that the UK is still trailing behind other major economies.
BCC Director General, John Longworth, said: ‘This is the highest quarterly increase we’ve seen in three years, so the economy is clearly moving in the right direction. But we are still behind a number of advanced economies, such as the US and Germany, that have managed to recover the output lost during the economic downturn.’
Meanwhile, Graeme Leach, chief economist at the Institute of Directors, commented: ‘The outlook looks better than at any time since the onset of the financial crisis. Indeed, our members have more confidence in the economy than at any time since 2008.
‘However, strong headwinds remain and the annual growth rate year on year is nothing to get too excited about yet. Though inflationary pressures are likely to remain benign, debt and inflation are rising faster than earnings. Much more needs to be done to transform our economy from being good to being really great’.
25 Oct 2013
The Bank of England is to increase lending to smaller banks in a bid to help businesses and consumers.
The Governor of the Bank of England, Mark Carney, said the Bank will offer money for longer periods of time, widen the definition of acceptable collateral assets and offer liquidity at lower prices than before.
Speaking at the Financial Times newspaper’s 125th anniversary, Mr Carney said he recognised that the reputation of the UK banking system had been damaged over the last few years but believed that now ‘there could be some sustainability, some traction in the recovery’.
He described the bank as being ‘open for business’ and justified the move by saying that ‘the core of the financial system has gotten a lot better’.
A document released yesterday by the Bank of England provided a summary of changes to its Sterling Monetary Framework (SMF) and said that the shift in circumstances has allowed ‘a re-positioning of the Bank’s lending facilities’.
Mr Carney hopes that the banks will take advantage of these new opportunities to borrow from the Bank of England and that they will be more willing to lend to both consumers and businesses.
25 Oct 2013
HM Revenue & Customs (HMRC) has announced that it will be exploring new approaches to Business Records Checks in selected areas of the UK, starting from next month. Under the Business Records Checks programme, HMRC can use on-site visits to encourage small and medium-sized businesses to improve their record-keeping standards.
HMRC previously launched a pilot programme of Business Records Checks in April 2011, to address the issue of poor record-keeping and the associated loss of tax, and in February 2012 a revamped system came into effect.
Following the introduction of the new system, businesses whose records were found to be inadequate on the first inspection, and who received follow-up visits, have all improved their record-keeping standards, and HMRC has not needed to charge any penalties.
As a result, HMRC is now seeking to better target the checks and ensure that they are cost-effective, and from 4 November will be evaluating new risk processes in Edinburgh, Glasgow, Leeds, Bradford and Stockport. For customers outside these areas, HMRC will continue with any existing Business Records Checks until they are completed.
We can help with your business record-keeping requirements.
23 Oct 2013
Taxpayers who wish to file a paper 2012/13 self assessment tax return are being urged not to miss the forthcoming 31 October deadline, or they could face a series of penalties.
Under HM Revenue & Customs’ penalty regime, any paper tax returns received on or after 1 November will incur an automatic £100 penalty.
The penalty applies even where there is no tax to pay, or where any tax due is paid on time, and additional penalties will apply where the return remains outstanding after 3, 6 and 12 months.
Individuals who are sending a paper tax return within the final days of the deadline are advised to obtain proof of posting, in order to support them in the event of any appeal against a late-filing penalty.
As an alternative, individuals can instead choose to file their tax returns online, by a later deadline of 31 January 2014.
We can help to reduce the administrative burden, by filing your tax returns on your behalf.