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Issue3 2009
In this issue
Financial Planning
Tax Planning
A Financial Healthcheck
Employee Benefits
A New Mortgage Service
Seminars
Matters
Tax Planning
Opportunities
The introduction of the 50% income tax rate
from 6 April 2010, and the immediate
restrictions on higher rate tax relief for pension
contributions are causing a number of our
clients to reassess the structuring of their
personal finances, including how they extract
income from their businesses.
Cover story Salary sacrifice and Financial healthcheck
your pension for individuals
When an employee makes a pension As a result of the current economic
contribution from his/her net salary, there uncertainty, many individuals are keen to
is no National Insurance Contributions reappraise and consider how best to plan
(NIC) saving. In contrast, when an for their future. However, it is quite
employer makes a contribution to a common to have tax, legal and financial
pension scheme, no NICs are payable. advisers who do not know one another,
Therefore, implementing a salary sacrifice which means the advice a client receives
scheme is an attractive way of making is not co-ordinated and there so no
both employer and employee NICs savings. comprehensive structure to how financial
This can be structured in a way that leaves objectives on the whole can be met.
the cost to the employer and the
employee’s net disposable pay To combat this and help ensure you’re
unchanged, while increasing the pension your personal financial, tax and legal
scheme funding by up to 30% (see table affairs are suitable and up to date we
below). have launched our “financial healthcheck”
In this year’s Budget, the Chancellor Benefits for you: The financial healthcheck
announced that, from April 2011, higher- is carried out by experienced financial
There are a number of simple strategies rate tax relief on pension contributions for planners who can work with your tax and
that all clients should consider, such as individuals earning more than £150,000 legal advisers.
revisiting the relative efficiencies of salary will be restricted. Anti-avoidance measures
were introduced with effect from 22 April What is involved: The healthcheck involves
versus dividend payments and what, if gathering sufficient information with
anything, can still be contributed tax 2009 to prevent the new restriction being
circumvented. This includes using salary regard to
efficiently to pension schemes.
sacrifice arrangements to reduce income • You and your family
There is also an exercise to be done in below £150,000 so, in the context of • Your assets and liabilities
considering whether individuals should be registered pension schemes, the above
bringing forward income into the current • Your income and expenditure
planning only works for individuals with
tax year (eg by declaring dividends early) income below £150,000. For individuals • Your retirement plans
rather than allowing it to fall into the with income in excess of £150,000, the • Your tax position
following tax year and be taxed at higher salary sacrifice approach is still possible, • Your legal documentation
rates. but only using unregistered pension
schemes. • Your objectives
Pre-salary Post-salary
There are a number sacrifice sacrifice
(£) (£) It operates in a similar
of simple strategies Company position
way to a medical
that all clients should Gross annual 20,000 18,262
salary
healthcheck –
consider, such as Employers NI cost 1,828 1,606
Employers pension 0 1,960 evaluating whether
revisiting the relative cost
you are in good shape
efficiencies of salary Total costs of 21,828 21,828
employment
to ensure a healthy
versus dividend
future.
payments… Employee position
Gross annual 20,000 18,252
salary
We are happy to help prepare example Tax and -4,276 -3,738
Once this information is provided, we will
calculations to show the tax implications employees NI arrange a meeting to understand fully your
of taking income in this year rather than Employees pension -1,200 0
overall position. The healthcheck will then
next, should this be of interest. contribution be completed and sent to you as a
bespoke report within two weeks. The
Total net salary 14,524 14,524
report will summarise your circumstances
Beyond the simple strategies, there are and objectives, flag up areas that we
more complicated approaches which can Pension scheme believe require immediate attention as
involve the full restructuring of a business position well as those areas which require more in-
and the use of trusts and other vehicles. Contribution 1,200 1,960 depth analysis.
received
These will not be appropriate for every In this respect it operates in a very similar
business or individual and care and advice Income tax rebate 300 0
way to a medical healthcheck – evaluating
should be taken. Total received by 1,500 1,960 whether you are in good shape and
pension fund
bringing to your attention areas that
require specialist treatment to ensure a
healthy future.
The value of employee A new bespoke
benefits mortgage service
Establishing and maintaining pay and Are benefits communicated to We have identified that many of our clients
benefits policies which are attractive, fair employees in a way which fits your require a more tailored service when
and affordable can be a major headache company culture and ensures that arranging property finance.
for employers. employees see real value in what is
provided? High net worth individuals, often with
Getting it right now will allow better cost complex financial affairs, require a more
control for the employer and can lead to • The continued competitiveness of considered, personal and discreet service.
higher levels of motivation and those products: Do the components Our experienced advisers are able to
engagement with staff. provide value for money and offer provide this, and can relieve you of the
the best possible terms available in time consuming and frustrating task of
Conversely, an unplanned and reactive finding and comparing all of the available
the marketplace?
strategy can lead to inconsistency, low options.
staff morale and an increased risk in the • The identification of other benefits
form of higher costs and non-compliance which may be of interest: what other We have detailed knowledge and
with legislation. benefits components might be experience of the specialist mortgage
relevant to your organisation/staff market and in conjunction with financial
Whether you are a new or more planners, tax advisers and legal specialists
established company, you should take requirements?
we can offer truly bespoke solutions.
time to consider how best to create and • Compliance with current legislation:
maintain the right package, ensuring that We have, over the years, built excellent
Are you up to date with relationships with private and overseas
benefits are both cost effective and requirements?
appreciated by your most valuable asset – banks, as well as specialist underwriters
your employees. at high street banks and building
societies.
Given the current economic climate, it is
arguably even more important for
Whether you are a new In addition to arranging bespoke finance
employers to review the structure of their or more established for your principle residence we are happy
to provide advice and arrange finance in
benefit programmes to ensure that the
benefit spend is providing the best value company, you should the following areas:
for money.
take time to consider Second homes and holiday
A proper review process should provide an
objective and independent assessment of how best to create and homes
existing benefits packages covering the
following key areas:
maintain the right Both in the UK and overseas, as well as
residential investment finance for buy to
• The suitability of the products package let properties
currently in place: Do the current
benefit components fit the employee • The service provided by advisers Lending to limited companies,
profile? Are they seen as valuable?
Are employees engaged in the benefit
and the product providers: Do the Trusts or other SPVs
current arrangements meet your
process? Are their thoughts required standards? For principal private residences, second
considered? homes and buy-to-let investments.
Availability based upon documentation
• Administration: Do your current
and details of structure
systems provide the best platform?
Offshore mortgages
Both for foreign nationals and when
required to form part of a wider tax
planning strategy
Foreign currency mortgages
Switchable currency mortgages are
available to those with a detailed
understanding of foreign exchange and
risk and reward, and single currency loans
for those who have substantial income in
that currency.
There may be a fee for mortgage advice.
The precise amount will depend upon your
circumstances and will be agreed with you
before we undertake any work. Your home
may be repossessed if you do not keep up
repayments on your mortgage.
Seminars
We are either holding or participating in a number of seminars over the coming months which should be of interest to a wide range of our
clients and professional contacts. No charge is made for attendance.
Retirement Planning for Business Wealth Management for Private Employee Benefits
Owners Clients & Trustees September 2009
September 2009 September 2009
• Knowing when and how to retire • How to create the most suitable • What we’ve done so far to
and exit from your business investment strategy employees in this recession
• Effective use of pension schemes, • What is investment risk? • How can we rebuild employee
given legislative changes morale to ensure they are focused
• What to expect from investment
• Investment planning to generate tax on success?
portfolios
efficient income • How employee benefits can cost
• Personal tax planning opportunities
• Coping with the impact of inflation effectively help the engagement
and longevity • How to make your assets go further process
in retirement.
• Creating your desired lifestyle • How tax can be applied creatively to
employees in the UK and overseas
• Estate planning considerations
• How share schemes can be used to
motivate and retain our high flyers
Solicitors & Accountants Nursing Home Proprietors
October 2009 November 2009
• Regulation and the future • Are you feeling frustrated with the
level of support provided by your
• Integrating tax, legal and financial bank?
services • Are you looking to expand, buy or If you would like to receive
• What is financial planning? build a new home? an invitation to any of
• Ever wondered what the key drivers these seminars please
• Appropriate investment
are on valuing a home? contact Dee Ruan on:
management for individuals, trusts
and charities • Are you looking to sell your business
in the next 5 years? bfa@bfa-uk.com
• Do you wonder whether you are
claiming all the tax allowances that
you might be eligible for?
Contact Us:
For further information or assistance regarding any of the topics covered in this newsletter please speak to your usual Blacktower adviser or
contact us at one of our offices
New Malden St Albans Redhill
80 Coombe Road 105 St Peter’s Street 36-44 High Street
New Malden St Albans Redhill
Surrey Herts Surrey
KT3 4QS AL1 3EJ RH1 1RH
Tel: 020 8336 6350 Tel: 01727 896 033 Tel: 01737 781 570
Email: bfa@bfa-uk.com Email: sta@bfa-uk.com Email: red@bfa-uk.com
Blacktower Financial Advisers Limited is authorised and regulated by the Financial Services Authority (FSA).
Past performance is not a guide to future performance and the value of your investments can fall as well as rise.
The FSA do not regulate taxation and trust advice, nor some types of mortgage.
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