Thursday, 22 September 2011

We pooled our Pensions and Bought the Building!!


Two things that are guaranteed to raise the hackles of any businessmen are pensions and landlords. So when we found that we could use one to eliminate the other it seemed too good to be true.

Take my firm as an example - Like most people we had bits and pieces of pensions floating around, all three directors had funds from previous employers and we reluctantly knew we needed to make provisions for our future.

At the same time as we were looking at pensions we had an option to buy out our landlord. To be frank this was something we were keen to do.

Being financial advisors we were well aware that in certain cases you could use pension funds to invest in or buy property so the research began. The answer turned out to be remarkably simple, bring together our frozen pension funds into a Self Invested Personal Pension (SIPP for short), pool our resources and invest them in our building. Our joint funds made up two thirds of the purchase price of the building, but SIPP rules allowed the scheme to borrow up to 50% of the funds value, meaning that we could afford to buy the landlord out.

We still pay rent, but now we pay it to our own pension scheme, we are our own landlord and the arrangements have proved to be very tax efficient for us. Since doing our own SIPP we have helped a number of clients put similar schemes in place.

SIPPs are not just for buildings, they are subject to the normal rules and regulations for registered pension schemes, but offer freedom of choice over investment management, and strategy whilst keeping the administration simple. This means that you are able to change investment managers when you wish, without incurring the expense of changing the provider. You are free to give direct investment instructions and most types of conventional investments are freely permitted including quoted stocks and shares, unit trusts, insurance policies and commercial property but there are some restrictions designed solely to prevent abuse,

A SIPP can be complex and you need to understand the risks so you need to seek independent advice from a suitably qualified advisor, if you feel that a SIPP might be for you give us a call on 01778 342291 for an initial chat about the possibilities.  

Tuesday, 13 September 2011

2012 A Big Year for Your Money


Whatever the new-year may bring in terms of the economy and the markets 2012 will be remembered as a big year for your money because the way in which you receive financial advice will change forever.

The Financial Services Authority (FSA) have reviewed the market for financial advice hoping to bring clarity and quality to the fore their aims are –

  • Advisers tell you how much their services cost and agree with you how much you will pay.
  • Advisers who offer you independent advice must consider all relevant options for you and do so free from any restrictions (such as working with only a select group of product providers) or bias (such as being paid by commission). This makes sure that the advice offered to you is truly independent and, if it is not, the adviser must clearly explain to you why not.
  • You will receive advice from competent, trained professionals who subscribe to a code of ethics ensuring they act with integrity and treat their customers fairly

Financial Advice has never been free – what you pay has always been hidden behind commissions, fees and charging structures.

The new rules have led to a shake up of Independent Financial Advisors, a need to gain new qualifications and increase skill levels across the board. The FSA’s own figures suggest that as many as a third of all advisors will leave the industry because of these new requirements leaving many people without access to advice.

Faced with the choice to adapt or see our business die, Tancreds have chosen to qualify at the highest level possible. Invest in training our people and give the best possible advice to our clients. As a result of this commitment we are now the first advisors in the Deepings to achieve the coveted Chartered Firm status.

So if you are left high and dry by the changes in the financial market, and want truly independent, unbiased, high quality, and transparent advice give us a call on 01778 342291.  

Man Down! – What to do when a business loses its head.


One of the biggest risks to any SME is the loss of key personnel – not through resignation but through ill health or death.

Before you stop reading this is not an article about insurance (except the bit at the end) but about the steps that a partnership or smaller limited company should take to ensure that the business can carry on if a partner or director cannot.

This is about the decisions you need to take in advance, and the documents you need to support those decisions.

If you are in a partnership – did you know that in the absence of a partnership agreement the partnership ceases to exist on the death of a partner and therefore cannot continue trading. If you wish your business to endure beyond the death of one of the partners you must have a formal partnership agreement. Your Wills should deal with your business assets separately from the rest of your estate as the taxation treatment can be significantly different for business assets. You should also consider Lasting Power of Attorney so that the business can continue to trade if one of the partners loses the capacity to make decisions.

If you are a director of a limited company you need to get a few more ducks in a row, your Articles of Association need to reflect both your Shareholders Agreement and your Cross Option Agreements and all three of these need to be accurately reflected in your Wills. Once again a Lasting Power of Attorney that deals with your business affairs is well worth having.

So - Partnership, Shareholder, and Cross Option Agreements, Wills, Lasting Power of Attorney - you need some, but not all of these and they need to be drawn up carefully to ensure that you retain the Tax Benefits of having business assets. If you need help and advice just give us a call.

Finally the insurance bit – if you die or are unable to work through ill health how much should you insure for?

The answer is probably more than you think, you should ensure that the company has enough money to buy you out, enough cash to trade through a period of 6 - 12 months without the revenue that you bring into the business, and finally the funds to recruit and train your replacement. For a quote tailored to your business and its unique circumstances give us a call 01778 342291 and we will arrange a meeting.   

Wednesday, 27 July 2011

Who will run your business if you can't?

Could Your Business Go The Way of Gretna Green FC?

Gretna Green FC were a phenomenon of Scottish Football, a community club that soared from third division obscurity to the Premier League and crashed into administration almost overnight.

The story that is never told is what happened, why did the money stop? The case is a sad and a salutary tale for anyone who runs a business. The club was run by one man – dubbed the ‘Roman Abramovich of Scottish Football’ – sadly he was not in the best of health, more unfortunately for the club he was the only man who could sign the cheques and authorise payments from the bank so when he became seriously ill nothing could be paid and the whole company crumbled around him.

This could have been avoided with the right planning – in this case a Lasting Power of Attorney for his business dealings could have authorised someone he trusted to look after his and the company’s interests whilst he lacked the capacity to do so.

This story is unusual but highlights the need to extend your planning beyond the day to day running of the business.

Wills and Lasting Powers of Attorney are frequently pushed to the back burner but they are critically important when things go wrong or in planning your tax and succession strategy.

Ask yourself –

  • How would your business trade if you couldn’t make the decisions and sign the cheques?

  • Could the business continue if your estate was caught in the probate process?

  • Would you be content to run the business with your partner’s surviving spouse or children?

  • How do you buy your business partner’s family out?

  • Does your Will make the most of the Tax breaks available to the business?

  • What are IHT, BPR and APR, more importantly how do they apply to me?

If you don’t have good answers to these questions then you need to talk to us, call on (01778) 341490.

Hard work and dedication has meant that you have built up a sound business to benefit you and your family don’t let the lack of simple planning take it all away. 

Monday, 4 July 2011

Dilnot Report causes media waves.

The Dilnot Commission has published its report into long term care funding, the highlights are:

A maximum lifetime care contribution of between £25,000 and £50,000 with a recommendation that £35,000 would be the correct figure.

A £7,000 to £10,000 contribution towards 'Hotel Costs' if in residential care.

A £100,000 capital disregard as against the current £23,250.

Changes to be in place by 2013.

All excellent in theory, but with a projected cost of £1.7bn rising to £3.5bn after five years could the country afford it. My guess is not at the moment.

Dilnot thinks that the burden of the costs should fall to those already in retirement, but with £1,7bn being equal to a penny on income tax globally, and relatively few people in retirement paying tax would any government dare to make all its taxpaying pensioners into higher rate taxpayers in one fell sweep. Political Suicide.

Dilnot says that implementing his reforms would bring certainty and peace of mind to those thinking of future care prospects - he even suggests that you could insure against the cost of care in the future.

Interesting ideas - Good Media fodder, time will tell if the coalition are brave enough to see this through.