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4 Key takeaways from the Spring Statement


The Spring Statement is an opportunity to hear the latest updates on the state of the UK economy and what to expect of its growth over the coming months and years. With most people setting their focus firmly on the amorphous hokey-cokey of Brexit negotiations, it’s something of a breath of fresh air to take a moment to look at concrete upcoming strategies and measurable realities.

With that in mind, here are 4 key points you can hang your hat on while what’s on or off the table continues to be debated in the background.

1) Taxes, Taxes, Taxes

Employment is up and that means more tax receipts for the Government’s coffers. 2018 ended with 440,000 more people in work than 12 months prior, with 60,000 fewer people relying solely on zero-hours contracts. Government borrowing fell in January to the lowest we’ve seen since 2001 and £21bn of income and corporation tax was raised, leaving a healthy monthly surplus of £14.9bn.

2) Even more taxes

The Making Tax Digital scheme is set to come into effect on April 1st 2019. Looking at it broadly, it’s an effort to modernise the tax system. The first step comes in the form of mandatory digital record keeping for VAT, for those businesses which find themselves above the VAT threshold. It’s undoubtedly a strong example of intent for the future.

3) You guessed it… taxes

No Safe Havens is an initiative that was introduced in 2013 to crack down on those who seek to evade their tax through hiding their income and assets overseas, and those who advise them on how to do so. The Spring Statement brought with it a declaration of further commitment to this cause by investing in the latest technology and enforcing tough new penalties while, at the same time, making sure it’s easy for law abiding taxpayers to handle their tax correctly.

4) Growth is good

Okay, it’s not all about taxes. The Office for National Statistics’ January figures demonstrate the UK Economy has grown to the tune of 0.5%, blowing the economists’ predictions of 0.2% out of the water with the biggest monthly increase we’ve seen since 2016. Construction saw notable growth of 2.8%, with the service sector up 0.3% and manufacturing up 0.8%. We saw inflation fall to 1.8% in January and the general consensus is that we can expect to see UK growth of between 1.3% and 1.4% this year.

That’s your breath of fresh air over. You can get back to talking about Brexit now. If you have any questions surrounding any of these topics or the Spring Statement in general, please feel free to get in touch with us directly.

4 Reasons why you should plan your self-assessment early

The Self Assessment season can be a stressful time. Thankfully, it’s over now – at least for those of you who made the deadline… Hopefully you managed to make the January 31 deadline with plenty of time to spare!


Although tax returns are famously stressful, it doesn’t have to be this way. Filing early is obviously the most straightforward way to avoid last minute stress. Here are our top reasons to do it:

1. HMRC’s call centres are always overwhelmed in January

If you’ve ever tried to get hold of HMRC’s personal tax helpline in January, you probably know their ‘on-hold’ music off by heart. HMRC aren’t renowned for their customer service and this reputation is well deserved.

Worst of all, HMRC’s phone line wait times look set to get even worse over coming years due to departmental cuts. If you want to make your Self Assessment as painless as possible, don’t leave it until the last minute. Getting in touch with HMRC outside of their peak times is far less frustrating.

2. If you’re owed a tax refund, you’ll get it sooner

HMRC not only taketh away, they also giveth. Some business owners overpay tax and are owed a tax refund. If you’ve overpaid tax, you’ll find out when you file your Self Assessment.
Your refund won’t be immediate (remember this is HMRC we’re talking about), but should only take a few weeks.

3. You’ll avoid HMRC’s late filing penalties

Naturally, the earlier you file, the easier it is to address any problems and avoid HMRC’s late filing penalties. In case you didn’t know, these are:

  • An initial £100 fine if you miss the January 31 deadline
  • £10 a day fines if you haven’t filed by April 30
  • A £300 fine if you don’t file for another 90 days
  • Another fine of £300 or 5% of your tax owed (whichever is greater) if you don’t file within a year
  • Addition penalties – including a fine of £100 of tax owed – if HMRC thinks you’re delaying your filing on purpose.
    These fines aren’t pretty. It’s always best to err on the side of caution when it comes to Self Assessment.

4. You can have a proper Christmas break

Because the deadline falls in the New Year, tax return and festive chaos often coincide. If you don’t have tax on your mind, recharging your batteries at Christmas is much easier (family chaos notwithstanding!). Get it out of the way and really relax over Christmas.

Sources
https://www.crunch.co.uk/knowledge/tax/reasons-to-file-self-assessment-tax-return-early/

Rupert Grint case sheds light on changing accounting dates

Actor Rupert Grint saw some unbelievable and mind boggling things over the years whilst working in the wizarding world of Harry Potter… but his biggest shock yet may have come to him in the more mundane world of muggles, thanks to discrepancies in accounting dates.

Grint made an attempt to change his accounting date from 31st July 2009 to 5th April 2010, as a result of the introduction of an additional tax rate of 50% in 2010/11. Had this change been approved, eight months worth of profits would have fallen back into 2009/10, allowing Grint to avoid the tax rate that wasn’t in place during that year.

Unfortunately for Grint, however, the change was not approved. Well, sort of. After filing his 2009/10 tax return in 2011 with two sets of pages (a 2009 schedule and a 2010 schedule), his first change of accounting date was accepted by HMRC. That was until a VAT visit brought light to a new set of accounts which covered a 20 month period from 1 August 2008 to 5 April 2010.

The FTT concluded that the two schedules which were originally filed were derived from the 20 month period “long accounts”, just being time apportioned versions of the broader figures. To establish a basis period for 2009/10, and for the intended change of accounting date to be successful, he needed to meet an 18 month test for a period of account. However, as only the 20 month long accounts could be considered as accurate accounts, they failed the 18 month test.

A brand new version of accounts miraculously appeared in 2012, covering the same two periods that were initially filed. Where these were different is that they were written up on an accruals basis, rather than the previous time apportioned schedules. The FTT were happy to accept that these did in fact meet the definitions of “accounts”, however where they faltered is that they had materialised after the original 2009/10 return was filed – and so, they were discounted.

For most businesses, a change of accounting date isn’t necessary. There are, however, some who could access transitional overlap relief through the process. The simplest way to avoid the pitfalls that Grint came across? Signing off accounts before your tax return is filed. Not only are accurate accounts helpful to measure business performance, they’re also essential for determining any tax for which you’re liable.

Sources
https://www.accountingweb.co.uk/tax/personal-tax/change-of-accounting-date-spells-disaster-for-harry-potter-actor

Revealed – the top 5 destinations for British pensions

Many British pensioners choose to move abroad, often in search of warmer climes and a more comfortable retirement.

The stereotypical idea of retiring abroad often involves moving to a mediterranean country. However, only one mediterranean country featured among the top 5 countries from which British expat pensioners claimed their state pension. This indicates that things might be changing…

Here are the top 5, in descending order:

5) Spain – 106,420 retirees

The Iberian nation has long been a retirement favourite for Brits, so we were surprised when it only came in fifth. The amount of British pensioners who spend much of the year in Spain is likely to be much higher, with many owning second homes whilst drawing their pension from the UK. Overall 16.7% of registered Spanish property belongs to UK citizens.

Spain is the only non-English speaking nation among the top 5. However, English is widely spoken in major cities and areas with a large number of tourists and expats, like the Costa Brava and Costa Del Sol.

4) Republic of Ireland – 132,650 retirees

Lush rolling scenery and cheap house prices outside of Dublin make the ‘Emerald Isle’ an attractive destination for British retirees. Although the weather may be a little on the damp side, its scenic countryside, dotted with stone castles and slower way of life have encouraged many to retire across the Irish sea.

The large quantity of Irish people living in the UK is also likely to be a factor, with many moving closer to their family after retiring.

3) Canada – 133,310 retirees

Great scenery, kind people and a low crime rate make Canada an ideal retirement destination. Canadians are famously welcoming, meaning settling in is very easy for retirees.

What’s more, Canada has excellent healthcare. There are no fees for medical treatment, doctors’ appointments and dental visits. Even eye tests come free of charge. It’s unsurprising that it’s just a hair behind it’s much more populous neighbour when it comes to the number British retirees settled here.

2) USA – 134,130 retirees

Despite coming in at second on our list, retiring in the US for non-citizens is tough. If you don’t have a job Stateside or a family member to sponsor you, your only option is the Green Card lottery. This is a lengthy and costly process.

All this said, the USA offers some great retirement options. Warm climates in southern areas, wild scenery and the allure of the American lifestyle can prompt Brits to retire across the pond.

1) Australia – 234,880 retirees

Warm weather, barbies on the beach and a high standard of living. It’s easy to see why Australia is the number one destination for British retirees.

However, retiring here does mean having a sizeable pension pot. Australia is a relatively expensive country, reflecting the much higher salaries people generally earn Down Under. House prices are expensive and food bills can leave you reeling.

Sources
https://www.independent.co.uk/news/business/news/brits-are-behind-one-fifth-of-properties-sold-to-foreigners-in-spain-as-sky-high-uk-prices-push-a6681296.html
https://www.thisismoney.co.uk/money/expat/article-6606883/Australia-number-one-destination-retired-British-expats.html
https://www.investopedia.com/articles/personal-finance/031115/how-retire-us-visas-process.asp

Why moving abroad can affect your state pension



Retiring overseas is a dream for many Brits. After all, who wouldn’t be tempted by the better climate and the amazing travel opportunities found abroad. Where you choose to spend your retirement, however, will affect how much state pension you get.

State pensions are frozen if you decide to move abroad to certain countries, such as Australia, New Zealand, Canada or India. Whilst normal state pensions rise according to the triple lock, in these countries your pension would be frozen. The triple lock means that pensions currently rise by the highest of inflation, average earnings or 2.5% Whether or not your state pension is frozen depends on whether the Government has struck individual deals with the country you move to. As it stands, the Government has only made deals with the EU, the US, Switzerland, Norway, Jamaica, Israel and the Philippines. It has been decades since any new deals have been made.

To illustrate what this freeze means, an expat who retired when the basic rate was £67.50 a week in 2000 would still get that, rather than the £125.95 received by those whose pensions have not been frozen. Likewise, if you qualify for the full state pension of £164.35 and already live in or move to one of the ‘frozen’ countries, the amount you receive will not increase while you stay abroad.

This freeze currently reduces the pensions of approximately 550,000 British pensioners.

However, upon returning to the UK, pensioners are eligible to get their state pension uprated back to the full amount by applying directly to the Department for Work and Pensions service centre.

What about Brexit?

As it stands, nothing is certain until we get a final deal (or no deal!). However, it’s likely that state pensions in the EU will not be frozen. An update on Brexit talks published jointly by the EU and UK indicated they had ‘convergence’ of their positions on state pension increases.

If you’re planning on moving to a ‘frozen’ country like Australia, it’s best to consider the implications of a frozen state pension on your finances sooner rather than later. It will be easier to mitigate the effects when you’re younger and still have greater financial ties to the UK.

Sources
https://www.thisismoney.co.uk/money/expat/article-6278449/Will-state-pension-retire-abroad.html

A snapshot of average weekly household spending

In January, the Office for National Statistics (ONS) released their latest Family Spending Survey, revealing the intimate details of British spending habits. In its 61st year, the report provides an insight into family spending habits, as well as showing how they differ between areas of the country.

The average British household spent £572.60 per week in the financial year ending March 2018. After adjustments for inflation, this was the highest weekly expenditure since 2005. Increases in transport and housing costs were chiefly responsible for this rise in expenditure.

Households are spending £18.40 more than they did a year ago, despite splashing out less on dining out and buying fewer clothes than they did 12 months ago.

Transport was the category with the highest average weekly spend. Brits spent £80.80 a week on transport, 14% of their total expenditure. This was followed by spending on fuel, power and housing, which came to £76.80 per week.

Other expenditures have fallen. As a nation, we are drinking far less than we did in the past. This is reflected in our expenditure. 10 years ago, the average amount we spent on alcoholic drinks “away from home” was £10.90 a week. Adjusted for inflation, this has fallen to £8 a week.

Good news for our liver, bad news for pubs. In fact, more than a quarter of British pubs have closed their doors since 2001.

Younger people tend to spend far more on takeaways than the elderly. Households headed by someone under 30 spend on average £7.80 a week on takeaways. By contrast, over 75s spend just £1.80 on takeaways a week.

Northern Irish families, however, spent the most on takeaways. An average of £8.60 per household. Analysts suggest that this is likely to be because families in Northern Ireland are larger than elsewhere in the UK.

Overall spending, too, varies regionally. The average weekly household spending was highest in London, at £658.30, while in the North East of England it was more than £200 less at £457.50. In Wales, the average weekly spend was £470.40 and the Scots spent an average £492.20. The ONS survey paints a diverse picture of the UK’s spending habits that are just as varied as its people.

Sources
https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure/bulletins/familyspendingintheuk/financialyearending2018
https://www.theguardian.com/business/2019/jan/24/spending-by-uk-households-rises-to-13-year-high

As a parent, could you be missing out on your state pension?

There’s no reason why being a parent, and particularly being a non-earning parent with commitments to their children, should put you at risk of decreasing your state pension entitlement. Currently, however, there are potentially hundreds of thousands of people in this exact position – although thankfully, there are steps to take so that it can be avoided.

Figures supplied to the Treasury by HMRC suggest that there could be around 200,000 households missing out on these pension boosting entitlements. If the child benefits are being claimed by the household’s highest earner, and not the the lower earner or non-earner, these potential national insurance contributions can fall by the wayside. Treasury select committee chairman and MP Nicky Morgan says; “The Treasury committee has long-warned the government of the risk that for families with one earner and one non-earner, if the sole-earner claims child benefit, the non-earner, with childcare commitments forgoes National Insurance credits and potentially, therefore, their entitlement to a full future state pension.”

With 7.9 million UK households currently receiving child benefits, there is potential for a large number of people to be affected. Thanks to data from the Department for Work and Pensions, it’s suspected that around 3% of those (around 200,000) may be in this situation. It’s worth noting that the family resources survey covered 19,000 UK households and as the estimate is sample-based, there is some uncertainty on the exact numbers of those at risk. Nicky Morgan continues, “Now that we have an idea of the scale of this problem, the Government needs to pull its finger out and make sure that people are aware of the issue and know how to put it right.”

Sources
https://www.moneymarketing.co.uk/over-200000-parents-may-be-missing-out-on-their-pension-says-hmrc/

https://www.mirror.co.uk/money/200000-parents-missing-out-state-13895884

From the Adviser-Store

The demise (and potential rebirth) of Patisserie Valerie

The prominent cafe chain Patisserie Valerie collapsed into administration after ‘significant fraud’ emerged in its past accounts.

Already, 71 of its nearly 200 cafes have been closed and a further 122 are up for sale, leaving the future of the prominent chain hanging in the balance. Accounting giant KPMG have been appointed as administrators to the company and its various subsidiaries throughout the process.

Thousands of false entries in the company’s ledgers, among other irregularities, led the firm to overstate its profits and cash flow for several years.

Companies have two primary motivations to manipulate their profits. Firstly, the pay of some executives is directly tied to financial performance. And secondly, it’s unlikely that financial manipulation will be detected by investors because of the nature of the relationship between independent auditors and their corporate clients.

The motivations in Patisserie Valerie’s case have not yet been established.

When the accounting ‘black hole’ emerged, the company was valued at £450 million. The company’s finance director was arrested by the police, bailed and resigned. Shares have since been suspended and are yet to restart trading.

An array of investigations have been opened into the company. The Serious Fraud Office are running an investigation of an unnamed individual linked to the company, while the Financial Reporting Council is meanwhile investigating accountancy firm Grant Thornton for its role as auditor to Patisserie Valerie. As it stands, only two members of the original board remain.

By any standards, it could be described as an accounting nightmare.

You might think all looks set for the company to join the likes of Woolworth’s in the cemetery of former British high street chains… However, the company’s story has recently taken a turn for the better.

On the 8th of February, sportswear tycoon Mike Ashley made a surprising bid to add the chain to his empire. The billionaire has been on something of a buying spree over the last year, adding struggling retailers House of Fraser and Evans Cycles to his high street portfolio. There are rumours that Ashley is trying to assemble a portfolio of brands to sell in his House of Fraser stores.

Whether or not his bid is successful remains to be seen. It will also be interesting to see what emerges from the ongoing investigations into accounting malpractice in the firm.

Sources
https://www.bbc.com/news/business-47094831
https://www.accountingweb.co.uk/business/finance-strategy/baking-bad-patisserie-valerie-collapses-into-administration?utm_medium=email&utm_campaign=AWUKBUS240119&utm_content=AWUKBUS240119+CID_ee7370ae83bca130e50bcc401c04136d&utm_
https://www.theguardian.com/business/2019/feb/08/mike-ashley-bid-patisserie-valerie-sports-direct

Mary Poppins returns: Can a tuppence really save the day?

Since the release of the film Mary Poppins Returns in December, it’s taken over $250m, making it a financial success. The story of the film itself however seems to recommend a few ways of making your own personal finances successful too. With the original set in 1910, the sequel takes us to 1935 where Michael, just a boy in the first film, is now a man with children of his own. Unfortunately, due to him being unable to repay a loan, he finds himself face to face with the frightening possibility of having his home repossessed.

Thankfully for Michael, in the original film his father gives him shrewd advice to invest his pocket money of a tuppence, rather than giving it to the women selling bird food. Quick reality check; even over the course of 25 years, the compound interest on a mere tuppence is extremely unlikely to have been enough to help Michael out of his rut in the real world. Realistically, with an average interest rate of 6%, saving two pennies wouldn’t even bring you in a single pound. Perhaps his father invested it particularly wisely, finding the unicorn company of his day, perhaps putting it into oil stocks, but even then it would require a huge return. It’s a film, after all, and the overriding message of being responsible with your finances is a noble one, so we can allow them a bit of creative licence.

Beyond taking the advice of investing two pence too literally, there are some positive messages and useful takeaways from Mary Poppins Returns. Ultimately, the tone is optimistic; the suggestion being that even if you’re in a particularly difficult financial position, there’s always a solution. It also suggests that these solutions are easier to come by with a bit of forward planning.

Sound investments are as beneficial now as they were in 1910, so seeking and listening to advice about how and where to put your money can be as helpful for you as it was for young Michael. Keeping on top of your financial situation and making conscious efforts to plan for the future will put you on steady ground and allow you to plan for a future that, in the words of Mary Poppins herself, is “practically perfect, in every way!”

Sources
https://www.bbc.co.uk/news/business-46741343

one in seven widows are missing out on valuable tax breaks

New data reveals that thousands of widows are missing out on valuable tax breaks on money inherited from their late husbands or wives.

In 2015, the government introduced a new rule that allows spouses to claim an extra ISA allowance. This allowance, known as an Additional Permitted Subscription allowance (APS allowance), is available to the surviving spouse or civil partner of a deceased ISA investor, where the investor died on or after 3 December 2014.

According to the Tax Incentivised Savings Association (an ISA trade body), around 150,000 married ISA savers die each year. However, just 21,000 eligible spouses used their APS allowance in the 2017-18 tax year, meaning they may be paying more tax than they need to pay.

Many bereaved spouses are unaware of the extra protections they can claim on, while others find the process difficult and confusing.

It is thought that many of those who lose out are widows whose husbands pass away without informing them of the exact nature of their financial affairs. In some cases, widows only discover large sums of money long after their husband’s death.

Situations like this have led to many to call for greater transparency between spouses around their financial affairs. A culture of privacy around financial matters is rife among the ‘baby boomer’ generation, where the higher earner often manages the money and investments. This can leave the bereaved in a precarious position, especially if they don’t know what bank accounts, investments and companies their spouse may have managed.

If your partner has left funds held in an ISA to someone else, you’re still entitled to APS. For instance, if your partner left an ISA of £45,000 to their friends and family, you can use your APS allowance to put an extra £45,000 into an ISA of your own.

Think you might be able to claim? You can apply through your late partner’s ISA provider. You will need to fill in a form, similar to when you open an ISA.

Sources
https://www.telegraph.co.uk/personal-banking/savings/one-seven-widows-missing-valuable-tax-breaks/