Economy

The Independent Office for Budget Responsibility has revised upward its UK growth forecast for 2012 to 0.8%, from 0.7%. The forecast for 2013 is 2%, then 2.7% the following year and 3% in the two years after that. UK inflation is forecast to fall from 2.8% this year to 1.9% next year.

Pensions

The government will examine linking the state pensions age to life expectancy. It will also introduce a new singletier state pension to be set above the means test at a minimum of £140 a week. This will take effect from April next year and more details will be released in the Spring.

Child Benefit

This will be phased out when someone in a household has an income of more than £50,000, falling by 1% for every £100 earned over £50,000. Only those earning more than £60,000 will lose the entirety of the benefit.

Tax

From April 2013, the 50p top rate of tax – levied on earnings of £150,000 or more – will be cut to 45p. Chancellor George Osborne said the existing 50p rate was the highest in the G20 and widely acknowledged as “harming the British economy”. He also said the government had raised just a third of the £1bn it was told it would raise via the tax.

“No Chancellor can justify a tax rate that damages our economy and raises next to nothing”

Elsewhere, the personal income tax allowance will be raised to £9,205 from April 2013, making 24 million people £220 a year (£170 after inflation) better off. However, an estimated 300,000 more people will be drawn into the higher (40%) income tax band from 2013/14 as the threshold is reduced from £42,475 to £41,450.

Age-related income tax allowances will be removed for new pensioners from April 2013 and replaced with the same personal allowance as the rest of the UK.

‘Tycoon’ Tax

After reducing the top rate of income tax, the government was under pressure (particularly from the Liberal Democrats) to ensure the rich contributed fairly to the state. So Osborne announced the following measures…

• There will be a new cap on tax reliefs set at 25% of total income for anyone claiming more than £50,000 in a year.
• Meanwhile, in a nod to the Liberal Democrat idea of a ‘mansion tax’, Osborne said there would be a new 7% stamp duty on properties worth more than £2m, to come into effect from midnight on 21 March 2012.
• He also detailed plans to clamp down on stamp duty avoidance by using companies to buy expensive properties. The headline measure will be a 15% stamp duty rate on properties worth over £2m “within corporate envelopes”.

Business

Corporation tax will be reduced by 2% (from 26% to 24%) from next month. It will then be reduced by a further 1% next year and the following year, meaning it will be at 22% by 2014.

There will also be a simplified tax return system for small firms with a turnover of up to £77,000.

If you would like additional information on any of the points raised in this post, or advice on a particular area of concern, please do not hesitate to get in touch.

We’ve just collated the feedback and all attendees rated the event, timing, and format, as very good to excellent. The presentations scored particularly high on the content delivery and relevance, of particular note were the sessions on Business Structures (100% very good to excellent) and Wills and Lasting Powers of Attorney (93.3% very good to excellent).

Having received such great feedback, we thought we would share key points from the presentation in this post. Summarised below are our ‘Top Ten Tips for Succession Planning’:

1. Structure your business for succession

Consider the overall business structure and governance. You can either appoint a single decision maker or establish Board.

Take steps to ensure that ‘family’ shares remain as an effective voting block. For example:

• 5% holding, Directors to call a general meeting
• 51% holding, pass ordinary resolutions
• 75% holding, pass special resolutions
• 90% holding, to consent to general meeting on short notice (95% for public companies)

2. Use Shareholder Agreements

Shareholder Agreements truly are worth their weight in gold. Consider the following key elements:

• Decision making elements
• Transfer restrictions
• Deadlock provisions
• Good leaver/bad leaver provisions
• Drag along and tag along rights
• Valuation mechanisms

3. Leave Will drafting to the professionals

Look at the practical immediate impact. There are numerous DIY disasters we can point to, so it’s always best to appoint a professional to draft a Will. As part of this process you will need to review your corporate governance structure and appoint executors. Always consider, if the worst were to eventuate, who will benefit and how?

4. Prepare for incapacity

Your business must be adequately protected should a key staff member suffer from mental or physical incapacity, either temporary or permanent. Look at establishing Enduring Powers of Attorney (EPA) or Lasting Powers of Attorney (LPA), especially as they relate to property and financial affairs, as well as health welfare. Court of Protection should be avoided at all costs.

5. Draft a Business Will

Did you know that the chances of death and critical illness occurring in a group of four people during their working life (18-65) are:

Males
Death 29%
Critical Illness 68%

Females
Death 23%
Critical Illness 59%

The statistics are quite staggering really. That’s why it is a good idea to consider drafting a Business Will. The three aims of succession planning through a Business Will include:

• Fair market value for the estate and/or outgoing shareholder
• Control of the business for the surviving and/or remaining shareholders
• Avoiding any capital tax traps

Business Protection will make sure the right money is available on death or serious illness to ensure that the remaining shareholders maintain full control of the business, whilst the estate gets full market value for selling the shares.

6. Audit your existing cover

It’s a good idea to audit your existing cover to make sure it remains appropriate for your needs. For example, check if the business value is still applicable. Look at this against your Articles and Agreements. Do you think the most appropriate route is being taken?

If under Trust, you should also check what cover is in place (if any) and whether it was issued under Trust from outset, or if equalisation has been done (if necessary).

You should also consider if there is a cross option agreement in place and whether there is an IHT problem upon the second death (in which case you should look at establishing a ByPass Trust).

7. Consider how to access liquidity

Collateral lending, a service offered by UBS, provides access to funding to meet your liquidity needs. For example, if there is a shareholder protection shortfall, a management buy-in/management buy-out, or family buy-in. Collateral lending can also be used for Directors Loans and as a tool for effective Inheritance Tax Planning.

8. Plan for business sale

When you’re preparing your business for sale, there are a number of things to take into account. For example:

• Why are you selling?
• What type of sale will it be?
• What are the tax implications?
• How will you manage the handover?
• What are your price expectations?
• How will you value your business?
• What are potential buyers looking for?
• What method of payment will you accept?

You want to make sure that your business sale is executed with a ‘no surprises’ outcome. The Corporate Advisory Group at UBS, provide advice, guidance and execution services specifically for privately held companies. Find out more here.

9. Create a ‘subs’ bench

If you lose a specialist key person, finding a replacement is never easy. Firstly, where will you find them? At what cost? The process is both time consuming and expensive. Recruitment agencies can charge up to 20% (or more) of salary and you will probably need to hire quickly. But then how long will it take to get that person on board?

To avoid these issues, you need to create a ‘subs’ bench (or back-up specialist team) within your business who can step-in, should your talent be unable to work or decide to leave.

10. Recognise and reward talent

The success of every business is underpinned by the people it employs. That’s why it is imperative that you recognise and reward talent. Most of us are aware of the mainstream employee benefits that can be provided: salary, bonus, pension, Death in Service and Private Medical Insurance, to name just a few.

If you are offering employee benefits, you need to ensure that the total value of the benefit is appreciated by the staff member and set-up in the most tax efficient way. For example, where you and your employee are both paying into a personal pension plan, why not use salary sacrifice instead?

For the same gross cost and net income, the employee’s pension contribution could be increased by either 33% or 17% depending on their salary level. Who wouldn’t want an extra £17 or £33 in each £100 for nothing?

Most ‘normal’ employee incentives often go unappreciated by employees. In fact, research shows that most employees don’t have a full appreciation of the value of their benefits package. They know what their salary is but not how much is being paid into their pension, what cover they have under their Death in Service or Private Medical scheme.

A Total Reward Statement for your employees can show them the true value of their employment costs and benefits and instead of feeling valued at £40k, they could see that they are valued between £45k and £50k depending on their benefits.

To find out more about employee benefits and how to provide a Total Rewards Statement for your staff, contact a member of the CWB Advice team.

Our aim is to ensure the content of our Breakfast Workshops is relevant to business owners and entrepreneurs, which is why we use feedback to plan for future events. The highest rated topic for our next workshop is Talent Management, particularly following the ideas raised in point 10 above. Stay tuned for more details on this blog.

Please contact Marie via email to marie.dewey@cwb-ifa.co.uk or join our group on LinkedIn if you would like to receive invitations to future CWB Breakfast Workshops.

In addition to the vacancies we listed in our last post we are now recruiting for two other roles: Trainee Administrator and Paraplanner. Details of these are provided below.

Trainee Administrator

At Clarkson Wayman Ball our Administrators possess strong interpersonal skills and enjoy interacting with our clients. The essential criterion for this role includes:

• Positive attitude for all parts of the role
• High persistence levels to get the job done
• The ability to multi-task
• Quick learner and be able to demonstrate taught techniques
• Office skills, including IT and typing
• Bright, outgoing personality
• Experience answering telephone calls
• Commute of 20 to 30 minutes to the CWB office in Market Harborough

Paraplanner

In order to meet the demands of this role, you will need to demonstrate relevant experience. It is essential that you have:

• Experience working within an IFA practice as a Paraplanner
• 5+ years’ experience
• Attained the FP1 qualification
• Office skills, including IT and typing
• Must have an understanding of pensions, PP and occupational, investments, life products
• Located within 1 hours commute of CWB

To really excel in this position it also desirable that you have:

• Already attained FPC3
• 5+ years – 10 years in industry
• Group scheme experience

What next?

If you would like to join our team and feel you have the right skills and outlook to contribute to our award winning business, please send your CV (by email only) to Chris.Everard@cwb-ifa.co.uk

A well known Law Firm that employs around 1,600 people has saved its staff approximately £2 million in tax and NIC over the past 12 months. How? By using salary sacrifice.

So what exactly is salary sacrifice and how does it work?

An employee can sacrifice part of their salary, which the employer can then pay directly into the pension plan.

As a result of having a lower salary, both the employee and the employer pay less NIC. As part of the salary sacrifice arrangement, the employer pays all or part of the NIC saving to the employee’s pension plan along with the sacrificed amount.

For example, if you earn £50,000 a year and decide you want to salary sacrifice £5,000. Your new salary is £45,000, with the employer paying £5,000 to your pension plan. You pay less NIC (and in some cases Income Tax) because your salary is lower. Your employer also pays less NICs and pays a percentage of their saving to your pension scheme. The percentage of NIC saving your employer pays is defined by them as part of their salary sacrifice offer. It could be anything between 0% and 100%.

Salary sacrifice can also be used to access employee benefits. For example, in the Law Firm mentioned above, the practice also revamped their employee benefits arrangements to be in line with the new auto enrolment legislation for pensions. Employees within the business, on average, ended up saving approximately £923 a year in tax by paying for their child care using salary sacrifice.

There are more than 20 benefits that employees can ‘buy’ through salary sacrifice. Another example is a gym membership (a benefit a lot of employees consider at this time of year!). An employee buying a gym membership at £450 per year, but paying through salary sacrifice, could save the tax on this amount. The employer will also save the 13.8% Class 1A National Insurance contributions.

Companies who use the salary sacrifice facility to its fullest clearly demonstrate that they are helping their staff make their salary go further. In economic times such as these, we believe a strategy like this will be well received.

To find out more about salary sacrifice and how you can make it work within your business, contact Caroline Robinson via email to Caroline.Robinson@cwb-ifa.co.uk or call 01858 469 910 .

With such a hot topic under discussion we had a great turnout – despite the miserable weather. The presentation was really well received with everyone in attendance rating the content and delivery as very good to excellent.

We used the usual format of breakfast rolls and presentations, however this time we held the workshop at Howes Percival’s Leicester office rather than at Clarkson Wayman Ball in Market Harborough. Nevertheless, both the venue and format also scored 100% very good to excellent by all in attendance.

Because we received such great feedback, we thought we would share key points from the presentation here on our blog. Summarised below are the ’10 ways to get what you are owed’ (without raising your voice).

1. Know your customers

When work is short, you can be tempted to take a client on without proper consideration. Be sure to look into credit reports, business accounts filed at Companies House, insolvency history and the register of county court judgments to better understand your client’s position. Also be prepared to stop work or amend payment terms!

2. Maintain a good relationship and regular contact

Encourage a frank relationship to find out about problems as soon as they arise, so that you can resolve them. If payment is late, immediately make contact to understand why. Phone can often work best but make sure you keep detailed notes. Advise of payment terms upfront, as your customer is more likely to adhere to them if they are made clear from the start.

3. Payment on account

Insist on payment upfront on account. Often this won’t be possible, but try to assess each case. Keep in mind the financial status of the customer, your relationship, previous experience and also whether you would lose the business.

4. Effective terms and conditions (payment terms)

Contractual documentation must clearly set out the terms of payment. Think about timescales within which invoices should be paid and pricing discounts for payment of invoices on or before the due date.

5. Effective terms  conditions (late payment)

Clearly set out the consequences of late payment. Encourage customers to pay promptly. It will also assist you in pursuing overdue accounts and recovering losses. Consequences might include the right to charge interest on overdue accounts at a specific rate. If not expressly included, you can rely on The Late Payment of Commercial Debts (Interest) Act 1998. However, we do recommend it is included in your contracts.

6. Incorporation of terms and conditions

Ts & Cs must be incorporated into your contracts. Avoid “battle of the forms” which can arise when a client has their own standard Ts & Cs.

Ensure your Ts & Cs are brought to the customer’s attention before the contract is concluded and include a clause stating that your terms prevail over any other party’s.

7. Strictly adhere to terms and conditions

Strict adherence encourages customers to pay promptly. It shows the business takes payment terms seriously. If you regularly accept payment on different terms, it could be argued there has been a variation.

Sometimes there is a commercial reason to waive certain payment terms. However, as a general rule payment terms should be adhered to and enforced. For any single exception, make clear that you are not waiving any other rights.

8. Implement a debt recovery procedure

Your strict procedure could include the following steps:

1. Issue invoices promptly, in accordance with your Ts & Cs. Ensure it is sent to the relevant person and includes details of the fees charged. Ts & Cs and details for how to pay should also be included.
2. If payment is not made by the due date, notify the customer and inform them of the possible consequences of late payment. Give a deadline for payment (perhaps 7 or 14 days).
3. If payment is still not made by the deadline, further notification should be made. Implement the consequences of late payment and provide a further deadline for payment.
4. If payment is still not made by the deadline, issue a final notification advising that the matter will be referred to solicitors and/or legal action will be taken.
5. Consider a telephone call to someone in authority at the customer.
6. Three communications will usually elicit payment, if it is going to be paid without legal action.
7. If an invoice remains outstanding at this stage, consider legal action.

9. Addressing complaints without prejudicing your position

A complaint may be raised and used as a defence to a subsequent claim for payment of the invoice. Address any complaints without prejudicing your position and remember that any comments or actions could be referred to at a later date.

Take action:

1. Brief all employees on your Ts & Cs and any debt recovery procedures, so they know the policies and steps to follow.
2. Investigate and address complaints promptly and notify the customer of your findings as soon as possible. If there is substance to the complaint, consider delaying further progress on debt recovery while complaint is addressed.
3. Be careful when responding – any admissions could be referred to at a later date. Balance this against the benefit of openly addressing genuine complaints.
4. The “Without prejudice” rule only relates to genuine attempts to settle disputes.
5. Keep a paper trail. Communication in writing is best, but discussions over the phone or in-person can often be more effective in resolving the issue. Keep detailed notes.
6. Do not destroy relevant documents and take care when annotating documents.
7. Beware of payments made by the customers with conditions attached.
8. If in doubt, seek legal advice early.

10. Techniques for effectively recovering a debt

1. A formal Letter of Claim sent from a solicitor. This is a precursor to legal proceedings.
2. Formal legal proceedings to recover the unpaid invoice.
3. A Statutory Demand for payment. This is a precursor to Bankruptcy or Winding-Up proceedings and may only be used in relation to an undisputed debt.
4. Formal Bankruptcy or Winding-Up proceedings.

The final comments by presenters Geraint Davies and Richard Tomlinson were reminders that one should consider the potential costs and time involved before taking legal action, as well as the recovery of your costs. Wise words in our opinion!

Martin Stanley, Client Support Adviser at CWB attended the workshop at Howes Percival and shares a few words about the event in the video below.

CWB Breakfast Seminar – Debt Recovery from A Business Innovation on Vimeo.

We strive to keep the content of our Breakfast Workshops relevant to business owners and entrepreneurs so we use feedback to plan future events. On this basis or next workshop will be held on 1 March 2012 at 8.00am with Business Succession and Protection as the main focus. Please contact Marie via email to marie.dewey@cwb-ifa.co.uk or join our group on LinkedIn if you would like to receive invitations to future CWB Breakfast Workshops.

Look out for further details about our upcoming events on our blog.

Geraint Davies of Howes Percival will show attendees ten ways to get what is owed to them. We will discuss techniques for effective debt recovery and also how to prevent debts going bad.

Share your experiences with us on 18 January, learn how to avoid “battle of the forms” and create Ts & Cs to suit your business needs.

The event will be hosted at Howes Percival’s Leicester office, view map and directions here. Breakfast rolls, tea and coffee will be served as normal from 8.00 am with presentations commencing at 8.30 am. Expected departure is 10.30 am.

To find out more about the event or to register to attend, email Marie or call us on 01858 469 910.

Please note that the office here at Clarkson Wayman Ball will be closed from 5.30pm Thursday 22 December 2011 until 8.30am on Tuesday 3 January 2012.

We look forward to seeing you in the New Year!

At CWB we always strive to deliver world class service, with a focus on constant business improvement. As part of this ethos we adhere to the principles of Investors in Excellence (IiE) and the EFQM Excellence Model.

To our delight, we just heard that we have been successful in achieving IiE re-accreditation which is an internationally recognised standard. It follows a detailed assessment of our business, part of an involved process undertaken every two years, including an onsite visit and the submission of a 100 page dossier. The material we prepared covered our:

• Mission, vision and values
• Leadership approach
• Business strategy
• Investment in people
• Partnerships and resources
• Processes, products and services
• Customer results
• People results
• Society results (i.e. contribution to the community)
• Success metrics

We will receive a certificate shortly, confirming our success. In March we will attend Midlands Excellence Awards Ceremony at The University of Birmingham’s Great Hall , where we will be awarded our new plaque.

The news gets better…

We also received a call yesterday from Ian Nield, Chief Executive of Midlands Excellence, to inform us that the judging panel met earlier this week and we are to be finalists for the main Midlands Excellence Award at the event in March! The official announcement has now been made on the IiE website.

We have also entered for two Specialist Category Awards, namely, Customer Service and Innovation. We will hear further concerning our progress in these awards as the judging process progresses.

Stay tuned for more details. In the interim, a big congratulations to the entire team here at CWB for your contribution to our continued success.

We currently have three vacancies: Client Support Adviser, Administrator and Senior  Administrator. Job specifications are provided below, including the essential and desirable criteria for each one.

Client Support Adviser

In order to meet the demands of this role, you will need to demonstrate relevant experience. It is essential that you have:

• Attained QCA3 or will achieve DipFS within 6 months of joining our team
• A full driving license, with 6 points or less
• UK residency status, for a minimum of 3 years
• Client facing experience
• A flexible approach to working hours
• Demonstrable skill and experience working as a team player

To really excel in this position it also desirable that you have:

• Already attained DipFS
• A clean driving license
• Sales experience
• Industry connections
• A demonstrable level of discipline
• Reporting accountability
• A commute within one hour of the CWB office (Market Harborough)
• Client relationship management skills
• Skill at working in a deadline-driven environment

Senior Administrator

To be successful in this role, you will need to possess the following essential and desirable skills.

Essentials skills:

• Experience working in a back office environment
• At least 5 years experience in an FSA regulated firm
• The ability to supervise junior team members

Desirable skills:

• Qualified to FP3
• Research experience

Administrator

At CWB our Administrators possess strong interpersonal skills and enjoy interacting with our clients. The essential criterion for this role includes:

• At least one year experience working within an IFA practice
• Office skills, including IT and typing
• Experience answering telephone calls
• Commute of 20 to 30 minutes to the CWB office in Market Harborough
• Knowledge of IFA needs and working practices

It is also desirable if you can demonstrate you have:

• Three years’ experience working within an IFA practice
• Attained the FP1 qualification

Do any of these roles sound like they might be right for you?

If you would like to apply, as a first step, please send your CV (by email only) to Chris.Everard@cwb-ifa.co.uk

While we may look forward to presents and mince pies rather enthusiastically, we’re happy to confirm that Paraplanner Sophie was raising money for a another cause on Sunday.

Sporting a Santa suit, Sophie joined hundreds of others in the British Heart Foundation’s Annual Santa Dash in Milton Keynes. Unlike the cuddly festive character, she managed an 8 km run without the help of Rudolph and Blixen, raising £130 for charity!

Well done Sophie!

Sophie ready for her run