Probably the most important financial decision you’ll ever make

Each person has their own way at looking at life and their own set of unique circumstances; therefore we believe that it is essential you obtain professional advice when it comes to generating an income for your retirement. If your pension fund is due to mature in the next twelve months, make sure you talk to us sooner rather than later to help ensure that you don’t miss out on the best pension arrangement available for your requirements. Here we explain why converting pension savings into an income is probably the most important financial decision you will ever make – and there is no second chance if you get it wrong.
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Why big savings could be made by
giving up some of your salary

The top rate of income tax increased from 40 per cent to 50 per cent on 6 April for those earning more than £150,000, while the personal allowance will be gradually withdrawn for those earning more than £100,000 and from April 2011 National Insurance contributions (NICs) rise from 11 per cent to 12 per cent.
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How to choose the right pension scheme options for you and your employees

For the entrepreneurial company director or self-employed owner-manager, we can provide advice on setting up small pension schemes not only to fund your own individual pension pot, but also to provide a flexible and tax-efficient vehicle to assist in achieving business economic success.
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Business taxation

Employment related securities

Anti-tax avoidance legislation will be introduced in relation to share incentive plans (SIPs) and company share option plans (CSOPs), effective immediately. In relation to SIPs, corporation tax deductions will not be allowed where companies pay money into a SIP as part of a tax avoidance scheme. In relation to CSOPs, new grants of CSOP options over unlisted shares in a company which is under the control of a listed company will not be permitted.
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Further penalties on those keeping untaxed wealth

The Chancellor, Alistair Darling set out his measures in Budget 2010 for a crackdown on offshore account holders. In the pre-election Budget, Alistair Darling had already laid out a number of anti-avoidance measures, namely signing tax sharing agreements with Dominica, Grenada and Belize, and imposing a 200 per cent tax penalty for those with irregularities relating to offshore accounts.
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The changes announced

Although the rate of VAT remains at 17.5 per cent, a number of changes were announced:

Supplies of postal services by the Royal Mail which are not made under a licence duty (e.g. Parcelforce) and services provided on terms and conditions that have been freely negotiated, will, from 1 January 2011 be subject to VAT at 17.5 per cent rather than being VAT exempt.
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The main tax points

Business Taxes

Corporation tax – the main rate of corporation tax remains at 28 per cent.
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Further refinements and streamlining of the rules

Late filing and payment of returns – Measures will be introduced to encourage filing and payment by the correct dates by introducing an escalating series of penalties depending upon the number of failures within a set penalty period. Further penalties will arise if there is a prolonged delay in filing returns or paying the tax due.

Financial security for late payment of PAYE and NIC – Legislation is to be introduced to allow HMRC to require a financial security from employers where amounts due under PAYE or NICs obligations are seriously at risk. This would be in line with the current practice for VAT.

Penalties for offshore tax avoidance – Finance Bill 2010 will introduce larger penalties for taxpayers who fail to provide a full account of their income tax or capital gains tax liabilities, where the failure is linked to an offshore matter.

Funding for businesses in the renewables sector

The Chancellor during his Budget 2010 speech referred to the “green bank”. While the measures proposed under this scheme will be welcome in making available funding to businesses in the renewables sector, the mechanisms for doing so are limited.

In addition to this headline scheme, more detailed measures included in the Budget to increase rates of green indirect taxes and the introduction of a new green tax were;

the introduction of a landline tax (physical electronic communication networks) from 1 October 2010 at a rate of 50p per line per month;

increases to landfill taxes and a review of material subject to the lower rate;

increases to rates in relation to climate change levy;

an increase in the aggregates levy rates;

amendments to hydrocarbon oil duty rates; and

an increase of air passenger duty rates for travel on or after 1 November 2010 – including for those who have already booked tickets.

What were the unexpected initiatives?

The 2010 Budget delivered some unexpected initiatives for entrepreneurs. The doubling of the Annual Investment Allowance will allow businesses to claim immediate tax relief of up to £100,000 each year for capital assets (excluding cars) purchased from April 2010. This will mean an additional saving of £10,500 for companies and up to £25,000 for unincorporated businesses. In a further concession, businesses that purchase new zero-emission goods vehicles from between April 2010 and April 2015 will benefit from a 100 per cent first year allowance.

The Chancellor highlighted the need to support the industries of the future. This regime should introduce a new 10 per cent corporate tax rate from April 2013 on income from patents registered in the UK. The video games industry will also receive a special tax relief following recommendations of the Digital Britain report.
A new Small Business Credit Adjudicator with statutory powers will review applications for finance that have been declined.

The government also introduced the housing of its £4bn suite of finance products for small and medium-sized businesses under one roof, which is now known as UK Finance for Growth. This aims to streamline the various initiatives previously announced. The fund will support businesses that need £2m- £10m in financing and are struggling to access capital through traditional routes.

A new Small Business Credit Adjudicator with statutory powers will review applications for finance that have been declined. Finally, there was a commitment to allow early stage businesses to get a larger slice of government expenditure by mandating a 15 per cent increase in the central government spending allocated to small and medium-sized enterprises – an estimated increase of £3bn.

The Business Payments Support Scheme which has been utilised by 200,000 businesses to date is now extended for a further five years.

On the investment side, the lifetime limit on Entrepreneur’s Relief – the rate at which capital gains tax is limited to 10 per cent – was doubled to £2m, providing a further £80,000 of relief (total £160,000) for entrepreneurs who meet the conditions. Despite speculation, the main rate of capital gains tax will not increase from its current level of 18 per cent.

The territorial rules contained within the Enterprise Investment Scheme, the Venture Capital Trust regime and the Enterprise Management Investment scheme has been relaxed. Previously, qualifying activities were to be ‘wholly or principally’ in the UK. Now a ‘permanent establishment’ in the UK will suffice.

Finally, there were a number of measures announced to combat tax avoidance and evasion, including higher penalties and even more disclosures. This follows the announcements made in the 2009 Budget Report about the new 50 per cent top rate of income tax and the 1 per cent increase (for employees and employers) in national insurance and the new pension restrictions.