On Wednesday 8th July, Chancellor Rishi Sunak provided his economic plan in response to the COVID-19 pandemic. The Summer Statement has been introduced on this occasion to help the UK economy recover following recent events.

We have summarised below the main points from the statement:

Job Retention Bonus

For every furloughed employee that an employer retains until the end of January 2021, the government will provide a one-off payment of £1,000. The bonus scheme applies to workers earning over £520 per month on average between November and the beginning of 2021.

If the nine million employees who have been furloughed this year return to work under the scheme, it could cost the government up to £9 billion, to retain people in work. It is highly unlikely all will be taken back but it does provide an incentive to businesses to take this step.

Leisure and Hospitality

The Chancellor announced that from 15th July to January 2021, the rate of VAT for selected areas across hospitality, will reduce from 20% to 5%.

To also encourage spending in businesses across the sector he has offered the “Eat Out to Help Out” scheme offering 50% discount for every diner. The scheme will offer up to £10 discount when dining from Monday to Wednesday throughout August, covering the food bill and non-alcoholic drinks.

Residential Property

The housing market has been put on hold over the past six months due to the pandemic and to prevent this continuing Mr Sunak has introduced a Stamp Duty holiday. This increases the threshold for stamp duty on residential property in England and Northern Ireland from £125,000 to £500,000. The measure applies to house purchases taking place from 8th July 2020 to 31st March 2021 and it is expected that nine out of ten transactions would be tax-free, due to the this.

Although this is the case, the additional 3% stamp duty for individuals purchasing a second residential property will still apply throughout the period.

For existing house owners, the ‘Green Homes Grant’ will be available from September this year, meaning households could receive vouchers of up to £5,000 for home projects that increase the energy efficiency of their home in England.

For low income households the government will increase the voucher amount, up to £10,000.

Employment for Young Workers

The Chancellor has introduced a vast range of initiatives to encourage employees to take on new workers and specifically aiming at the younger generation, aged between 16 and 24. The ‘Kickstart Scheme’ includes a £2billion fund to pay for six-month work placements for 16 to 24 year olds who are currently on Universal Credit. Over the six-month period, he hopes that employees will provide the necessary training to allow the individuals a good start in employment.

The government is also offering employers a £1,000 grant per trainee aged between 16 and 24, £2,000 per apprentice aged under 25 and £1,500 per apprentice aged over 25.

Infrastructure and Decarbonisation

The government is providing grants of £1billion to public sector bodies to improve energy efficiency and also £50million towards a social house decarbonisation fund.

One of the most common phrases heard from retirees is ‘I don’t know how I had time to work before’. Indeed many people find they are busier than ever during retirement, but just how important is it to fill your time throughout retirement, and what are the common things people do?

Holidays/Travel

Although everyone is different and have different aspirations, one of the common things we see is increased travel and holidays for retirees, however this will not keep you busy day to day. Humans, by their nature, thrive with a routine, so having some form of daily routine will be beneficial to overall health.

This isn’t to say that holidays/travel should not be an aspiration, as often a goal or something to look forward to outside of a daily routine is just as important. This provides a break from ‘normal life’

Companionship

One big issue for retirees can be loneliness. Once the novelty of escaping the 9-5 job has worn off, people can often miss the social network that this brought. Indeed, studies have shown that without any adequate social interaction, people are twice as likely to die prematurely, with effect on mortality being comparable to that of smoking.

People often get a dog, that was not possible previously whilst working. Owning a dog can provide companionship and combat loneliness, but is also a great way to get outdoors and socialise with others.

Retiring also provides people with a lot more free time to simply spend with their family if they wish. Watching grandchildren grow up can be extremely rewarding for many and you can help with babysitting too!

Hobbies

Many feel the need to keep active, from a physical and mental perspective. This doesn’t necessarily mean having to become a marathon runner. Walking, gardening, yoga and golf are some common activities taken up to keep you active.

Learning something new, such as a new language, playing an instrument or crafting for example, can be a challenge to some, keeping their mind occupied.

The key is finding something that appeals to you and we all will have different hobbies that interest and excite us.

For some people, simply carrying on working is the most appealing to them. Ideally, this should not be financially driven, but more for enjoyment of the work achieved, or the purpose it provides.

Your Retirement

Your lifestyle in retirement should be how you want it to be, with your income and capital being used to facilitate this. The above is simply an indication of what you could do, however we appreciate everyone is different and there is no right or wrong path to take with filling your time in retirement. Whatever you do should be enjoyable for you.

Here at Eldon we help clients achieve their objectives and ensure that their retirement is how they want it to be, with capital and assets structured in a way to help meet these objectives. Once retired, life is all about you. You’ve worked hard to get to where you are and this is the time to enjoy life, in any way you see fit.

The minimum contribution to a workplace pension currently stands at 8%. This 8% consists of a minimum of 3% from your employer. This leaves you with the remainder of 5% to pay.

But what happens when you have been furloughed during Covid-19?

The government’s coronavirus Job Retention Scheme will cover the contribution made by your employer based on your furloughed salary. This is until 31st July and then your employer picks up the contribution as normal. You must still pay your own contribution. So, if you had to pay 5% before you were furloughed, you still pay 5% now but based on your new furloughed salary.

The downside is that, if you earn more than £2,500 pm then the 3% employer contribution on anything you earn above this, is not backed by the scheme. Your employer is not obliged to continue to pay above the auto-enrolment minimums as the rules have been relaxed during this time.

If you require advice or guidance on your pension, contact one of the team at Eldon who will be happy to help.

In periods of uncertainty, such as those of recent times, the importance of estate planning is ever highlighted. Careful financial planning can be undone by the absence of a Will, or indeed the execution of and outdated one.

For many people, there has been a surge in requests for Will writing, putting in place Powers of Attorney, and other succession planning measures. An issue that has arisen, however, is that such planning involves the witnessing of signatures which has, understandably of late, proven somewhat problematic. As such, some firms have taken to witness the signing of Wills through windows, and even meeting in car parks to do so – socially distanced of course!

Of course, having your affairs in order should be a priority for most, if not all, even without the presence of events such as the Coronavirus; times like these simply reinforce the need. We recommend that all clients have in place provisions for Wills and Powers of Attorney as a minimum, with these as a cornerstone of holistic financial planning.

If you would like further information on how Eldon can assist you in your own succession planning, please do feel free to get in touch with a member of the team.

Further to the previous article on this topic, further guidance has been released from HMRC, now that the new legislation is in force.

From the start of this tax year, any Capital Gains Tax (CGT) that is due from the sale of a residential property must be declared and paid within 30 days of the sale.

Individuals must calculate the gain themselves (although they can use an accountant to help with this). If tax is due (after taking into account the annual exempt amount), the sale must be declared and tax paid using HMRC’s online portal here.

To use the portal, individuals must be registered to use the Government Gateway and will need their Gateway ID and passcode. If anyone has issues using this system, they should contact HMRC on 0300 200 3300.

The following information is required, so we suggest having it to hand prior to starting this process:

• property address and postcode
• date you got the property
• date you exchanged contracts when you were selling or disposing of the property
• date you stopped being the property’s owner (completion date)
• value of the property when you got it
• value of the property when you sold or disposed of it
• costs of buying, selling or making improvements to the property
• details of any tax reliefs, allowances or exemptions you are entitled to claim
• property type, if you’re non-UK resident

 
Agents, such as accountants, can also declare the Capital Gains Tax on behalf of individuals. Should this be a preferable option, it would be advisable to speak with your accountant regarding this.

Our enforced working from home meant that Jan Davies, our Administrator, retired from Eldon by ‘slipping quietly out the back door’ rather than leaving with our planned celebrations. Nevertheless, we all recognised her 5 years’ loyal service by raising a glass and eating cake in her honour!

Jan’s career spanned 44 years and before joining Eldon she had retired from Cleveland Constabulary where she worked on the front line, helping to keep drugs off our streets.

Her early career was in banking and financial services, so she quickly became a valuable member of our team, with a particular skill, from her investigative days, of spotting discrepancies and errors and working to benefit our clients.

Jan and her husband are looking forward to travelling the UK in their mobile home and she plans to become more involved with her local community, trying new activities and taking up opportunities.

All of us at Eldon wish her health and happiness in retirement.

Many things remain uncertain across the world at present due to the Coronavirus outbreak and financial uncertainty is a core concern for many. Following sharp falls, investment markets continue to be volatile in both directions on a daily basis. Many people are simply not able to continue with their usual employment and the loss of this income can place a strain on a person’s finances; across all demographics.

The power of good personal financial planning really does come into its own during these difficult times.

The element of our service our clients tell us they value most is how we bring their money and their lives together so that they blend together neatly whatever their personal circumstances.

We can model various scenarios for clients, showing them the effect of any changes to their financial circumstances. We can discuss reactions and steps that could be taken to help combat these ‘What If’ situations and provide reassurance at a time it is most needed.

Naturally, careful management of investments is an integral part of any financial planning and managing risk and return in a portfolio is part of what we do. Our clients tell us the peace of mind that comes with knowing their investments are in the right place for them is huge. Their finances are designed to meet their needs, and when investments take a downturn, as they do, our planning means the falls are of a level that they can tolerate; both financially and emotionally.

Such planning begins not just months but years before these events occur and reviewing a client’s affairs on a regular basis allows this to be refined and adaptations made.

We also see that, through inter-generational financial planning, we can help the whole family remain secure in challenging periods of their lives.

The success of financial planning allows our clients to concentrate on the truly important things in life at this time; knowing their finances are set-up in the best way possible for them.

If you would like further information on how Eldon can help you structure your finances effectively, please don’t hesitate to get in touch with a member of the team.

During this time when change is inevitable and fast-moving, here at Eldon we are keen to ensure we maintain open and transparent communication with our clients and our team.

We take our commitment to our clients seriously. Our investment in secure technology and stringent continuity plans has enabled us to be very well prepared, and as such we have been able to continue to hold our client meetings on a remote basis. Clients who have used this alternative have given positive feedback about our ability to continue to meet with them even during these unprecedented times.

Our team’s safety is paramount and we made the decision before the Prime Minister’s announcement to have all-but-one colleague work from home; post is being processed and our office remains open.

We do not anticipate having to close the business at any stage; our remote meetings have been very successful and we would anticipate being able to offer this service for as long as it is necessary.

If you do have any concerns or you would like to talk anything through, simply contact us as usual.

Here at Eldon, we are keen to ensure the health of our team, our clients and all their respective families and friends too. We are conscious that as active members of society we have many reliant upon us to provide reassurance and support in these times and we are keen to provide this in the most appropriate way for all.

We are very well prepared and have taken steps to ensure we can continue to provide our service through this time.

• We have the technology in place to hold remote meetings with clients and we are encouraging this as a preferred course of action for the safety of all
• We have been taking careful measures to ensure our office space is a clean and safe environment for everyone
• Over the coming days, we will reduce the number of colleagues physically in the office with an increasing number working from home

 
We do not anticipate having to close the business at any stage; our technology is good and very secure in the event our entire team needs to work from home.

If you do have any concerns or you would like to talk anything through, simply contact us as usual.

Current headlines are dominated by Coronavirus and the early announcements in the budget were no different, with £30bn in total announced to help try to curb the effects of the virus.

Looking past this, there were a few other key take-aways in the budget, which are summarised below:

Tapered Annual Allowance

The Tapered Annual Allowance has been a headache for many for a while and has often been something heavily criticised, there have been calls for it to be abolished. For those who were lucky enough to be caught by the Tapered Annual Allowance, a complex calculation takes place to assess total income for the year. First, the “threshold income” is assessed and if this above £110,000, then a calculation for “adjusted income” takes place.

If the adjusted income (which includes pension contributions) is above £150,000 for the year, the pension Annual Allowance is tapered away at a rate of £1 for every £2 of income above this level. If someone has pension input above their tapered annual allowance, with no carry forward of unused allowance available, an Annual Allowance tax charge is the result.

This has come in for strong criticism of late, especially as it has led to many Doctors and GPs not taking part in overtime, to prevent them incurring the annual allowance tax charge.

The announcement that the taper will increase by £90,000 was a welcome move. The calculation will remain the same, however the threshold income level will be £200,000 and the adjusted income level will be £240,000.

This should see that 98% of consultants and 96% of GPs are out of the taper altogether. Something which, given the current health crisis, will be very beneficial.

Junior ISAs

The Junior ISA allowance is set to more than double, from the current amount of £4,368 up to £9,000 pa. This is a significant increase of the allowance and if it remains at this level, in theory, parents could build a tax-free pot of £162,000 by using the allowance in full each year, by the time their child reaches age 18, assuming no growth and/or interest.

The standard ISA allowance for adults will remain at £20,000.

IHT

Many had been hoping for a simplification of the IHT regime, with recommendations for this having come from the report published by Office of Tax Simplification (OTS).

IHT was barely mentioned however, with no changes proposed during this Budget.

As a reminder however, the residence nil rate band will increase to £175,000 per person from 6th April 2020, or up to the value of an individual’s share in the main residence.

Income Tax

The income tax bands will remain unchanged for 2020/21 and the Personal Allowance will remain at £12,500. The income tax bands (after the Personal Allowance) are as follows:

Basic Rate (20%) – £1 to £37,500
Higher Rate (40%) – £37,501 to £150,000
Additional Rate (45%) – £150,001+

National Insurance

The threshold for paying Class 1 National Insurance (for employees) has been increased to £9,500, which will be a saving of £85 pa on average the Chancellor expects.

Other

Other key points noted in the budget are listed below:

• The lifetime limit on Entrepreneurs Relief has been slashed from £10m to £1m.
• Fuel Duty has been frozen for the 10th consecutive year.
• Duties on spirits, beer, cider and wine will be frozen.
• Economic growth is projected to be 1.1% for the year, revised downwards from the 1.4% predicted last year – although this does not take into account the impact of coronavirus and would still be the slowest growth the UK has had since 2009.
• Inflation is forecast to be 1.4% for the year – again this does not take into account coronavirus.
• £2.5bn has been pledged towards fixing potholes and roads being resurfaced over the next 5 years.
• The pension Lifetime Allowance (LTA) will increase to £1,073,100 from 6th April 2020 – this figure increases by CPI each year.
• CGT annual exempt amount is increased to £12,300.