Echo: February 2012

Presenting our new logo - Ta Dah!

From now on you'll be seeing our logo on all our correspondence, newsletters and reports along with our music based images.

Your opinion always matters to us, so we'd like to know what you think about our new look.  

Papers are littered with stories about the Treasury's Chief Danny Alexander pushing for the removal of pension tax relief for high and higher rate tax payers. This could of course be more marketing spin from the pension providers but be aware as it could mean only basic rate tax relief to be given for pension contributions. The move would definitely increase revenues for HMRC without the need to increase tax to the majority. It would only affect those paying higher rate tax and therefore in effect 'tax the rich'. As usual with potential change, the expectation would be for the change to be made on the Budget day which is 21st March so if you are planning to make a pension contribution and fall in to the higher rate category, you may want to give this some serious consideration in advance of the Tax Year End which is 5th April.

You are working hard on the day to day running of the business, thinking, planning, keen to move it forward, doing all the right things - reading business books, going to seminars, doing training courses – you understand what you need to do, but then you get back to your desk and the daily demands of running the business take over! Everything you learned just goes on the “To Do” list and stays there. Recognise the problem? It’s frustrating and worst of all you start feeling overwhelmed and disillusioned; you’re just busy being reactive rather than proactive. Wouldn't it be good to have someone on hand to help you organise and clear your To Do list, who operates at an appropriate level and who brings experience, clarity and impetus.  

Meet Paula White of Ovation's Better Business Team: With a career to date of over 20 years in business, finance and operations, Paula has managed projects and people through a variety of business challenges. She backs up this experience with knowledge of best practice gained through a post-graduate Diploma in Management and membership of the Chartered Management Institute. Paula has a very practical and hands-on approach to getting things done, and excels in bringing people and processes together to bring efficiency, clarity and cost-effectiveness to your internal business procedures.

Take a look at the Ovation Better Business Team section on the web site: www.ovationbbt.co.uk 

Do any of us think of ourselves as ‘wealthy’? Given the way house prices have risen over the past twenty years, we all need to be aware of the thresholds. Like anything to do with Tax, planning is essential. Here are a few steps you can take:

Step 1: Look at what you can do to remove money from your estate. The best and simplest way is always to SPEND IT.  Yes, it’s as simple as that, go out and spend your money.  Don’t buy any asset though as that will still be part of the estate at death.  The only problem is no one knows exactly when they’re going to die, so spending sufficient at the right rate is beyond most mere mortals!

Step 2: Give some funds away.  Be careful though, there’s a few ways to minimise the tax implications for cash gifts that are exempt from tax, we’ve highlighted a few below:
 - Wedding gifts of up to £5,000 to each of your children
 - Other gifts of up to £3,000 a year (plus any unused balance of £3,000 from the previous tax year)
 - Gifts of up to £250 each to any number of people each year
 - Gifts to charities and national museums.
 - If you so desire you can even give money to the main political parties and it’s straight out of your estate.
 - From April 2012, to encourage charitable giving, the Government will reduce the rate of IHT, 40 per cent to 36 per cent, if you 
   leave 10% of your total estate to charity.

Step 3: There is another way of passing on your wealth without incurring IHT and it’s one that’s missed out by most people - regular expenditure relief.  If you have an income which you’re not spending every year, you can give away that excess income to anyone, on top of all the freebies above!  Rather than let your estate build, give it away.  As long as you intend it to be a regular payment (not a regular amount) then it’s instantly out of the estate. And whilst we are on the subject of gifting - don't forget the seven year rule that applies to gifting assets. If you choose to gift an asset and then survive seven years from date of gifting, the asset is then IHT exempt.

Step 4: Many families find it hard to discuss IHT - because it means acknowledging your parents are getting older and may not be here one day. It's a sad fact but one that shouldn't be ignored. Everyone has a current £325,000 band before IHT kicks in. There is also an IHT nil threshold transferability between married couples. Let's take as a example the principle family house. Let's assume the house is worth £500,000. If the property is in just one of the married couples' name and that spouse dies, whilst their spouse won't be liable for IHT, their children will be when the second parent dies. If the house was in joint names,and assuming no further assets, both spouses receive the £325,000 threshold and if they chose to leave the property to their children, the value would be exempt from IHT.

It is provisions like these, that with careful planning, can provide many opportunities - which  is why inheritance tax is often described as a voluntary tax.

You may not know that Chris recently qualified with the European Mentoring and Coaching Council (EMCC) to provide business coaching. We asked him to answer the frequently asked question, "So what is coaching"? Over to you chris:

In reality it is many things to many people, but this is what I think coaching is, as you can imagine my thoughts are based on what I have learned during the months of travelling the qualification road:

Running a business can be a lonely place.  Coaching allows a business owner time and space to think about the issues of the business.  This time can be used to discuss any issues whatsoever.  For example, it could be the directions of the business, internal operations, management team issues - the list really is endless.  It is entirely for the coachee to choose the subject.

How does this differ from a business mentor?  It is certainly true that experience of running a business will help a business coach (I began running my own business in 1998).  A mentor is more likely to provide answers and solutions, whereby a coach will aim to help the business owner find the solutions themselves - the difference to me is summed up in the old proverb "Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime".

The word 'coach' is therefore actually very well used, in that you are 'coaching' the individual to be better at running a business long term. This, in my opinion, this is of far greater use in the long term than simply providing the answers.

Having said this, I am also able to work on the mentoring basis assisting with experience, and bringing in outside parties to help as and when needed.

So please feel free to book me for a coaching session if any of the following sound familiar:

*       You have an idea but aren't quite sure how to make it work
*       You never find the time to think about your business
*       You have issues you want to solve but don't know how to go about it

Or if you just want to learn to fish for your business.

There are not many investments which give you returns which are tax free. If you haven’t already, make sure you start to think about making the most of this year’s tax efficient ISA opportunity – the deadline is April 5th but as we all know that’ll be here before we know it.

ISAs are one of the first choices for your tax free saving as both the growth and the income you take is not subject to tax. Investment allowance is up to £5,340 cash in a Cash ISA or £10,680 in a Stocks and Shares ISA, You can combine the two as long as the total doesn’t exceed £10,680.  Call Tom or Adrian and organise your ISA investments.