ABG Times Winter/Spring 2012 INSIDE Could your business benefit from R&D Tax Relief? Employee benefits - save on tax? Countdown to retirement: are you still on track? PAYE: collecting Real Time Information Pre year end tax planning Minimising the inheritance tax burden You’re hired! Recruitment on a shoestring VAT do’s and don’ts Pension reform - are you ready?
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ABG’s expert contributors Gary Jackson is our Senior Partner. Gary acts for a diverse range of clients. He has dealt with a large number of corporate sales and purchases as well as reorganisations and reconstructions. He also advises on the establishment and suitability of captive and cell captive insurance arrangements.
Mark Rubinson is Head of Practice Development. His portfolio comprises mainly of medium-sized, owner-managed businesses and high net worth individuals and Mark advises on both corporate and personal tax mitigation and planning.
Paul Berlyn is our Managing Partner. Paul’s portfolio includes clients in the property, recruitment and “not for profit” sectors including charities and trade associations. Paul provides a variety of services to these clients and is involved in all aspects of their affairs. Paul has been involved in many corporate sales in recent years.
Julie Piper is head of Audit. Julie deals with many of the firm’s larger audits and regulated clients. Julie’s client base includes FSA regulated clients together with clients in the property sector. She also advises clients on personal and corporate tax issues.
Paul Morris acts for a wide range of businesses covering many sectors including start ups and growing companies. In addition he advises many individuals in respect of their personal affairs and deals with most of the firm’s Corporate Finance assignments.
Filiz Zekia is our Finance Partner. Her portfolio includes owner-managed businesses covering a wide range of sectors including media, retail and wholesale. Filiz is involved with several of the firm’s internal management committees. She specialises in helping her clients with tax planning.
John Donohoe is a Business Services Partner. John works with owner- managed businesses and high net worth individuals. He advises clients on audit and accounting issues as well as personal and corporate taxation.
Victor Dauppe is our Tax Partner. Victor lectures widely and sits on the Corporation Tax subcommittee and the Small Business Working Group of the Chartered Institute of Taxation. Victor spends his time looking at tax planning opportunities for our clients.
Welcome - Note from the Managing Partner This year is going to be a difficult year for businesses many of whom will find themselves interspersed with celebrations for the Queen’s Diamond Jubilee and the Olympic games. Team ABG is as committed as ever to helping you achieve your business goals throughout 2012. Every athlete participating in the London 2012 Olympics is currently working on a training schedule to attain peak performance at this year’s games. ABG have for a number of years presented training seminars to keep clients up-todate and in touch with important business topics and issues. This year’s planned seminars include The Pension Reforms, The Bribery Act, IHT Planning on the family home and How to survive an H M Revenue & Customs enquiry, just to mention a few. We would like to invite you to join us at any of our 2012 seminars and full details can be found on our website at www.abggroup.co.uk/seminars-events. Finally, I would like to thank you for allowing us the opportunity to serve you. We value our relationship with every client, supplier and contact and we are committed to do all we can to ensure that you are celebrating this year. If you would like further copies of ABG Times do please call Kay Merryman on 020 7330 0012.
Could your business benefit from R&D relief? Corporation tax relief is available on research and development (R&D) revenue expenditure at varying rates. Recent changes to the relief, together with reforms planned for 2012, mean that this may be an attractive benefit for many small and medium-sized enterprises. There are two schemes governing the availability of relief – the Small or Medium-sized Enterprise (SME) Scheme and the Large Company Scheme. Here we focus on the relief that is available for SMEs. Small and medium-sized companies
The SME scheme applies to companies with fewer than 500 employees and either of the following: • an annual turnover not exceeding 100 million euros, or • a balance sheet not exceeding 86 million euros. The scheme provides relief for companies that spend at a rate of at least £10,000 on qualifying R&D costs in an accounting period. Subject to further consultation, the minimum expenditure limit of £10,000 will be removed from 1 April 2012 and relief will thereby be extended to lower levels of qualifying R&D expenditure. SME relief is capped at 7.5 million euros per project and subject to the most recent accounts having been prepared on a going concern basis. Since 1 April 2011, relief under the SME scheme has been given at a rate of 200% of the actual qualifying R&D expenditure. So if a company spends £20,000 on qualifying R&D, it can claim a total deduction of £40,000 – £20,000 in respect of the actual expenditure plus a further £20,000 R&D relief. From 1 April 2012, the rate of relief under the SME scheme is set to increase by 25% to 225% of qualifying R&D expenditure.
Relief is only given for R&D projects which seek to achieve ‘an advance in overall knowledge or capability in a field of science or technology,’ through the ‘reduction of scientific or technological uncertainty’. It must not simply be an advance in its own state of knowledge or capability. There are some restrictions on the areas of innovation that may qualify, so please contact us for details. In addition, the project must be related to the company’s organisation or trade. This can be an existing organisation/trade or one that the company intends to start up based on the R&D. Claiming R&D relief
Where the project meets the definition of R&D, relief can be claimed on the associated revenue expenditure. Broadly, this is expenditure on the day-to-day running of the project. You will need to keep track of the following types of expenses connected with the project: employee costs; payments to staff providers; material costs; and payments for clinical trials, utilities and computer software used directly in the R&D. Relief under the scheme is not given for capital expenditure (in respect of which capital allowances may be available). Claims for R&D relief can be made in the company tax return. The time limit for making a claim is two years from the end of the corporation tax accounting period to which the claim relates. If you would like more information on R&D relief, and advice on how to claim, please contact us.
ABG Seminar Calendar 28 February 2012 - Pre 5 April Year End Tax Planning 23 & 26 March 2012 - Budget Briefings 26 April 2012 - Pension Reform 17 May 2012 - Anti Bribery 21 June 2012 - 30 Top Tax Tips for 2012
Filiz Zekia, Partner Tel: 0207 330 0024 email@example.com
Employee benefits - save on tax The tax system contains a number of exemptions that make it possible to reward employees, at least in part, in a way that is free of tax and national insurance. There are also benefits for the employer, who may be able to save employer national insurance contributions (NICs) in the process. Here we examine some of the more popular taxefficient benefits. Please note, however, that the availability of any exemption is contingent on the associated conditions being met.
Health screening and eye tests
Employers can provide employees with one health screening and one medical check-up per tax year without liability. A separate exemption applies to eye tests, which the employer is required to provide under Health and Safety legislation, and/or corrective glasses for using computer monitors. Small loans
Mobile telephones are arguably one of the most popular tax-free benefits. The exemption is limited to one mobile phone per employee. For the exemption to apply, the employer must provide the mobile phone for the employee’s private use rather than reimbursing the costs of the employee’s own phone. To be within the terms of the exemption the contract must be between the employer and the phone provider. However, the exemption does extend to the provision of a SIM card to be used in the employee’s own mobile phone. Childcare vouchers and employer-supported childcare
Employers can provide childcare vouchers and/or employer-supported childcare, such as a place in a private nursery, free of tax, providing that it is within the exempt amount. Employees who joined a scheme before 6 April 2011 are entitled to an exempt amount of £55 per week on which tax relief is given at the employee’s marginal rate of tax. Where the employee joined the scheme on or after 6 April 2011, the exempt amount depends on the employee’s marginal rate of tax. The monetary value of the exemption is £55 per week for basic rate (20%) taxpayers, £28 per week for a higher rate (40%) taxpayer and £22 per week for an additional rate (50%) taxpayer. In each case the benefit is worth around £11 per week. Where care is provided in a workplace nursery, there is no limit on the exemption.
Although a tax charge arises in respect of the provision of low interest and interest-free employment-related loans, an exemption is available for small loans, provided that the balance outstanding does not exceed £5,000 at any point in the tax year. In times of economic hardship this can be a valuable benefit, providing the employer with the means to help an employee over a difficult period without triggering a tax charge. However, a tax charge will arise if the loan is written off. Christmas parties
The exemption for Christmas parties and similar functions is well known. Employees can enjoy the benefit of a tax-free bash (or several smaller functions) provided that the cost per head is not more than £150. However, if the cost per head exceeds the £150 threshold, the full amount is taxable, not just the excess over £150. The £150 limit applies per head, not per employee, meaning that guests are taken into account when calculating the cost per head figure. Other benefits
There are many other potentially tax-free benefits available, including: tea, coffee and subsidised meals; employer-provided bicycles; zero-emission cars; car parking spaces; suggestion schemes; and long service awards. For further information and advice on the tax-free benefits available, please contact us.
Victor Dauppe, Partner Tel: 0207 330 0022 firstname.lastname@example.org
Countdown to retirement: are you still on track? Recent figures suggest that only a quarter of 50-somethings are financially prepared for retirement. Meanwhile, increased life expectancy, a falling state pension and poor returns on private investments all look set to add to the pensions squeeze. But whether you have 10 years until you retire, or just six months, there are some simple steps that you can take to get your retirement planning back on track.
Five years to go… Consider moving any stock market investments
Continue to maximise your savings, but consider moving any stock market-based investments (including pensions) into safer alternatives i.e. cash, bonds or gilts. If stock values fall suddenly, as many people are currently experiencing, you may not have sufficient time to recoup any losses.
As a starting point, you should establish what your likely state pension will be. This can be done by requesting a State Pension Forecast – visit www.direct. gov.uk. You should also contact your past and present providers or employers for an up-to-date pension forecast.
If you have maximised your pension contributions, it may also be possible to contribute into a partner’s pension plan. However, higher earners in a final salary scheme should be aware that any additional pension savings which breach the lifetime allowance could result in a tax bill. The lifetime allowance on money that can be accrued in a pension fund and still receive tax relief, is set to fall from £1.8 million to £1.5 million from April 2012.
Decide how much money you will need
Obtain up-to-date pension forecasts
10 years to go… Find out how much you’re worth
Naturally, you will need to calculate how much income you will require in retirement. Remember, you could spend a third of your life in retirement so it is important to be realistic with your estimates – and inflation is almost certain. So, whilst you may save money on commuting costs, you should make allowances for holidays, travel and any outstanding debts. Determine how you will make up any shortfall
It is likely that your projected retirement income will be less than you would ideally like to achieve. However, with a potential 10 years left before you retire, there may still be time to get your pension plans back on target. You will need to maximise your savings during this period – as well as continuing to put money into your pension, you should utilise tax-efficient saving options such as ISAs. If you own your own home, you might want to contemplate down-sizing or equity release. You may also want to consider retiring later or working part-time to help you meet your retirement goals. Review your investment strategy
Contact us to arrange a review of your investment strategy – it is not only how much you save but where it is invested that can make the difference. We can also discuss your retirement plans and will work alongside you to help you achieve your goals.
Once again, arrange up-to-date pension forecasts to help you determine whether you are still on track to achieve your retirement goals. If necessary, you may need to pay voluntary national insurance contributions (NICs) to ensure that you receive the full state pension. Start paying off your debts
If you have any outstanding debts such as a mortgage or credit cards, now is the time to use any surplus cash to reduce them. Trace any lost pensions and investments
If you have any lost pensions, contact the Pension Tracing Service (0845 600 2537) as they may be able to help you trace the provider. Their database holds information on over 200,000 pension schemes. Consider your options
Recent changes to the pension rules mean there is now more flexibility for those approaching retirement. With the previous compulsory annuity age of 75 removed, you now have more freedom to choose when and how you take your pension. While it is still possible to convert funds to an annuity, other options such as pension drawdown and continued pension investment may be available.
Continued..... Six months to goâ€Ś
Contact your pension provider(s)
Consider deferring retirement
Deferring your retirement may mean that you qualify for a bigger pension. The withdrawal of the default retirement age also means it is easier for the majority of people to continue working beyond age 65. If you are planning to continue working, you will need to inform your employer as you no longer need to pay NICs when you reach the State Pension Age. You must also inform the Pensions Service if you intend to defer your state pension.
Contact your pension provider(s) to find out how much your pension is worth and how it will be paid. Talk to an expert
Talk to an adviser about the options available to ensure you get the most income from your pension. And if you will be taking a tax-free lump sum on retirement, consider where you will invest it. Whatever your current situation, we would welcome the opportunity to discuss your pension and retirement planning with you.
PAYE: Collecting Real Time Information As HM Revenue & Customs (HMRC) prepares to pilot Pay As You Earn (PAYE) Real Time Information (RTI), new research has found that many employers are not prepared for the forthcoming changes. In a recent study, more than three-quarters of small businesses questioned admitted that they are unaware of the future reforms. While the fundamentals of PAYE will remain the same (i.e. use of codes, employers deducting tax and national insurance), RTI will change how and when employers and pension providers report information to HMRC. It will require employers to provide information to HMRC for PAYE, national insurance and Student Loans at the point of pay. Under the current PAYE system, employers tell HMRC what deductions they have made from employeesâ€™ pay after the end of the tax year. However, under RTI employers will report tax and national insurance deductions when, or before, payments are made. It is hoped the new system will ensure that the correct deductions are made from pay, and result in more employees paying the right amount of tax and national insurance in the tax year.
HMRC states that RTI is designed to make the PAYE process simpler and less burdensome for employers by: making it easier to ensure individuals pay the right tax after a change of job; removing the need for the P45/P46 process over time; offering the prospect of simplifying the PAYE end of year reconciliation process for employers and HMRC; removing much of the uncertainty that leads to errors in the tax credits system; and supporting the introduction of the universal credit from October 2013. PAYE RTI is being piloted with volunteer employers and software providers around the UK from April 2012. Subject to successful completion of the pilot, large businesses will be required to start using RTI from April 2013. All businesses will be expected to use the new system from October 2013. For more information on the introduction of PAYE RTI, visit www.hmrc.gov.uk/rti. If you would like further advice on operating PAYE, please contact us.
Paul Morris, Partner Tel: 0207 330 0026 email@example.com
Keeping the year end in mind Next April may seem a long way off, but in tax planning terms it is never too early to start thinking about yearend opportunities. This article considers some of the planning options available to individuals before 5 April 2012. Don’t waste personal allowances
If your spouse or partner has little or no income, consider transferring income to them. For example, transferring an income producing asset or giving them shares in a family company which pays dividends will ensure that personal allowances are being utilised. Similarly, it is costly for one spouse or civil partner to be paying tax at 50% and the other at only 20%. Equalising income where possible ensures that the basic and higher rate bands are not wasted, thereby reducing the overall combined tax bill. The personal allowance is abated where income exceeds £100,000 (being reduced by £1 for every £2 of income over £100,000) and is lost completely once income reaches £114,950. Consider reducing income to below £100,000, for example by making pension contributions, donating to charity or, as mentioned above, transferring income producing assets to a spouse or civil partner. Other strategies can include delaying bonus or dividend payments. Make pension contributions
Pension contributions can be made up to 100% of income, subject to the annual allowance of £50,000. Unused allowances (up to £50,000 per year) can be carried forward for up to three years. Unused allowances from 2008/09 will be lost unless used by 5 April 2012.
Take advantage of tax-efficient saving opportunities
For 2011/12 it is possible to invest up to £10,680 in an Individual Savings Account (ISA), of which £5,340 can be in cash, with any balance in stocks and shares. Investments must be made by 5 April 2012 or the ISA allowance for 2011/12 will be lost. You might also want to consider other tax-efficient options such as investments in Venture Capital Trusts and the Enterprise Investment Scheme. Use the capital gains tax (CGT) exempt amount
For 2011/12 an individual is allowed to make capital gains of up to £10,600 before CGT is payable. If the limit is unused and sales of capital assets are planned, consider accelerating the sale to before 6 April to take advantage of the exempt amount. Spouses and civil partners can transfer assets between them on a nogain no-loss basis, which enables both parties’ annual exempt limit to be utilised. Use the inheritance tax gifts allowance
The annual inheritance tax exemption for gifts is £3,000 for 2011/12. Any unused allowance for 2010/11 may be brought forward for use after the 2011/12 allowance has been exhausted. Consider making gifts up to this limit to ensure that the allowance is not wasted. Gifts covered by the exemption do not form part of the estate for inheritance purposes. The success of any tax planning will depend on your individual circumstances, and it is essential to consider the bigger picture. Please contact us for advice tailored to your requirements.
Mark Rubinson, Partner Tel: 0207 330 0005 firstname.lastname@example.org
Minimising the Inheritance Tax burden With recent reports suggesting that HMRC is investigating inheritance tax (IHT) claims more thoroughly than ever before, proper IHT planning is becoming increasingly important for many people. The tax is payable from your estate, so if you want to make sure that the taxman’s slice is kept to the minimum, you need to start planning now. When you die, IHT will be charged on your personal wealth, together with some or all of your lifetime gifts made in the preceding seven years. IHT is currently payable at 40% where a person’s wealth is in excess of the nil-rate band – set at £325,000 for 2011/12. So if you have an estate worth £500,000, £175,000 is taxed at 40%, meaning the IHT bill would be £70,000. The nil-rate band has been frozen at £325,000 (£650,000 for married couples) until 5 April 2015. The seven-year rule – ‘potentially exempt transfers’
Most gifts made during your lifetime will be entirely exempt from IHT if you live for seven years after making the gift. These sorts of gifts are known as ‘Potentially Exempt Transfers’ (PETs). Taxable gifts made up to seven years before death are added back into your estate and tax is calculated on the inclusive value. But to the extent that such lifetime gifts made between three and seven years before death exceed the tax threshold, the associated tax is discounted by up to 80%.
Transfers of assets
Transfers of assets between spouses and civil partners are exempt from IHT, but other lifetime gifts may be more tax-efficient. Note, transfers on or within seven years of death to a spouse domiciled outside the UK are exempt only to the extent of £55,000. Lifetime gifts
Lifetime gifts are potentially exempt from IHT, and there is no limit on such transfers, so this is an excellent way of transferring assets that you do not need to keep in your estate. It may be advisable to cover substantial gifts by insurance against death within seven years. Trusts
Trusts let you transfer assets out of your estate for IHT purposes, but enable trustees to exercise some degree of control over the capital or income (and you can be a trustee). There may be an IHT charge, but this would be at 20%, and then only if the transfer is over £325,000 (2011/12). Under current rules, a further tax charge at up to 6% will then be levied on the withdrawal of funds or at 10-yearly intervals. Write a Will
A well-drafted Will can ensure that the wealth you have built up during your lifetime benefits the right people on your death – and it can also be structured to save tax. Life assurance policies
Reducing the IHT bill
Minimising your IHT liability should form an important part of your tax planning. Consider the following strategies to help reduce the IHT burden.
Life assurance policies (unless designed to cover IHT liabilities) should be assigned during your lifetime so that the proceeds do not form part of your estate on death.
Use your annual allowances
The annual exemption allows you to give away cash or assets up to the value of £3,000 a year without incurring any taxes. Any regular gifts you make out of your after-tax income, not including your capital, are also exempt from IHT (providing you have enough income left after making them to maintain your normal lifestyle). And don’t forget, small gifts of up to £250 a person per tax year are exempt, while parents can give up to £5,000 to each of their children as a wedding/civil partnership gift (grandparents can give up to £2,500 and others can give up to £1,000).
A reduced rate of 36% will apply from April 2012 to death estates where 10% or more of the net estate is left to charity (subject to consultation). There are many ways to reduce the IHT payable on your death, through lifetime planning and action – please speak to us if IHT is a concern.
Julie Piper, Partner Tel: 0207 330 0025 email@example.com
Junior ISA limit is raised The annual amount that can be invested into a new Junior Individual Savings Account (JISA) has increased from £3,000 to £3,600. In July the Government published detailed regulations on the new tax-free savings account, which included an amendment to the annual contribution limit as previously announced in March. JISAs which became available on 1 November 2011 and are seen as a replacement for Child Trust Funds (CTFs), which were closed to new savers in January 2011. The Government has confirmed that JISAs will have the following key features: • All UK resident children under the age of 18 who do not have a CTF will be eligible for Junior ISAs • Any income or gains will be tax-free • Both cash and stocks and shares Junior ISAs will be available • There will be an overarching contribution limit of £3,600 per year which will be indexed by CPI from 6 April 2013 onwards • Accounts will be owned by the child and funds will be locked in until the child turns 18 • Children will have the right to manage their accounts from age 16 • Junior ISA accounts will by default become adult ISAs on maturity. Meanwhile, the investment limit for existing CTFs will rise from £1,200 to £3,600 per year from November, in line with the new limit for Junior ISAs.
The Move to online VAT filing HMRC has launched a consultation on the next steps for moving VAT online. It proposes that from 1 April 2012, it will be compulsory for VAT registered businesses with a turnover below £100,000 to file VAT returns online and make electronic payment of any VAT due. There are also plans to make online the default (though not compulsory) channel for all businesses for VAT registration, deregistration and changes to registered details. Since 2010, larger businesses and all new VAT registrants have had to file VAT returns online and pay their VAT electronically. Others can still file paper returns and pay by cheque. The move is part of a wider general Government drive to move transactions from paper to online. There are plans to introduce a new online VAT registration service from October 2012, with the aim of making registering quicker and easier, and there are also consultations to move direct taxes online.
Gary Jackson, Partner Tel: 0207 330 0003 firstname.lastname@example.org
Sustainability makes good business sense In 2011 ABG became Planet Positive certified. Planet Positive provides an environmental mark demonstrating organisations’ commitment to sustainability and to the wider community. Planet Positive also helps to save energy and win new business. Planet Positive works with many large businesses such as Deloitte, Marks & Spencer and Land Securities through to hundreds of SMEs.
In addition to saving energy and engaging employees, ABG has invested in Link Community Development, one of the charitable projects supported by the Planet Positive Foundation to help create a better way of living. Link Community Development purchase solar panels for rural schools in Africa, which lead to improvements in education and opportunities to teach pupils about sustainability.
Certification began with the measurement of ABG’s Scope 1 and 2 emissions, i.e. gas and electricity consumption. All of the data was entered online, making the process quick and simple. Following this, ABG has now committed to reducing its carbon emissions by 5% per employee this year.
“The partners at ABG are committed to environmental sustainability and believe that by following the Planet Positive programme, it will lead to a positive impact on our business. We are keen to hit our 5% reduction target, reduce our emissions and save money.”
ABG has taken the next step and initiated a Green Team, who are responsible for driving energy savings and recycling within the business. To kick this off, Planet Positive conducted a workshop with 10 ABG employees to initiate behaviour change in the office.
Paul Berlyn, Partner, Arram Berlyn Gardner Find out how your business can become Planet Positive Certified at www.beplanetpositive.com Or call the Planet Positive team on 0207 953 3170
You’re hired - Recruitment on a shoestring While placing a job advert in the local paper or contracting an agency are still popular channels for recruitment, they can be very expensive for the small business owner. Before launching a costly recruitment campaign, you might want to consider the alternatives.
You might want to consider posting a job vacancy on a dedicated recruitment website. Such sites enable you to reach a much wider audience, without going through the more costly route of agents.
Consider whether a vacant post can be filled internally. Is there someone you can promote or can you create a role-share for two junior colleagues? It could save you money in the long-term.
Recent studies have suggested that many employers are also turning to social media to source new employees. While it enables recruiters to reach their target audience quickly and cheaply, it is not without its drawbacks. Negative feedback or ill-considered ‘Tweets’, for example, can damage a firm’s brand and reputation.
Links with universities/ colleges
Employee referral schemes can be significantly more cost-effective than a potentially protracted recruitment campaign. Rewards can vary between companies, but a good referral program will have many benefits, both in cost and the time savings.
Consider establishing links with universities and colleges in your region. University careers sites will often allow free job listings. You might also want to consider organising work experience appointments during your busy periods or to fill voids over the holiday season.
While it can be tempting to disregard speculative job applications, they may come in useful at a later date. Why not stockpile speculative applications and CVs and refer back to them when a vacancy arises? Go online
If you have a firm website, make sure that you utilise its advertising potential. Keep it up-to-date with current vacancies and provide clear instructions on how and where applicants should respond.
Paul Berlyn, Partner Tel: 0207 330 0004 email@example.com
Some VAT do’s and don’ts DO keep a monthly record of your turnover – late registration can result in severe penalties DO notify your local VAT office when major changes take place – changes must be notified within 30 days DO retain records for the last six years – these could be demanded by law DO obtain and keep VAT invoices – these are your authority to claim back VAT on supplies made to you DO account for VAT on fuel used for private motoring using the appropriate scale charge
DON’T claim the VAT paid on the purchase of a motor car – it is not recoverable except in some very special cases DON’T claim the VAT paid on goods or services used for private purposes. Where there is an element of private use (e.g. telephone) an appropriate percentage should be claimed. Special arrangements apply to private use of fuel DON’T claim the VAT paid on entertaining (except for reasonable, relevant costs of entertaining overseas customers) DON’T charge VAT on the transfer of a business as a going concern (make sure contracts incorporate appropriate VAT provisions)
Pension reform - are you ready? Between 2012 and 2016 employers will be required to automatically enrol eligible workers into a qualifying pension scheme. The key aim of the policy is to help ensure that UK workers are saving enough for their retirement. The scheme could be an existing company scheme (if it meets, or can be changed to meet, the necessary criteria) or it could be a NEST (National Employment Savings Trust): a simple low-cost pension scheme being introduced by the Government.
All businesses will need to contribute at least 3% on a band of qualifying pensionable earnings for eligible jobholders. However, to help employers adjust, compulsory contributions will be phased in, starting at 1% and rising to 3% by 2017. Employees will also contribute to their pension scheme – this will start at 1% of their salary, before rising to 4% by 2017. An additional 1% in the form of tax relief will mean that there is a minimum 8% contribution rate. Employers: preparing for the changes
Who is an ‘eligible worker’?
An eligible worker is an employee aged between 22 and the State Pension Age and earning above the income tax personal allowance (£7,475 in 2011/12). Workers aged between 16 and 22, or between State Pension Age and 75, who are earning more than £7,475 will not be enrolled automatically but can ask to be enrolled. Workers earning below £7,475 a year may opt in to their employer’s workplace pension. Automatic enrolment and phased implementation
Auto-enrolment should take place within three months of a new worker commencing employment. Eligible workers have the right to opt out, but not until they have been auto-enrolled. Auto-enrolment is being phased in between 2012 and 2016 (larger employers first, smaller employers last). Employers with less than 50 workers will have their staging date set over 18 dates between 1 August 2014 and 1 February 2016. Further details on the likely timescales can be found on the Pensions Regulator website (www. thepensionsregulator.gov.uk).
Although smaller employers will not be affected for a few years, it is essential to plan for the changes in good time. Consider the following: Decide which scheme will suit your business and workforce – Decide on the type of pension scheme you will offer. Do you have an existing scheme that meets (or can be changed to meet) the Government’s requirements? Consider whether an employer pension scheme or NEST is most appropriate for your organisation. Discuss the changes with employees – How do you intend to communicate the changes to members of staff? Make sure you have a strategy in place for briefing employees and plan how you will manage any queries that arise.
John Donohoe, Partner Tel: 0207 330 0068 firstname.lastname@example.org
Recent ABG Charity Activities 5 October 2011 - Jeans for Genes Day Denim was very much the order of the day for everyone on 5 October as we all wore our jeans to the office for the day. We also held a raffle and ran a charity “Tuck Shop” for the week. 18 November 2011 - Children in Need & Mitzvah Day 18 November was a very busy day as we ran 2 charity events on the same day. We arranged a dressdown day and a cake sale with all proceeds going to Children in Need and we also participated in the Mitzvah Day “Donate a Lunch” Appeal. ABG were asked to join in with the Mitzvah Day “Donate a Lunch” Appeal as the charity who were looking for corporate businesses to join in for the first time this year. The “Donate a Lunch” Appeal has been running successfully in synagogues, nurseries, schools and local community groups for a number of years and the charity were keen to expand the appeal. ABG were partnered with St Mungo’s a charity helping the homeless in London and we were put in contact with The Lodge in Brooke Street, EC1. Our staff donated a range of foods and Rob Robinson (Office Admin) and Kay Merryman (Marketing Manager) arranged to deliver the food and spend time with the guests at The Lodge. On her return to the office Kay commented, “I am really pleased that ABG joined in with the Mitzvah Day Appeal and I am pleased to have been a small part of this. It was really nice to give something back”. The Lodge has completely gone against any pre-conceived idea I had of a homeless hostel. The Lodge was a beautiful building that was homely, warm and welcoming. The staff were kind, dedicated and caring and the guests were incredibly appreciative, proud of their environment and were willing and wanting to give back to the community”. Whilst chatting with the guests at The Lodge Kay and Rob heard how the residents were currently volunteering to help renovate a local community garden to make it safe for young children and they too were really pleased to be giving something back. It was obvious that everyone at The Lodge was very proud of their “home” and incredibly grateful for the help and donations they receive. You are able to read more about ABG’s Corporate Social Responsiblity on our website at www.abggroup.co.uk/ corporate-social-responsibility and if you would like further information on any of ABG’s recent or forthcoming charity activities please contact email@example.com.
Copyright Arram Berlyn Gardner February 2012
If you are interested in writing an article for our next issue please contact Kay Merryman at firstname.lastname@example.org
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Intermediary Reviews and Advice ABG Insurance Services Limited is Authorised and Regulated by the Financial Services Authority. Arram Berlyn Gardner is a member of EuraAudit and 2020 International with worldwide representation and is registered to carry out audit work in the UK by the Institute of Chartered Accountants in England and Wales. Details about our audit registration can be viewed at www.auditregister.org.uk under reference number C006321677. Regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. Arram Berlyn Gardner is not authorised under the Financial Services and Markets Act 2000 but we are able in certain circumstances to offer a limited range of investment services to clients because we are members of the Institute of Chartered Accountants in England and Wales. We can provide these investment services if they are an incidental part of the professional services we have been engaged to provide. Important: This newsletter has been written for the general interest of our clients and contacts and is correct at the time of going to print. No responsibility for loss occasioned to any person acting or refraining from acting as a result of material in this publication can be accepted.