The Number 9 Bus...

A big part of me advising any of my clients is trying to keep them away from things that I have seen previous clients get wrong, and also some of life's more unexpected events like divorce and accident.

It is these aspects of advice that are vital to a client, especially one prone to delay in the face of a lengthy period of time before the circumstance they want to plan around is likely to hit. Over the years I seem to have developed what some friends and colleagues are starting to refer to as the "No9 Bus" doctrine. I have to thanks my friend @bddalton for the photograph, as he recently sent this to me after a meeting with a mutual client in which we had been discussing one of life's more terminal unexpected events...

A large part of the advice I give, particularly around inheritance tax and succession planning in business is (and there is no way to dress this up) death. This is a sensitive subject at best and I find very often best dealt with through use of a slightly macabre sense of humour (well at least in Britain, not sure it would work anywhere else). A common example of mine, (as no-one likes to think about death as a result of a terminal illness, or old age) is that of accident and for some reason many years ago the example I took was being knocked down by the ubiquitous "No9 Bus" as I was working in the Halesowen area at the time. This has stuck over the years and despite the humorous connotations, it does represent a very real example of life's unexpected events, and how they can affect our plans, particularly where they relate to tax.

This is another image (I am a very visual person) I use with clients, and is centered around their expectations, the reality of those expectations and how these can vary on the journey to the eventual end result. Now, I can take no credit for this image, it is one I found through social media and use with some clients during meetings, so to whoever developed this I am eternally grateful. It represents a very real illustration to a client between the difference in their perceptions once they are in full possession of all the facts that affect them and their situation.

Life is very rarely simple I am afraid, and tax even less so, so put the two together and you have a heady mix of things that can potentially go wrong. So through good, and more importantly experienced advice you can hope to iron out some of those kinks, or at least choose a better method of transport for the journey...

The 2014 Autumn Statement

The date for the Statement is announced and the Government invites views on what should be in it. The Government has announced that the 2014 Autumn Statement will be made on Wednesday 3 December. In a new move, the Government has invited views on what should be in the Autumn Statement. 

“In the interest of open and transparent policy-making, the Government welcomes original and innovative ideas, which will be considered by HM Treasury as part of the policy-making process.” 

Business, charities and members of the public can send views to the Treasury via email to autumnstatementrepresentations@hmtreasury.gsi.gov.uk – the deadline is 17 October. 

University fees and tax...

It's that time of year again when children are leaving the bosom of the family home and venturing off into the wider world for the next stage of their educational careers, and with the changes to university fees over the last few years that is becoming a more and more expensive endeavour for students and their family's. So, if I told you there was a more tax efficient way in which these costs could be met you'd be interested right?

Fortunately there is, and it's not complicated, or morally abhorrent in the eye's of HMRC either! However, unfortunately it's not something that all of us can do as the first requirement is for you hold shares in your own, or perhaps the family business. So for those of us who are employees (like me) this is a no go zone, but for many business owners (from those operating from their kitchen tables right up to those with multi-million turnovers) there is a solution, and it's all to do with shares.

The premise is fairly simple, as if you are taking additional dividend income from your company to meet the fees that university is charging your son or daughter then you have to pay tax on that. For most that will mean paying around 25% of the net dividend to the tax man, so to get £9,000 you have to extract £12,000. This means that you're actually paying tax to educate your children! So, how do we save that tax then?

Well, and we're making a large presumption here, your average student who is being supported by their family doesn't work whilst at university (by which I mean have a tax paying job), so their tax free personal allowance of £10,000 each year is being wasted. Yes, that's right over an average course £30,000 of tax free cash is being lost and you're not taking advantage of that.

Hopefully you've already guessed at where this is leading to, and yes you'd be right, but how do we make giving shares to our children from the family business safe? Well, that is possible with the use of trusts and other such vehicles to ensure that the funds/shares cannot be abused. There are also tax consequences that you'll need to be aware of, but provided your child isn't working you should be able to pay each year's university fees TAX FREE!

If this is of interest to you, and you want to learn more contact me at Haines Watts Chartered Accountants (the web-link is on the bar above).