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Financial Monitor (October 2008)Are You Concerned about the Safety of Your Savings? For the first time we have seen the Financial Services Compensation Scheme activated and sadly we must now consider the risks which apply to savings. Please ensure your savings are spread. £50,000 per institution (although see September edition of Financial Monitor for institutions covered by one registration) is guaranteed by the Government. However compensation payouts are not instant so if you have funds under £50,000 these should also be spread, to ensure monies can be accessed. If investing in a foreign bank make sure it is registered under the UK scheme, or at least has equivalent protection. Kaupthing Edge is now part of ING Direct but this is a Dutch bank covered by their protection scheme. Consider paying off debts such as a mortgage with savings. This is often sensible because the interest rate on savings net of tax is unlikely to be more than that paid on a mortgage. Now you have the added benefit of not having to worry about the safety of those savings. If you are self employed consider investing in tax certificates so that your tax money is safe. Interest is paid by HM Revenue and Customs although the rates are not as high as offered by some banks. Some VAT Do’s and Don’ts The following is a reminder for VAT registered businesses of some common areas of VAT error: DO retain records for the last six years – these could be demanded by law. DO obtain and keep VAT invoices – these are your authority to claim back VAT on supplies made to you. DO charge VAT on supplies to your staff. DO charge VAT on equipment or vehicles (except motor cars) that you sell or part-exchange. DO account for VAT on fuel used for private motoring using the appropriate scale charge. DON’T claim the VAT paid on the purchase of a motor car – it is not recoverable except in some very special cases. DON’T claim the VAT paid on goods or services used for private purposes. Where there is an element of private use (eg. telephone) an appropriate percentage should be claimed. Special arrangements apply to private use of petrol (see above). DON’T claim the VAT paid on entertaining, unless it relates solely to staff. DON’T forget to account for VAT on inter-company charges, unless there is a group election in force. DON’T charge VAT on the transfer of a business as a going concern (make sure contracts incorporate appropriate VAT provisions). If you need to check you are being given a valid VAT number you can call HM Revenue & Custom’s national advice service on 0845 010 9000 from 8 am to 8 pm Monday to Friday. Postal Scam The Trading Standards Office are making people aware of the following scam, which has been confirmed by the Royal Mail. A card is posted through your door from a company called PDS (Parcel Delivery Service) suggesting that they were unable to deliver a parcel and that you need to contact them on 0906 6611911 (a premium rate number). DO NOT call this number, as this is a mail scam originating from Belize. If you call the number and you start to hear a recorded message you will already have been billed £15 for the ‘phone call. If you do receive a card with these details, then please contact Royal Mail Fraud on 0207 239 6655 or ICSTIS (the premium rate service regulator) at www.icstis.org.uk National Minimum Wage From 1 October 2008 the national minimum wage rates were increased as follows: Adult main rate workers aged 22 and over increased from £5.52 to £5.73 per hour. Development rate for 18 to 21 year olds increased from £4.60 to £4.71 per hour. Those who are younger than 18 but are no longer of compulsory school age – the rate increased from £3.40 to £3.53. Sale of Quoted Stocks and Shares after Death When someone dies any quoted stocks and shares in the estate are valued at the date of death and this value is used for calculating the inheritance tax liability. If the shares are sold within a year of the death then if the value achieved is lower than that at death, then this lower value can be substituted for inheritance tax purposes and a refund obtained. This may be particularly appropriate given the recent stock market falls. There is no time limit for claiming the relief but there are four conditions:
From a planning point of view selling loss making shares can reduce the inheritance tax liability although the relief is restricted if the shares are re-purchased, so care must be taken. Please contact Peter Newsam if you need advice in this area. Houses that are let by Builders If a developer builds a house or flat for resale then he can recover all the input VAT on his cost of construction unless he intends to let the property in which case no input tax can be recovered. In the current climate developers, whilst having the intention to sell, are in fact letting properties in the interim, until a sale can be achieved. Customs have agreed the following policy to be adopted for input tax recovery relating to these short term lettings. For VAT purposes the developers interest in a property is treated as having a life of ten years so if a property is let for two years before sale 2/10ths of the VAT is irrecoverable If the total irrecoverable VAT (including any other VAT relating to permanently let properties) is less than £7,500 in a year then all the VAT can be recovered. If it is more than £7,500 then the whole amount is irrecoverable not just the amount over £7,500. If you need advice in this area please contact Peter Newsam. Forms P45 and P46 From 6 April 2009, all employers with 50 or more employees will be required to submit details of new employees, and employees leaving (Forms P45 and P46) online. However, HMRC have stated that if a paper Form P45 or P46 is received between 6 April 2009 and 5 January 2010, they will not charge a penalty, but will write to the employers, pointing out that the form should have been submitted on line. From 6 April 2010, penalties may be charged. The requirement to file Forms P45 and P46 online will be extended to employers with less that 50 employees from 6 April 2011. Intestacy Rules In England and Wales, the rules for dividing an estate where the deceased died intestate, ie. without a will are to change, with effect for deaths occurring on or after 1 February 2009. At present, a surviving spouse (or civil partner) is entitled to the personal effects, the first £125,000, and a life interest in half the remainder of the estate. If the deceased has no surviving children or grandchildren, the spouse is entitled to £200,000 (plus, as before, the personal effects and a life interest in half the remainder). The £125,000 or £200,000 so allocated to the surviving spouse or civil partner is generally known as ‘the statutory legacy’. These figures have been in force since 1993 and from 1 February 2009 they will be increased to £250,000 and £450,000 respectively. Please note that where property is owned jointly (not as tenants in common) then the deceased’s share will accrue to the survivor outside the estate and will not count towards the statutory legacy. Whilst these increases are welcome it does not replace the need for everyone to have a will to ensure that their estate is dealt with as they wish.
Whilst every care has been taken in the preparation of these notes we can accept no responsibility for errors or omissions contained in them or for any loss arising from their use unless we have been consulted professionally prior to any action being taken. UHY Wingfield Slater A member of the UHY Hacker Young Group of independent UK partnerships. A member of UHY, an international association of independent accounting and consulting firms. |
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