Driving Hastings forward 01424 205481

Hastings Borough Council has been successful in its recent bid to the Coastal Communities Fund in the latest round of grant funding applications.

The grant worth £812,770 is for a new project called ‘Destination White Rock, Hastings – Continuing the Economic Revival’ and will enable the council and partners to revive the White Rock area with a total project value of £1.081m.

Led by the council, the Hastings Coastal Communities Team will manage a portfolio of projects to improve the economic wellbeing of the White Rock area.

Funding will contribute to projects at Rock House, a partially converted office block with a mix of uses, including commercial, residential and community, to provide affordable business development and commercial space. The adjoining Rock Alley will also benefit, with improvements allowing adjoining businesses to contribute to its economic revival and by giving another pathway between the White Rock seafront and inland.Pier white rock area IMG_6650 SM

The currently redundant water feature and White Rock promenade between the Pier and Source Park will be refurbished and traditional beach huts will be installed east of the Pier to encourage active use of this area of the beach.

The Source Park will develop a BMX Olympic inspired training programme and offer a series of local, regional and international BMX and skateboarding events to attract thousands of visitors extending the season throughout the year.

There will also be a community based business initiative, developing the local community to participate in and manage the economic revival of the area.

Project manager Kevin Boorman commented:

“This is excellent news for Hastings and the future development of our town. This funding will enhance the significance of the White Rock area as the geographical centre of Hastings and allow it to become a destination in its own right and, a great place to relax and do business. We will start work on these projects now and hope to see completion at the end of 2019.”

Richard Moore the Source Park added: “This grant will help The Source Park realise its full potential as a global BMX and Skateboard centre of excellence. We’re looking forward to building on the success of the Battle of Hastings contests to develop a series of events that showcases Hastings and the Source Park around the world. At the same time, our coaching program, the first of its kind in our sports, aims to give everyone the chance to learn our sports’ and develop the stars of the future”

“Rock House is a unique creative and affordable space for living, working and community action. We’re delighted that this grant will help us with the next phase of the refurbishment which will create new jobs and enterprises, while protecting the very special character of the White Rock/America Ground neighbourhood” said Jess Steele, White Rock Neighbourhood Ventures, social enterprise owners of Rock House

Together the projects aim to support 180 local businesses, create 12 tourism events, create over 180 jobs,  increase visitor numbers by over 60,000  which in turn will create an extra £4m spend in support of the wider community.

 

How can you strike a balance between retiring when you want to, receiving the income you need and not paying more tax than you have to? Peter Watters spoke to McPhersons Financial Solutions to find out more.

Drawdown could be an answer. mcphersons financial

What is drawdown?

For those currently aged 55 and over, drawdown is one of the main alternatives to an annuity. If you don’t need all of your pension to provide a secure income immediately, you can use drawdown to keep your pension invested while drawing an income as and when you want to. There is no maximum limit to the income you can withdraw; which you can stop, start or change at any time to meet your needs.  You also have the option to buy an annuity at any point in the future if you wish to.

It is the flexibility of drawdown which makes it appealing.

It offers the potential to increase your pension value through investment growth and the chance to protect your income from inflation. Your loved ones can also continue to withdraw the remaining pension after you die, as an income, or alternatively as a lump sum, and tax free in many cases.

The amount you draw down should depend on how your investments perform and how long you would like your pension to last. Drawdown is higher risk than an annuity; there are no guarantees and your income is not secure. If your investments perform poorly, you withdraw income too quickly or you live longer than expected, you could run out of money.

The tax advantage

The main tax advantage of drawdown is when you don’t need to use all of your pension pot to provide an income. There is no requirement to use your entire pension fund in one go or to draw it at its earliest point.

Partial, or phased, drawdown can be used to maximise this tax advantage; which simply means splitting your pension into parts and converting each part to drawdown at different times, as and when you need the income.

Each time you convert a part of your pension to drawdown you can usually take up to 25% of that amount as a tax-free lump sum up front.

For those who don’t need immediate income, it is possible to just withdraw the tax-free cash for the time being and leave the rest invested to provide a taxable income later on.

This is a strategy favoured by many who are already using drawdown. These investors have taken their tax-free cash and are keeping their pension fund invested for future growth.

You may wish to use this tax-free cash to add to other sources of income. This could be particularly useful if you reduce your working hours or perhaps take on part-time work during retirement. The tax-free cash can supplement your earnings, without increasing the tax you pay.

For example, if you earn £11,000 a year, and you move £30,000 of your pension into drawdown, you could take up to £7,500 (25%) as a tax-free lump sum up front; boosting your annual ‘income’ for that tax year to £18,500. Assuming you receive no other taxable income in that same tax year, the whole £18,500 would be tax free. The £22,500 remaining in drawdown could be left invested to draw a taxable income from in later tax years.

You can move more money into drawdown as many times as you like, until you have exhausted the tax-free cash part of your pension. You could repeat this process while you transition into full retirement, replacing any reduction in your earnings with tax free cash or taxable income from your pension.

It’s important to remember tax rules can change and benefits depend on individual circumstances.

Please get in touch now to arrange your free meeting on 01424 730000 or info@mcphersonsfs.co.uk. 

What you do with your pension is an important decision. Therefore, we strongly recommend you understand your options and check your chosen option is suitable for your circumstances: take appropriate advice or guidance if you are at all unsure.The government’s Pension Wise service can help. Pension Wise provides free impartial guidance on your retirement options.

 

 

 

Hastings Borough Council is looking for expressions of interest for an operator to develop and manage Hastings Castle.

Cllr Kim Forward, deputy leader of Hastings Borough Council, and lead member for tourism explained :- “Hastings Castle is one of the only direct links we have with the Norman invasion. It was the first Norman castle to be built in England, and is featured on the Bayeux Tapestry.

“But it does need more investment to provide an even better visitor experience there. Unfortunately our Heritage Lottery Fund bids to improve the castle weren’t successful, and we don’t have the resources ourselves to invest in it.

“So we are inviting expressions of interest from prospective operators a longer lease on the castle, the terms of which would include significant investment to improve access to the castle, and the visitor experience there. We are working with experts ‘GVA’ who will help us manage the process, and make the castle the ‘must see’ visitor attraction it deserves to be.”

Various rumours were swirling around Westminster in the days before Philip Hammond rose to deliver his first Budget – confirmed as the last time a major fiscal statement will be made in the spring.

The Chancellor, still scarcely nine months in the job, has a reputation as a cautious man and in advance many expected that much of today’s speech would be laying the ground for the Prime Minister to begin formal negotiations for the UK to leave the EU.

That said, the day before Mr Hammond stood up to address the Commons, the Organisation for Economic Co-operation and Development (OECD) upgraded Britain’s growth forecast, which inevitably raised questions about whether there was yet room for manoeuvre.

Would the Government prove willing to make money available to shore up struggling services or answer the growing criticism over business rates reforms? Would it be tax rises or surprise giveaways bothering the headline writers?

Economic overview

In his opening statement, the Chancellor said that the resilience of the UK economy had continued to defy expectations and the country had enjoyed robust growth. Indeed, he noted that last year Britain’s growth was behind only Germany’s among the world’s biggest economies.

Mr Hammond confirmed that the Office for Budget Responsibility (OBR) had raised its growth forecasts for the year, with the economy now projected to grow by two per cent in 2017, compared with the previous estimate of 1.4 per cent. The independent body suggests growth next year will be 1.6 per cent and in 2019, 1.7 per cent.

But he made clear that there was no place for complacency in the current climate, acknowledging that levels of debt were still too high (peaking at 88.8 per cent next year), productivity needs to be improved and many families up and down the country continued to feel the pinch almost a decade on from the financial crash.

OBR figures also suggest that inflation will peak at 2.4 per cent this year, with expectations that it will drop off as we approach the end of the decade.

Trying to strike a balance between prudence and positivity, the Chancellor told MPs that the Budget presented an opportunity to put money into public services while ensuring that the nation continued to live within its means. Crucially, he said, the tax and spending plans would form the bedrock of the EU negotiations ahead.

Business and enterprise

Following several weeks of sustained criticism over the burden that business rates changes would place on many enterprises, Mr Hammond announced a three-point plan which he said would amount to an additional £435million support.

Any firm losing existing rate relief will be guaranteed that their bill will not rise by more than £50 a month next year. In addition, there will be a £1,000 discount for pubs with a rateable value of less than £100,000 and the creation of a £300million fund which will enable local authorities to offer discretional relief.

The Chancellor made clear that a fair tax system was one of the best ways to make Britain a top destination for businesses. He reiterated the commitment made by his predecessor, George Osborne, to bring the Corporation Tax rate down to 17 per cent by 2020. A reduction to 19 per cent will take effect from next month.

Following concerns about the current timetable, he confirmed that quarterly reporting would be delayed for small businesses for a year (at a cost of £280million).

Transport and infrastructure

Acknowledging that congestion was an issue in large parts of the country, Mr Hammond said that some £690million would be made available to tackle traffic problems in urban areas and get local networks moving more freely.

The Chancellor also announced a £270million investment to keep Britain at the forefront of research into biotechnology, robotic systems and driverless cars.

An additional £200million will be ploughed into projects to help secure private sector investment in full-fibre broadband networks and £16million put aside for a 5G mobile technology hub.

Personal tax

Controversially, it was revealed that National Insurance contributions will rise for the self-employed.

Under proposals, Class 4 NICs will increase from nine per cent to 10 per cent next April and to 11 per cent in 2019.

Trying to defend what will undoubtedly be a contentious move, the Chancellor said that the “unfair discrepancy” in contributions between different groups of workers could no longer be justified. Critics have suggested the move has broken with a commitment in the 2015 manifesto.

In more positive news, the personal allowance will rise to £11,500 – the seventh consecutive increase.

The Chancellor reiterated the Government’s previous commitment to increase the allowance to £12,500 and the higher rate threshold to £50,000 by the end of the Parliament in 2020.

There was a boost for road users with confirmation that vehicle excise duty for hauliers and the HGV road user levy will both be frozen.

The Chancellor also announced there would be no change to the previous planned duties on alcohol and tobacco. There will, however, be a new minimum excise duty on cigarettes based on a £7.35 packet price.

Pensions and savings

In what is likely to be an unpopular move, Mr Hammond confirmed that the tax-free dividend allowance for shareholders would be cut from £5,000 to £2,000 as of April 2018.

The Treasury said that the change would “ensure that support for investors is more effectively targeted”, but critics fear it will could further hurt entrepreneurs.

Public spending

Mr Hammond had faced some pressure from his own MPs to plough more revenue into public services.

In an attempt to address criticism that institutions were buckling beneath the strain, the Chancellor confirmed an extra £260million for improving school buildings and funding for an additional 110 free schools (on top of the 500 previously announced). There has been some controversy, however, that some of these are set to be selective.

In an attempt to address the mounting crisis in social care, Mr Hammond announced there would be an extra £2billion in funding over the course of the next three years.  A Green Paper will be published later this year with a view to drawing up a long-term funding plan.

Tax evasion, avoidance and aggressive tax planning

The Chancellor said that a fair tax system required people to pay their dues and a series of measures to curb abuses of the system are expected to raise an additional £820million for the Treasury.

A raft of measures to tackle non-compliance were announced, including preventing businesses converting capital losses into trading losses, curbing abuse of foreign pension schemes, introducing UK VAT on roaming telecoms services and imposing new financial penalties for professionals who help facilitate a tax avoidance arrangement that is later defeated by HM Revenue & Customs.

Summary

In his closing remarks, Mr Hammond struck an optimistic tone. Whatever the uncertainties surrounding Brexit, he told MPs that the UK should be confident that our best days lie ahead of us.

It would be fair to say that the Budget was not strewn with giveaways, but the Chancellor did try and take the sting out of some of the main criticisms levelled at the Government in recent months – including its handling of business rates reform and the sluggish response to a mounting care crisis.

That said he is also likely to have stirred up fresh controversies and the decision to increase National Insurance for the self-employed is perhaps evidence that in the current climate tough choices will still have to be made.

To discuss how any of the above changes will affect you and your business, please contact McPhersons on 01424 730000 or email info@mcphersons.co.uk

 

The problem with investing a lump sum amount in one go, is the timing of the stock market. If it is high then it will be a while before those investments increase further. Making smaller regular payments by drip-feeding money into your investments on a monthly basis can be a much better and highly effective strategy. Here we highlight some of the main benefits of investing smaller amounts on a regular basis.

Getting ‘pound cost averaging’ right

Investors are not happy when they experience falls in their values. However, short-term falls in share prices can actually provide opportunity and prove advantageous over the long-term for regular savers. By investing smaller amounts every month, investors average out the buy price of investments and benefit from a phenomenon known as ‘pound cost averaging’. This means your investment buys more units or shares when the price goes down, as per the table below and allows you to benefit from bigger returns if and when the share price recovers.

Month Amount Investment Share Price Number of Shares
1 £100 £5.00 20
2 £100 £4.00 25
3 £100 £2.50 40

Based on the table above, the average price purchased over the 3 months is £3.53 per share which is £300 investment divided by 85 shares. However, if you had invested the full £300 lump sum in one go during the first month, you would only have received 60 shares, which is £300 investment divided by £5.00. Of course had the market risen each month, your monthly investment would have bought fewer shares and actually have been worse off than if you’d invested a lump sum at that time. It is fair to say, investing is as much about timing as picking the right stock.

Benefits of regular savings

Some people believe that you need lots of money to start investing. In fact, drip-feeding money into investments over a longer period of time can build a very substantial sum. If you invested £250 per month for ten years, you would have a total of over £37,500 (based on a medium growth rate and a 1% charge).

Affordability – you can start investing from as little as £25 per month and it often costs no more in dealing charges

No fear – Instinctively you will watch the shares as the move up and down and probably want to buy quickly and more when shares are rising and less when they are falling. With smaller investing the money can be automatically taken from your bank account via direct debit and invested every month, regardless of price and movement, which removes the fear factor.

Flexibility – you can alter your investment choices and the amount you invest from month to month. You can even suspend payments for a period if you wish.

The sooner you start the more you will have invested on share platforms, you can choose to invest monthly into a wide selection of investments including, FTSE shares and eligible investment trusts. It’s easy to get started and you can set up a direct debit with some companies from just £25 per month and drip-feed money into your investments. You can also set up a regular savings instruction into Stocks & Shares ISAs, Fund & Share Accounts, SIPPs, Pensions or a Junior Stocks & Shares ISAs with many companies.

The value of your investment and the income from it can go down as well as up and you may not get back the original amount invested. Past performance is not a reliable indicator for future results. Levels, bases and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor. Please contact us for further information or if you are in any doubt as to the suitability of an investment.

This guide and article are not advice. If you are unsure of that suitability of an investment for your circumstances please seek advice. Once held in a pension money is not usually accessible until age 55, which is rising to 58 in 2028. 

Need more help? This feature aims to give some informal hints. If you are unsure of the suitability of an investment for your circumstances please contact McPhersons Financial Solutions for a free meeting info@mcphersonsfs.co.uk or call 01424 730000.

 

 

The Chancellor of the Exchequer gave his Autumn Statement earlier this month. Check out the Mcphersons article for a recap on what was announced.

We have a look at how local businesses have reacted to the statement.

Graham Marley, Chief Executive at the Let’s Do Business Group, said he was ‘lukewarm’ about the Chancellor’s first Autumn Statement. He said: “It was a measured approach which lacked the bombshell moment often delivered by George Osborne, but is probably more appropriate for the economy at this time.

“The highlights for businesses are the extra funding to support export finance and £400m fund to support tech firms through Venture Capital.

Philip Johnson, Director of Locate East Sussex, was ‘concerned’ by Mr Hammond’s speech. He said: “We welcome the Chancellor’s investment into transport and housing and very much hope East Sussex is a beneficiary of this additional funding. However, more support is urgently needed to help job creation within the new communities that are being developed.

“It is important the investment to support 5G and broadband provision goes towards  improving coverage and reducing ‘not spots’ in rural areas, as well as making networks faster. The increase in Rural Rate Relief to 100% is good news for a rural communities although it is not clear yet whether this will be extended to all types of businesses or just villages with only one shop such as a convenience store or a pub.”

We would all like to have substantial income so that we can stop or cut down on the amount of time we spend at work or even retire altogether. But what if you are facing a pension shortfall or need to meet an unexpected expense. Equity release may be an option to consider, as it allows you to unlock some of the wealth accumulated in your property without having to downsize. However, before you consider taking this option, there are key aspects of it which you must consider.

There are two main types of equity release scheme:

Lifetime mortgage – which is a loan secured on your home, it is repaid by selling your home when you die or go into long-term care.

Home reversion – Where you sell all or part of your home to a scheme provider in return for regular income or a cash lump sum, or both, and continue to live in your home for as long as you wish. To qualify for equity release you have to be usually 55 or over and own your own home. If you do have an outstanding mortgage and want to take out equity release, you will need to settle your mortgage first, which will affect the amount you then have access to for other purposes. You will receive tax-free cash as a lump sum, a regular income, or both, to use as you wish and you can continue to live in your own home. Remember though that it is still your responsibility to maintain the home.

Your equity release questions answered:

Q: Is there a minimum amount I have to take?
A: There could be a minimum amount you have to take, it will depend on the scheme and provider. But you may not have to take it all at once. Drawdown loans can be taken in smaller amounts over time.

Q: What happens to my partner if I die?
A: The scheme should be in both your names then the arrangements will continue. If you are using equity release to increase your income, make sure you consider the situation should you or your partner die. If the property and scheme were in your sole name, the property would have to be sold and your partner would have to move out, unless they could repay the lifetime mortgage in full.

Q: Does equity release reduce the amount of Inheritance Tax (IHT) due on my estate?
A: Equity release will reduce the value of your estate when you die, which may reduce a potential IHT liability. If you are considering using an equity release scheme as part of your planning for IHT, you should obtain professional financial advice.

Q: Is a sale-and-rent-back scheme the same as a home reversion?
A: No, because if you rent you may have to leave your home after the end of the fixed term in your tenancy agreement, which may only last a few years and you may have to pay a much higher rent than under a home reversion plan, and the rent could go up.

Q: What happens if we need long-term care?
A: Your equity release scheme will usually continue unchanged if care is provided in your own home or just one of you moves to a residential or nursing home. If you both move into a care home, the scheme will usually end and the property will be sold. Releasing equity from your home is a very big lifetime commitment, so ensure you have included your family in any decision you make. Equity release may involve a lifetime mortgage or a home reversion plan. To understand the features and risks, it is crucial to obtain a personalised illustration from a professionally qualified adviser because equity release is not right for everyone and it may affect your entitlement to state benefits and will reduce the value of your estate.
INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE. Need more help? This feature aims to give some informal hints and McPhersons Financial Solutions are offering free advice so get in touch now to arrange your meeting.

Inheritance tax can cost loved ones hundreds of thousands in the event of your death, yet it’s possible to legally avoid some if not all of it. Here are some ways to reduce your Inheritance Tax Bill. 

What is Inheritance Tax (IHT)? 

When you die, the Government assesses the value of your estate (property, cash etc.) and deducts any debts owing by you. If the remaining amount exceeds the threshold  (£325,000 until 2018), you must pay tax at 40% on the extra amount. This is reduced to 36% if you donate at least 10% to charity. 

What about Assets left to my spouse?

If your spouse is UK domiciled, any assets left to them are exempt from IHT. In addition, your partner’s IHT allowance is increased by the amount you didn’t leave to others. This means a couple can leave £650,000 tax free. Being UK domiciled will mean all overseas assets are subject to IHT. 

How can I reduce my Inheritance Tax bill?

GIFTING – Money you give away before you die is normally counted as part of your estate. However, it is not counted if you live for 7 years after giving the gift.

This is why it is important to plan as early as possible. However, gifts to charities are inheritance tax free.

REDUCED CHARGE ON GIFTS WITHIN 7 YEARS OF DEATH 

Years before death 0-3 3-4 4-5 5-6 6-7
% of death charge 100 80 60 40 20

ANNUAL GIFT EXEMPTION – The first £3,000 gifted each year is ignored. If you don’t use it, it can be carried into the next year (no more than this though).

THE £250 ‘PRESENTS’ – You can give £250 to as many people as you like and this is not counted in the £3,000 referred to above. For example, if you have 10 grandchildren, you can give each of them £250 each year and this would be exempt from inheritance tax.

GIFTS ON CONSIDERATION OF MARRIAGE – Each parent can gift £5,000, grandparents/bride/groom £2,500 and anyone else £1,000. However, it is not a wedding gift, it must be conditional, for example, “If you marry my daughter, I’ll give you £5,000!” 

GIFTS FROM INCOME – This is referring to gifts from pensions or other earnings. You can’t give it all away though, you must show that giving it away does not affect your lifestyle.

GET ADVICE FROM AN ACCOUNTANT/TAX ADVISOR – This is the most effective way of finding the best solution for you. After all, you’ve already paid tax at the time of earning your money, why should you pay more than you have to on what you leave your beneficiaries?

What is the £1 million homes allowance?

This is based on parents or grandparents passing on a home that’s worth up to £1million (or £500,000 for singles). It will be phased in gradually between 2017 and 2020, starting at £100,000 from April 2017, rising by £25,000 each year until it reaches £175,000 in 2020.

CALCULATION FOR COUPLE

£175,000 x 2 = £350,000 plus £325,000 x 2 = £650,000

£650,000 + £350,000 = £1,000,000

Need more help? This feature aims to give some informal hints and McPhersons are offering free advice so get in touch now to arrange your meeting info@mcphersons.co.uk or call 01424 730000.

 

Dividends have been a very tax-efficient way of making savings in National Insurance Contributions (NIC) and Income Tax contributions for a number of years, with many business owners and shareholders choosing a smaller salary, plus an additional remuneration package paid as dividends.

However, this has now all changed from April 2016 as the income tax position of dividend income will effectively increase for most taxpayers. This may have a direct impact on the overall savings in NIC and income tax that can be achieved after 5 April 2016.

Up to 5 April 2016, no additional income tax would be due if a company paid a dividend to its shareholders, as long as the person receiving the dividend was a standard rate tax payer.

Individuals receiving dividends then only paid additional personal tax if their dividend income fell partly or wholly within the higher rate (40 per cent) or additional rate (45 per cent) bands. The following rates applied for 2015-16:

  • All dividend income in the standard rate band was taxed at 10 per cent.  As the tax credit was deductible, recipients paid no additional tax
  • All dividend income at the higher rate was taxed at 32.5 per cent (of the gross dividend, including the tax credit) less the 10 per cent tax credit
  • All dividend income at the additional rate was taxed at 37.5 per cent (of the deemed gross individual, including the tax credit) less the 10 per cent tax credit

From 6 April 2016, the way dividends are being taxed changed. The 10 per cent tax credit was abolished and each individual has a flat rate dividend allowance of £5,000.

Any dividends received by an individual in excess of the £5,000 allowance will be taxed as follows:

  • 7.5 per cent if your dividend income in within the standard rate (20 per cent) band
  • 32.5 per cent if your dividend income is within the higher rate (40 per cent) band
  • 38.1 per cent if your dividend income is within the additional rate (45 percent) band

In all cases, any tax liabilities for 2016-17 will be collected on 31 January 2018. At the same time, HMRC will also add 50 per cent of the tax liability to the first self-assessment payment on account for 2017-18, also due 31 January 2018, with a further 50 per cent due at the end of July 2018.

The new changes will also have an impact on PAYE codes for owners and directors in 2016-17. Under the new rules, HMRC will amend tax codes to automatically ‘code out’ a sum approximately equal to the amount of dividend tax due for that tax year.

 

George Osborne has announced a Lifetime Isa in his Budget.  The new Isa is due to start in April 2017 and anyone between the ages of 18 and 40 are eligible.

This could be the Isa for you if you are looking to save for your first home or for retirement.  This is significantly better than current pension arrangements and should act as an incentive for young people to save.

The way this Isa works is if you manage to save £4000 a year, the government will give you a £1000.  There is no monthly maximum contribution – you can save as little or as much as you want each month, up to £4000 a year.

You can withdraw the money at any time before you turn 60.  However, you will lose the government bonus, the interest on this bonus and pay a 5% charge.

Savers who have already taken out a Help To Buy  will be able to move their money into a Lifetime Isa.  If they have both types of Isa, they will only be able to use the bonus from one of them to buy a home.

The Help to Buy Isa scheme, which is slightly less generous than the new Isa, is due to end in November 2019.