INDEPENDENT MATTERS

TALKINGMONEY

Taking advice from a qualified and experienced professional

ISSUE 2 n SPRING 2014

From Medics Financial Services & Lansdell & Rose Chartered Accountants

A NISA way to save or investSupporting savers at every stage of their lives

BUDGET 2014

The key announcements at a glance

Lansdell & Rose Chartered Accountants36 Earls Court Road, Kensington,London, W8 6EJT: +44 (0) 20 7376 9333 F: 44 (0) 20 7376 9777

Medics Financial ServicesGlobal House, Daux Road, Billingshurst, West Sussex, RH14 9SJT: 01403 780 770 F: 01403 780 771 E: info@medicsfs.com

Inside this issueWelcome to the latest issue of our magazine Talking Money. In this issue we look at the key measures announced in the Chancellor of the Exchequer George Osborne’s fifth Budget speech, in which he unveiled plans to support economic recovery – including tax breaks to boost productivity, exports and manufacturing.

The deficit Mr Osborne announced would be lower than expected this year at 6.6% – and he said the Government was on track to post a surplus of 0.2% in 2018/19, according to the Office for Budget Responsibility (OBR) forecasts.

This was a Budget billed for makers, doers and savers. The changes announced in Budget 2014 are set to redefine financial planning with the reforms aimed at boosting savings in the long term. These reforms included the amount people earn before tax going up by £500 to £10,500. There was an increase to the annual Individual Savings Account (ISA) allowance from £11,520 to £15,000, from 1 July this year, which will combine Cash and Stocks & Shares allowances into a New ISA (NISA).

The Chancellor announced a series of radical reforms to the pension system, giving people unprecedented freedom over how they draw their pension. From April 2015, anyone who is aged 55 or over will be able to take their entire pension fund as cash – although only the first 25% will be tax-free. The remaining 75% of the fund would be taxed at the saver’s marginal rate.

Pensioners will be able to drawdown as much or as little of their pension pot as they want, anytime they want. No caps. No drawdown limits.

A full list of all the articles featured in this edition appears opposite.

Darren Scott-GuinnessMedics Financial Services

Medics Financial ServicesGlobal House, Daux RoadBillingshurst, West SussexRH14 9SJ

T: 01403 780770F: 01403 780771E: info@medicsfs.comW: www.medicsfs.com

Lansdell & Rose36 Earls Court RoadKensington, LondonW8 6EJ

T: 020 7376 9333 F: 020 7376 9777E: info@lansdellrose.co.ukW: www.lansdellrose.co.uk

The content of the articles featured in this publication is for your general information and use only and is not intended to address your particular requirements. Articles should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. Levels and bases of, and reliefs from, taxation are subject to change and their value depends on the individual circumstances of the investor. The value of your investments can go down as well as up and you may get back less than you invested. Past performance is not a reliable indicator of future results.

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Contents3456

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Independent matters

Budget 2014

Budget 2014: Pensions

Why incorporation for dental and medical professionals makes more sense than ever

How to keep your finances healthy and your tax low

A NISA way to save or invest

We hope you enjoy reading our magazine. To discuss your financial planning requirements or to obtain further information, please contact us.

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INDEPENDENT MATTERSTaking advice from a qualified and experienced professionalThere are two different types of financial advisers – ‘independent’ and ‘restricted.’ Medics Financial Services are experienced in providing independent financial advice and professional mortgage services to the medical and dental professions including GP’s in practice partnerships or locum posts, hospital doctors, consultants, dentists and dental principals, vets and opticians.

We offer the full range of financial products

and providers available, which is why we can

call ourselves ‘independent advisers’. But

many advisers have chosen to offer ‘restricted

advice’ and will focus on a limited selection of

products and/or providers.

INDEPENDENT ADVISERSMedics Financial Services is able to consider

and recommend all types of retail investment

products that could meet our client’s needs

and objectives. In addition, we also consider

products from all firms across the market, and

have to give unbiased and unrestricted advice.

RESTRICTED ADVISERSA restricted adviser or firm can only

recommend certain products, product

providers, or both. The adviser or firm has to

clearly explain the nature of the restriction, for

example if the adviser works with one product

provider and only considers products that

company offers, the adviser can recommend

one or some types of products, but not all

retail investment products, or the adviser has

chosen to focus on a particular market, such

as pensions, and considers products from all

providers within that market.

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Medics Financial Services adviser Restricted adviser

Will consider all retail Yes Noinvestment products

Can focus only on a No Yesparticular market

Can consider products only No Yesfrom certain product providers

Has to explain to you the type Yes Yesof advice they offer

Can use ‘independent’ to Yes Nodescribe the advice they offer

Incentivised to recommend No Noone product over another

IT PAYS TO GO INDEPENDENTWhether it’s a pension to help you

achieve a comfortable retirement,

or a Will that’s properly written

and legally binding, the benefits

of taking independent advice is

likely to far outweigh the initial

cost – especially when you consider

that you will be living with the

consequences of those decisions

for years, if not decades to come.

For more information about how

we can help you protect and grow

your wealth, please contact us.

Call today: 020 7376 9333

Or visit our new website for more

useful articles: www.lansdellrose.

co.uk/blog

INDEPENDENT MEDICS FINANCIAL SERVICES AND RESTRICTED ADVICE: KEY DIFFERENCES

BUDGET 2014:

THE KEY ANNOUNCEMENTS AT A GLANCEThe Chancellor of the Exchequer George Osborne gave his Budget to Parliament on 19 March 2014. These are his key announcements.

ECONOMYn Gross Domestic Product (GDP)

forecast to grow by 2.7% this year and

2.3% next year, then by 2.6% in 2016

and 2017 and by 2.5% in 2018

PUBLIC BORROWING/DEFICITn Deficit forecast to be 6.6% of GDP

this year, 5.5% in 2014/15, then falling

to 0.8% by 2017/18 with a surplus of

0.2% in 2018/19

n Borrowing forecast to be £108bn this

year and £95bn next year, leading to a

surplus of almost £5bn in 2018/19

n A new charter for budget

responsibility to be brought in this

autumn

n Promises to make permanent £1bn

reduction in government department

overspends

BANK OF ENGLANDn Bank of England’s remit to

keep inflation at 2% renewed

TAXATIONn Point at which people start paying

income tax will be raised from

£10,000 to £10,500 from 6 April 2015

n Threshold for 40p income tax to rise

from £41,450 to £41,865 from 6

April this year and by a further 1% to

£42,285 from 6 April 2015

n Those accused of using a tax

avoidance scheme and appealing will

have to pay tax up front while they

appeal, rather than after

n Inheritance Tax waived for members

of emergency services who give their

lives in job

n Tax on homes owned through a

company to be extended from

residential properties worth more

than £2m to those worth more than

£500,000

SAVINGSn Cash and Stocks & Shares Individual

Savings Account (ISA) to be merged

into a single New ISA (NISA) with an

annual tax-efficient savings limit of

£15,000 from 1 July this year

n The 10p tax rate for savers abolished

n Cap on Premium Bonds to be lifted

from £30,000 to £40,000 in June this

year and £50,000 next year

PENSIONSn All tax restrictions on pensioners’

access to their pension pots to be

removed, ending the requirement to

buy an annuity

n Taxable part of pension pot taken as cash

on retirement to be charged at normal

income tax rate, down from 55%

n Increase in total pension savings people

can take as a lump sum to £30,000

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BUDGET 2014: PENSIONSFundamentally redesigning the UK private pensions system

n New Pensioner Bond, paying ‘market-leading’ rates,

available from January 2015 to over-65s, with possible

rates of 2.8% for one-year bond and 4% for three-year

bond – up to £10,000 to be saved in each bond

ALCOHOL AND TOBACCOn Beer duty cut by 1p a pint

n Duty on spirits and ordinary cider frozen

n Tobacco duty to rise by 2% above inflation, and this

escalator to be extended beyond the next general election

ENERGY AND FUELn Fuel duty rise planned for September will not happen

n £7bn package to cut energy bills, including £18 per ton

cap on carbon price support, predicted to save medium-

sized manufacturers £50,000 and families £15 a year

COINAGEn Twelve-sided £1 coin to be introduced in 2017

WELFAREn Budget to be capped at £119bn for 2015/16, rising in line

with inflation to £127bn in 2018/19. The cap includes

child benefit, incapacity benefit, winter fuel payment and

income support – but does not include State Pension

and Jobseeker’s Allowance

BUSINESSn Annual Investment Allowance for businesses doubled to

£500,000 and extended to the end of 2015

n Direct lending from Government to UK businesses to

promote exports doubled to £3bn and interest rates on

that lending cut by a third

n Business rate discounts and enhanced capital

allowances in enterprise zones extended for three years

n Export finance doubled to £3bn and interest rates on

lending scheme cut by a third

ENERGYn The carbon price floor will be capped as part of a

£7bn package to save manufacturers from increasing

energy costs

TRANSPORTn Air passenger duty reformed: all long-haul flights will

carry the same tax rate as current visits to the US

n A £200m pot for councils to repair pot holes

HOUSING/INFRASTRUCTUREn Help to Buy equity scheme for new-build homes

extended to 2020

n Support for building of more than 200,000 new homes

n £270m guarantee for Mersey Gateway bridge

n Legislation to give Welsh Government tax and

borrowing powers to fund infrastructure needs,

including improvements to M4

n £140m extra for flood defence repairs and maintenance

n £200m made available to fix potholes

The Chancellor George Osborne plans to

fundamentally redesign the UK private

pensions system. He announced in his

Budget speech that by removing the

effective requirement to buy an annuity

which will be introduced from April 2015,

people will have greater flexibility in

accessing their pensions.

This means that people can choose how

they access their defined contribution

pension savings: for example, they could

take all their pension savings as a lump

sum, draw them down over time, or buy

an annuity.

The Government will also explore with

interested parties whether those tax rules

that prevent individuals aged 75 and over

from claiming tax relief on their pension

contributions should be amended or abolished.

In the meantime, as a first step towards

this reform, the Chancellor announced a

number of changes to the current rules

that will come into effect from 27 March

2014. This will allow people to now have

greater freedom and choice over accessing

their defined contribution pension savings

at retirement. These are:

n Reducing the amount of guaranteed

income people need in retirement

to access their savings flexibly, from

£20,000 to 12,000

n Increasing the amount of total pension

savings that can be taken as a lump

sum, from £18,000 to £30,000

n Increasing the capped drawdown

withdrawal limit from 120% to 150% of

an equivalent annuity

n Increasing the maximum size of a small

pension pot which can be taken as a

lump sum (regardless of total pension

wealth) from £2,000 to £10,000 and

increasing the number of personal pots

that can be taken under these rules

from two to three

The areas around pensions

and the new tax-efficient

NISAs are very significant.

If appropriate to your

particular situation, you

should review your

financial plans immediately.

Don’t delay. To discuss

how the changes

announced in Budget

2014 could impact on

your financial plans going

forward, please contact

us for further information.

We look forward to hearing

from you.

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WHY INCORPORATION FOR DENTAL AND MEDICAL PROFESSIONALS MAKES MORE SENSE THAN EVERIncorporation has for many years been a favourable trading vehicle for dentists and medical consultants yet there are still many practices that trade as partnerships and many professionals who are still operating as sole traders.

This is often due to lack of guidance from

accountants who do not fully understand the

dental and medical sectors, or where there

is no help from an accountant at all. Find out

why now it makes even more financial sense

for your business to be a limited company.

And why it is so important to get the structure

correct, even for those who are already set up.

Now an even lower tax rate for companiesOnce profits reach (very broadly) £50,000,

trading as a limited company can be a robust

means of saving tax. This is because the higher

rate of tax kicks in under income tax, and the

tax savings more than compensate for the

additional costs that being incorporated brings.

Whilst the 2014 budget was very much

centered on personal taxes, savings and

investments, another key benefit was for

businesses, specifically relating to corporation

tax rates. The already low rate of corporation

tax is 21% or 20% for those companies with

profits below £300,000.

However, following the 2014 Budget, from

April 2015 the corporation tax rate has been

set at 20%, regardless of profit levels, so it’s

good news for the practice owners and larger

earners amongst you. It also gives faith to

the general approach that the government is

supporting legitimate tax saving strategies.

The UK rate of 20% will be one of the most

competitive company tax rates in the G7.

Four years ago, it was one of the least

competitive at 28%.

Avoid tax avoidanceThis low rate of corporation tax comes hand

in hand with the objectives set to clamp down

even further on tax avoidance schemes,

incentivising taxpayers to consider lawful

ways to cut their tax bills, that don’t provoke

HMRC to investigate.

Key benefits?n Significant tax savings - A properly

planned out incorporation, taking into

account the unique business and personal

circumstances of the tax payer typically

reduces tax bills by between 30% and 50%.

n Limited liability – Except where personal

guarantees have been given, shareholder

liability is usually capped at the share

capital of the company, typically between

£100 and £1,000.

n Future prospects – Not only does a

limited company release more funds for

retirement planning but often the sale of a

business is easier with a limited company.

Let’s not forget goodwillIf you own your own practice that has built up

or purchased goodwill then there can often

be fantastic additional tax benefits that a

specialist tax advisor can help with.

Incorporation specialistsIncorporation is not just the setting up of a

limited company – there are several different

angles and legitimate tricks that are where

the real benefits of incorporation are found.

Anyone looking to explore this should take

specialist advice. n

GET IN TOUCHCall Lansdell & Rose, dental and medical

specialist accountants, to discuss your

incorporation – or indeed any other tax issue.

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HOW TO KEEP YOUR FINANCES HEALTHY AND YOUR TAX LOW As specialist dental and medical accountants we come across the meticulously organised of you, who know to the penny how much was spent last year on postage stamps and we also come across those of you who don’t even pretend to know when your next tax payment is due.

Being meticulously organised is obviously the

better option out of the two although being

busy professionals, time is also of the essence

and there are ways to keep your finances

healthy, your tax low AND be time efficient.

These 8 top tips are provided by Lansdell &

Rose specialist accountants, tax and business

advisors. Make a start to getting your finances

healthy today!

n Get a separate bank account for your

business transactions - it is the first step

to thinking like a business owner and

minimises time spent on keeping track of

your business.

n Instruct a specialist accountant who

understands the financial needs of your

industry and can save you tax by claiming

the maximum in allowable expenditure

though knowing the tricks of the trade.

n Use online, cloud based software to record

your income and expenses – it cleverly

does most of the job for you, leaving your

time free to treat patients and earn more

money or just do the gardening, whichever

you decide! They also typically produce

simple financial reports so you always

know how your business is performing.

n Consider carefully the structure in which

you trade; i.e. limited company, sole trader

or partnership – getting this right can

save significant amounts of tax – typically

between 30% and 50% for a practice owner

or consultant and up to 25% for an associate.

n Know the deadlines for your financial

commitments; accounts and tax return

filing, tax payment dates and when your

mortgage rate is up for renewal, for

example – this way you will never be

pressurised against the deadline and can

avoid the often hefty penalties for late

submission and being unorganised.

n Keep a log of your debts and make a plan

to pay these back over a set period of

time. This will reduce unnecessary interest

payments and give you a sense of control

over your finances.

Understand the tax breaks you can benefit from in terms of:

n Paying into personal pension schemes

n Utilising your ISA allowance

n Gift aid donations

n Buying equipment, IT and motor vehicles

at the right time to maximise tax savings

Protect you and your business against the

costs involved with a HMRC investigation

by getting insurance. An inspection can be

stressful to say the least so this is one thing

to ease proceedings. n

This short summary are just a few key

points for consideration. Lansdell &

Rose deal with many dental and medical

professionals, just like you, organised and

not. We would be delighted to hear the

things you struggle with and see if we can

help you to find a solution.

Visit our new website: www.lansdellrose.

co.uk/our-clients/testimonials

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Lansdell & Rose are already helping a large number of

consultants, practice owners and associates and our

many years of experience serving dental and medical

professionals around the UK means we’re able to

ensure you get the most out of your business.

Very simply, we’ll help you save tax and still be

legally compliant.

BUT WE DO MUCH MORE THAN THAT...

Alongside the full range of essential compliance work like preparing annual accounts and corporation and personal tax returns, we can also help with:

n incorporation services – where we often save

our clients tax of 30-50%!

n advice on starting a practice

n producing and understanding regular

management accounts

n financial forecasts

n tax planning, and

n 'the opportunity to benchmark your practice

against similar businesses

In fact, everything you need to start and grow a

successful business.

You’ll find that our services are designed to add

genuine value, making a real difference to the

growth potential and profitability of your business.

If you are a consultant or dental practice owner – or are thinking of becoming one – and need professional accountancy, tax and business advice, why not join all the other medical and dental professionals who have chosen Lansdell & Rose?

Lansdell & Rose is a specialist firm, providing professional accountancy, tax compliance and business planning services for the dental and medical professions.

A NISA WAY TO SAVE OR INVESTSupporting savers at every stage of their livesBudget to Parliament on 19 March 2014. These are his key announcements.

Alongside the major reforms announced

in Budget 2014, further measures will be

introduced to support savers at every stage of

their lives.

These include reducing taxes for the lowest

income savers, radically increasing the

flexibility of Individual Savings Accounts

(ISAs) and introducing new products to help

retired savers achieve a better return on

their investment.

‘New ISA’ (NISA)From 1 July 2014, Individual Savings Accounts

(ISAs) will be reformed into a simpler product,

the ‘New ISA’ (NISA), with an overall limit of

£15,000 per tax year. The Government is also

abolishing the rule that says only half can be

saved in cash.

This will give savers complete flexibility to

save or invest how they wish, and could

benefit over six million people previously

constrained by the Cash and/or Stocks &

Shares ISA limits.

The Government will also raise the limits

for Junior ISAs and Child Trust Funds from

£3,720 to £4,000.

NISA limitFrom 1 July 2014, the overall NISA limit

for 2014/15 will be £15,000, an increase of

£3,480 from the 2013/14 limit.

The NISA will also offer you the option to save

your whole NISA allowance of £15,000 in cash,

stocks and shares, or any combination of the two.

For example, from 1 July you could choose to pay in:

n £15,000 to a Cash NISA and nothing to a

Stocks & Shares NISA

n £15,000 to a Stocks & Shares NISA and

nothing to a Cash NISA

n £5,000 to a Cash NISA and £10,000 to a

Stocks & Shares NISA

n £10,000 to a Cash NISA and £5,000 to a

Stocks & Shares NISA – a combination of

amounts between a Cash and Stocks &

Shares NISA, up to the overall annual limit

of £15,000

Transferring existing savings from a Stocks & Shares NISA to a Cash NISAFrom 1 July 2014, any money you have in a

Stocks & Shares NISA can be transferred to a

Cash NISA. You should not withdraw sums from

your Stocks & Shares NISA in order to deposit it

into a Cash NISA yourself. If you do, any amount

that you pay in will count as a fresh payment

against the overall NISA limit of £15,000.

Different transfer rules will apply, depending

upon when you paid into your Stocks & Shares

account. But if you put money into your Stocks

& Shares account between April and July 2014,

this sum must be transferred as a whole.

Other amounts from previous years may be

transferred as a whole or in parts, as you

wish; however, not all ISA providers will allow

part transfers. n

Medics Financial Services are a trading style of Global Financial Ltd which is a member of Best Practice IFA Group Ltd which is regulated and authorised by the Financial Conduct Authority. Company registered in England 992704. Registered office: Global House, Daux Road, Billingshurst, West Sussex, RH14 9SJ.

DID YOU KNOW?

You are able to open one Cash NISA and

one Stocks & Shares NISA each tax year.

However, once open, you can transfer your

Cash or Stocks & Shares NISA between

providers as many times as you wish.

Annual NISA allowances are aligned with

the tax year, from 6 April to 5 April.

Lansdell & Rose Chartered Accountants36 Earls Court Road, Kensington,London, W8 6EJT: +44 (0) 20 7376 9333 F: 44 (0) 20 7376 9777

Medics Financial ServicesGlobal House, Daux Road, Billingshurst, West Sussex, RH14 9SJT: 01403 780 770 F: 01403 780 771 E: info@medicsfs.com