Hornbeam Highlights 23

November 2004

Hornbeam highlights is a topical news sheet for clients and associates of Hornbeam Accountancy Services Ltd.

Staff.

After many years with an incredibly stable workforce Hornbeam have had a summer of changes. Firstly, Anne Jo and Jackie have left to progress their careers elsewhere. Whilst we are sorry to see them leave we wish them every success in their new jobs. Matt also left, to train as a Motorsport Engineer at Corby, we tried to talk him out of it to no avail, and so all that is left is to wish him every success in that perilous adventure!

Sadly, since I wrote the first draft and after 18 months of struggling with various illnesses Paul Estcourt has also decided to leave us, hopefully for a less stressful environment!

I am particularly pleased with the calibre of the replacements who have joined our firm.

Di has joined as receptionist and administrator, having previously worked with Glenda and I over a decade ago!
Jill has joined to run our payroll department having previously worked as payroll manager for Duffields Volvo and the NHS!
James has joined us as our latest trainee and is already pushing work through faster than we can get it reviewed!

Pensions

As most of you will know Hornbeam are not licensed to give specific Pensions Advice. However the complete change of the Pensions legislation, due to be introduced on the 6 April 2005 but now delayed to 6 April 2006 is such a seismic shift that we feel that all of our clients with company pensions, retirement annuities or personal pensions (and those who ought to have them and haven’t) should be taking specific advice.

Basically the wholesale revision of the pensions legislation and the accompanying transitional relief’s are going to create some ‘not to be missed’ opportunities and some equally great dangers for the unwary.

For example at present one cannot take the cash element of ones pension until one buys an annuity. So a successful company owner with £100,000 profit to dispose of may pay himself £44,326 salary and put £50,000 into his pension. The missing £5,674 goes in employers NI. After tax and NI this leaves our guy with £26,152 of net pay. Under the new regime he puts the £100,000 into pension and then withdraws £25,000 cash. He has £1,152 less to spend but a whacking £25,000 extra in his pension fund!

On the other hand quite a few of you will probably have under funded executive pension schemes. Under the present rules you may well be entitled to take 100% of the fund as cash. Under the new rules this will be reduced to 25%….. unless you opt to stay with the old rules!

These examples are just the tip of a very big iceberg, so we have arranged to make top-flight independent finance advice available to our clients in two ways.

Firstly, for a general view of the forthcoming pensions changes we have arranged for Smith and Pinching, who are one of Norwich’s top independent firms of financial advisers, to conduct a Seminar at Hornbeam House at 5p.m. on Wednesday 8 December. Places are limited so please book your spot by returning the enclosed slip now. There will be a free Buffet and a chance to talk to the Experts after the seminar.

Secondly, we are prepared to offer a free individual review with a qualified IFA and one of our partners or managers at Hornbeams premises at any time over the next 12 months. Just phone in to arrange your appointment.

Inheritance Tax

The last budget sank most of the complex schemes to avoid Inheritance Tax. However there are still some very valuable simple things that you can do.

Ensure that you take advice and that your wills are up to date, and designed to take advantage of both spouses entitlement to a £263,000 nil rate band.
There are lots of bits and bobs of gifts out of capital that are permitted, but for an elderly wealthy person, living well within her (usually) means there is the unlimited right to make gifts out of income. So if Granny has a pension of £10,000 and investment income of £6,000, but only spends about £10,000 per year, she can gift up to £6,000 per year to her descendents clear of IHT. To obtain this concession she needs to establish a pattern of giving, and we strongly recommend that to do this standing orders be set up in favour of the lucky descendents.

Expanding By Acquisition

If you are interested in expanding your business by acquisition, Hornbeam have just published a book ‘Successfully Expanding Your Business By Acquisition’. It’s free to any client who takes up this offer.

Disclaimer

Information in Hornbeam Highlights is of necessity greatly simplified. We are trying to draw to your attention tax planning opportunities or threats. You should not take action based on this leaflet without obtaining specific professional advice.

Whether you are a client or not, if we can provide further help or advice please do not hesitate to contact us on telephone (01603) 720424.

Return to Hornbeam by Fax to 01603 722392

By post to Hornbeam Accountancy Services Ltd, Hornbeam House, Bidwell Road, Rackheath, Norfolk, NR13 6PT.

I will be attending your seminar on the forthcoming pensions changes at Hornbeam House at 5pm on 8 December 2004.

My name…………………………………………………………………….

My telephone no. ………………………………………………………….

No. of attendees…………………………………………………………….