We have launched a new website and our blog has moved too!

It’s been quite a year so far for Lawrence Grant, Chartered Accountants as we have just relaunched our new website.

We’ve been working very hard to improve the user experience, and we are now able to offer enhanced functionality and stronger signposting to make navigation around the website, and access to any information you require, much easier.

The website pages have been written with a greater emphasis and empathy on understanding the needs of anyone who may be seeking tax advice or accountancy help.

Should you require someone from the firm to call you back to answer any tax enquiry you may have, you can now “instantly request” a Lawrence Grant partner or member of the team to get in touch!

The enhanced “FREE guides and literature” section now gives visitors the ability to find our wide-ranging list of guides and checklists all in one place, and a much simper process to request any of our literature.

Please take a look around and let us know what you think.

We have also created a new blog so we could better communicate and stay in touch with our followers and subscribers – so why not visit, and follow our new BLOG for the latest tax news and accountancy tips.

What happens if you die leaving only your spouse/ civil partner, no children & no will?

You might imagine that everything goes to the survivor, but currently that is not always the case.

Under the intestacy rules for England and Wales, a surviving spouse/civil partner would receive:

* Personal chattels;

* £450,000 outright; and

* One of half the residue outright.

 

The other half of the residue would go to your parent(s), failing whom your siblings or, if they have predeceased you, their offspring. The rules in Northern Ireland are very similar, while Scotland has its own distinctly Scottish regime.

The Ministry of Justice is now proposing to reform English and Welsh intestacy rules, so that where there are no children, the surviving spouse will inherit the whole estate. There are also revisions planned for the estate distribution when there are children involved.

The ministry says that its proposed changes will “ensure the laws on intestacy become closer aligned with public expectations”. However, any reform will not alter the fact that an up to date will that’s spells out what you want is a better course of action than relying on the state’s interpretation via the intestacy rules.

Your will is up to date, isn’t it..?

If not, we would strongly advise you begin your estate planning right away. Please give us a call if you want to talk through your concerns on 0208 861 7575 or visit our website for more indepth information about the service we offer.

 

Fancy a 30% flat tax relief on your pension contributions?

In 2006 the previous government introduced what it described as ‘pension simplification’, a radical reworking of the pension tax rules. Ever since, there has been a process which has now gained the label of ‘complification’ – adding complexity back into the pension tax system. The current government can take a fair slice of the blame, with its efforts to cut back the cost of tax relief by twice reducing both the lifetime allowance (on total benefits) and the annual allowance (on contributions).

A recent paper from the Pension Policy Institute (PPI) examined who benefits from the current pension regime and highlighted two tax points:

1. Basic  rate taxpayers  are  estimated  to  make  50%  of  the  total   pension  contributions,  but  benefit  from  only  30%  of  pension  tax  relief.  In  contrast,  50% of all  pension tax  relief  goes  to  higher  rate  taxpayers, with the balance going  to  additional  rate taxpayers,  while  these  groups  make  40%  and  10%  of  the  total  contributions respectively.

2. Currently  77%  of  pension lump  sums by number are  under  £40,000, but  these account for just under a quarter  of  the  tax  relief  on  lump  sums. At the opposite end of the scale  2%  of  lump  sums  are  worth  £150,000  or more and  they  attract  nearly a third  of  tax  relief  on  lump  sums.

The PPI’s concluded that instead of marginal rate income tax relief, a flat rate relief of 30% for everyone would be better at incentivising low and middle income earners and spreading the benefit of tax relief more evenly. It looked at a number of options for cutting back on the lump sum, but concluded that these would have limited immediate effect because any change could not be made retrospectively.

The PPI’s ideas on flat rate relief should not be dismissed as just the musings of another think tank. They echo proposals from the Centre for Policy Studies, a think tank founded by Sir Keith Joseph and closely linked to the Conservatives. The other main political parties have both talked about cutting tax relief for high earners, so the writing may well be on the post-election wall.

The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.

Make sure you take full advantage of the tax saving opportunities open to you – call our team of specialists for a personal tax planning review by contacting one of our partners for more information on +44 (0)20 8861 7575

National Savings & Investments are cutting the prize money on premium bonds.

In June, National Savings & Investments (NS&I) announced reductions of between 0.4% and 0.5% from 12 September on three of its variable rate offerings, the most significant being a cut in the Income Bond rate from 1.75% to 1.25%. At the time, some of the press coverage commented that the move increased the relative appeal of premium bonds, where the underlying prize money equated to 1.5% tax-free interest.

Last month NS&I reacted to the resultant inflows into premium bonds by cutting the prize money rate to 1.3% from 1 August. The lower rate will result in two changes:

• The chances of any one bond winning a prize in the monthly draw will fall from 1:24,000 to 1:26,000.

• The distribution of winnings will alter (see chart), with an even higher proportion (98.1%) of successful bonds earning their owners the minimum prize of £25.

1.3% tax-free doesn’t look bad if you are a higher rate taxpayer – you would have to earn 2.17% gross interest to match it, which beats any instant access account currently available. However, the 1.3% is theoretical and what you would actually earn depends upon lady luck. The statisticians say that the skew of prizes and the minimum of £25 means on average you will earn less than 1.3%.

Value of prize	Number of prizes in July 2013	Number of prizes in August 2013   (estimate)
£1,000,000	1	1
£100,000	5	3
£50,000	9	6
£25,000	20	11
£10,000	49	30
£5,000	97	58
£1,000	1,142	789
£500	3,426	2,367
£100	33,552	11,891
£50	33,552	11,891
£25	1,831,461	1,724,014
TOTAL	1,903,314	1,751,061

P.S. If you are thinking of that £1 million jackpot, then don’t plan your retirement around it: the odds of winning the top prize in the monthly draw are now less than 1 in 45,500,000,000.

Have you invested in premium bonds? Would you say they have been a worthwhile investment?

The UK economy shows signs of growth, but there’s still some way to go…

Cast your mind back a little over three months to late April. It was still winter and there was a distinct possibility that the preliminary UK Gross Domestic Product (GDP) for the first three months of 2013 would show the economy shrinking for a second successive quarter, creating a “triple dip” recession.  However, the GDP figures issued by the Office for National Statistics (ONS) on 25 April confounded the pessimists and showed growth of 0.3%.

Two months later, the ONS revised some 2012 statistics, stating that the first quarter of last year had seen no growth, rather than the 0.1% contraction of previous calculations.  That meant there were not the two consecutive quarters of shrinkage that are the ingredients of a recession, and hence even the “double dip” recession also disappeared.

In July there was a third round of good news, with preliminary figures for the second quarter suggesting that the UK economy had grown by 0.6%. This was faster than the Office for Budget Responsibility (OBR) was expecting and points to a rarity in future OBR forecasts; an upgrading to growth numbers.

These signs indicate an economy on the mend, but there is a long way to go. The overall output of UK plc is still over 3% below the peak set in the first quarter of 2008 and at much the same level as at the end of 2006.

The gap between where we are now and where we might have been in the GDP growth line before the financial crisis in 2008, is one measure of how much the downturn has cost the economy.

On a more optimistic note, it also suggests plenty of scope for future growth which is always welcome news!

We’ve put together some very useful expense checklists which will advise you on what you can claim for including travel, food, accommodation and motor expenses and much much more – and they are FREE to request.

Anything we can do to help YOU reduce your tax liability!

Doctor denied tax deduction as Tax Tribunal rejects travel cost allowance

You may have read recently about a Dr Samadian who lost his case to obtain a tax deduction for the cost of traveling between his home, where his private office was located, and the private hospitals where he regularly held consultations and oversaw patient care. To rub further salt into the wound, he was also denied a deduction for the costs of travel between the NHS hospital where he was employed, and the private hospitals.

In an enquiry that had lasted the best part of 7 years, Dr Samadian, a consultant geriatrician, works in the NHS, (and like so many other typical practitioners), also has a private practice – using his own home and, principally, working at two nearby private hospitals.

HMRC challenged the doctor’s claim that 65% of his mileage was for business purposes by questioning if the travel between his home office, the NHS hospital and the private hospitals was actually business related.

Whilst Dr Samadian argued that he had a dedicated office in his home for his private practice, HMRC did not accept the home office could be a starting point for calculating private practice business mileage. Neither did journeys between NHS and private hospitals qualify.

HMRC did accept however, that Dr Samadian had an office at home and that it was used in his self-employment, but sought to distinguish between journeys that were regular or routine – like those to the private hospitals, and those that were irregular, like attending to a patient at their home, or a meeting engagement with his bank manager.

What could now turn out to be a landmark decision in the interpretation of ‘wholly and exclusively’ business expenditure, this decision may be appealed by the doctor, and we could see further developments as a consequence.

Whilst Dr Samadian argued that he had a dedicated office in his home for his private practice, HMRC did not accept the home office could be a starting point for calculating private practice business mileage. Neither did journeys between NHS and private hospitals qualify.

Lawrence Grant Partner, Alan Rajah says: Where you are self-employed you can only claim the entire cost of a business expense if it is incurred ‘wholly and exclusively for the purpose of the trade’ if the expense is of a ‘revenue’ nature, rather than a ‘capital’ purchase. Allowable costs would include, for example, hiring of an operating theatre or paying an anaesthetist.

However, if expenditure relating to your self-employment is for both private and business use, you cannot claim a deduction unless you can separate the business element.

Travel costs from home to work are not an allowable expense. However, if home is also your base of operations, the position becomes rather more complex.

If you are self-employed either as a sole trader or a partner in a practice or partnership and would like to receive tax or accountancy advice regarding the tax treatment of expenses such as mileage or travel claims, please contact Alan Rajah on 020 8861 7575 or you can drop him an email at: alan@lawrencegrant.co.uk

Demob Happy?

The Governor of the Bank of England showed unusual signs of optimism in presenting the latest quarterly inflation report.

Sir Mervyn King is now in his last month as Governor of the Bank of England. In July he will be replaced by Mark Carney, currently the governor of the Canadian central bank. Sir Mervyn has had a turbulent ten years as Governor. He started the job in July 2003, just as the markets were beginning to recover from the Iraq War and the fallout from the end-of-century technology boom and bust. For the second half of his tenure he has had to deal with the 2007/08 financial crisis and its lingering consequences.

It is therefore unsurprising that Sir Mervyn was in a reflective mood when he presented the May Quarterly Inflation Report (QIR), the final to be issued under his reign. What was less expected was the optimistic note in his finale. For once, Sir Mervyn was able to say that “projections are for growth to be a little stronger and inflation a little weaker than we expected three months ago.”

The improved outlook was partly down to the higher than expected figure of 0.3% growth for the first quarter, which was reconfirmed towards the end of May. That allowed the Bank to raise its growth estimate for 2013. On the inflation front, a week after the QIR’s publication National Statistics revealed a 0.4% fall in annual inflation for April, double the drop predicted by the pundits. At 2.4%, CPI inflation is still above the Bank’s target, but far enough away from 3% to mean Sir Mervyn’s successor should not be writing a ‘Dear Chancellor’ letter explaining above-target inflation immediately he takes up his post.

These pieces of good news do not mean the economic good times are just around the corner, even if the world’s share markets have seemed to think so of late. As Sir Mervyn noted, “…markets expect Bank Rate to remain below 1% for a further four years,” which hardly suggests an imminent return to boom times. Or, for that matter, any respite for those relying on income from bank or building society deposits.

At Lawrence Grant we offer an extensive range of accountancy and tax services. We will work with you to carefully assess your personal or business requirements with the ultimate aim of reducing your tax liability.

So whether it’s the preparation of financial statements, company secretarial, tax enquiries, cross-border trading opportunities or system and internal audits, our experienced and knowledgeable team are on hand to manage and guide you through any processes and paperwork, assisting you every step of the way!

The Government is consulting on reforms to intestacy

What happens if you die leaving only your spouse/civil partner, no children and no will?

You might imagine that everything goes to your spouse or partner, but currently that is not always the case. Under the intestacy rules for England and Wales, a surviving spouse/civil partner would receive:

• Personal chattels;
• £450,000 outright;
• One of half the residue of the estate outright.

The other half of the residue would go to your parent(s) or, if your parents are no longer alive, your siblings. (If your siblings, too, have predeceased you, it goes to their children.) The rules in Northern Ireland are very similar, while Scotland has its own distinctly Scottish regime.

The Ministry of Justice is now proposing to reform English and Welsh intestacy rules, so that where there are no children, the surviving spouse will inherit the whole estate. There are also revisions planned for the estate distribution when there are children involved.

The ministry says that its proposed changes will “ensure the laws on intestacy become closer aligned with public expectations.” However, any reform will not alter the fact that an up to date will that spells out what you want is a better course of action than relying on the state’s interpretation through the intestacy rules.

Your will is up to date, isn’t it..?

Losing a family member is never easy, and the last thing you will want to think about is whether or not you will be liable for paying inheritance tax in such an event. 

Should that circumstance arise, it is very important that you are aware of your rights so that you can prepare your family for the future ahead. 

Please contact us on 0208 861 7575 if you would like advice on the preparation of your will.

The Chancellor survives a difficult month

April saw a raft of economic news, but ended with two small rays of light for Mr Osborne.

The Government’s chosen economic course, Plan A for Austerity, has not been receiving much good publicity of late. An economics paper by two Harvard economists that was seen as academic backing for austerity was found to contain significant errors.

At much the same time, the International Monetary Fund’s chief economist suggested that it may be time for the UK to relax its tight budgetary plans. On cue, unemployment figures rose by 70,000, taking the level to 7.9% of the labour force. Just to add to the Chancellor’s woes, a second credit-rating agency, Moody’s, stripped the UK of its AAA rating.

Towards the end of the month Mr Osborne had two pieces of good news.

The initial estimate of government borrowing figure for 2012/13 came in at £300 million below the 2011/12 figure. This allows Mr Osborne to say he is still cutting the deficit year by year, although a reduction of just 0.25% could well be revised away in the future.

The Office for National Statistics (ONS) announced that in the first quarter of 2013 the UK economy grew by 0.3%, reversing the 0.3% decline in the final quarter of last year. As a result, Mr Osborne avoided the much talked-about triple dip recession that had been forecast in some quarters. 

The falling borrowing and positive economic growth figures do not yet mean the UK economy has returned to health. The government deficit is stuck at close to 8% of GDP – it will be virtually unchanged again in 2013/14 – and in the words of the ONS the economy “has been broadly flat over the last 18 months.”

The UK’s economic peak was five years ago and the latest data show that we are still 2.6% below that level today.

The stock market took this all in its stride, and was little changed over April. Whether that reflects optimism about UK plc’s future or the impact of loose global monetary policy is open to debate.

The value of your investment can go down as well as up and you may not get back the full amount you invested.

Past performance is not a reliable indicator of future performance. 

Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances

Ben Korklin joins Lawrence Grant as a new Partner

Lawrence Grant, Chartered Accountants are very pleased to announce that Ben Korklin, sole practitioner, will be joining as partner with effect from 1st May.

Ben brings with him an established and growing client base having started his own firm Benjamin Alan in 2010.

Paul Levy, senior partner at Lawrence Grant says “Ben’s modern, fresh and innovative approach will be a key asset to our firm and will complement our core values. His ability to help clients grow their business in a difficult economic environment and his track record in establishing his own practice in such a short period of time make him an excellent addition to our team. We view his appointment as a continuing sign of our commitment to being a driving force within the industry.

 “I am confident that Ben will play a vital role in growing our existing client base, and in addition, develop new opportunities within our ‘specialist accountancy services’ which currently include Legal, Dental and Medical professionals to now encompass the Media and Beauty sectors which Ben will be bringing with him.”

Ben Korklin says “I am very excited to be starting a new challenge at Lawrence Grant and look forward to working with the other partners and staff.  I am very fortunate to be joining such a respected firm that prides itself on providing top quality accountancy services.”

For further information, or to arrange an interview with Paul Levy or Ben Korklin, please contact Paul Atkinson, Marketing Manager at Lawrence Grant on 020 8861 7575