Class 2 National Insurance Contributions to be abolished

Simpler is not always cheaper is it?

The Chancellor, George Osborne, is abolishing Class 2 National Insurance Contributions (NIC) in a bid to support the self employed and reform the Class 4 National Insurance contributions.

Class 2 NICs are payable at a rate of £2.75 per week if you are self employed, however those with profits below £5,885 a year can apply for a small earnings exception.

This will therefore save self-employed persons £143 a year and take the hassle out of collecting a relatively small amount of money

However, the government mentioned that Class 4 NICs would also be reformed with an introduction to a new contributory benefit test. Class 4 NICs are charged at 9% on profits above £7,956 and 2% on profits over £41,865.

So it may be fair to assume that the ‘reform’ could balance out the move on the Class 2 NICS and a method of recovering the tax giveaway, simple right?

This simplification of the National Insurance system for the self-employed will probably be welcomed however it is vital that people do not lose out on receiving benefits to which they have previously contributed. For example, it is currently not possible to pay Class 4 NICs unless your profits are above currently £7,956, however, the self-employed can still make Class 2 NICs even if their profits are below the Small Earnings Exception threshold of £5,885.

If you feel you need to talk to me or one of the team about this in more detail then please get in touch with us via email tellmemore@clayshawthomas.co.uk or 01656 867167.

 

Income drawdown – use it or lose it!

  1. Are you (or do you know someone) 55 years old or over and have a pension fund?
  2. Will you continue to have earnings after 6 April 2015?
  3. Will you possibly take a lump sum or income from your pension whilst you continue to work?
  4. Do you wish to have the opportunity to continue to pay more than £10,000 per year into your pension?

If you answer ‘yes’ to questions 1. and 2. and in addition if you answer ‘yes’ or ‘maybe’ to questions 3. and 4., you need to read on and contact us.

If you do nothing and then, after 6 April 2015, decide to take a lump sum or regular income to provide funds for items such as:

  • A holiday of a lifetime
  • A family wedding
  • A big purchase such as a car
  • A home improvement project
  • Or that you just want to be able to have some funds to use for a number of different things

… then going forward your income drawdown annual allowance will be reduced and you will only be able to contribute a maximum of £10,000 per year.

If, however, you use current capped drawdown legislation it is possible for you to access the funds you want when you want them whilst at the same time retaining your current annual allowance of £40,000 per year.

Therefore if you feel that you would like this additional flexibility (whether or not you actually use it) you need to speak to us urgently!

REMEMBER! This legislation is only available until the end of this tax year!

Don’t lose out, contact us today!

 

This article is for information only and does not constitute financial advice. Please contact your usual adviser at CST Wealth Management Ltd if you have any questions relating to your own personal circumstances or if you would like to make an appointment to discuss your financial plan. Contact details can be found on our Meet the Team page or by contacting us via  info@cstwealth.co.uk or 01656 867167.

The Financial Conduct Authority does not regulate tax advice.

CST Wealth is the trading name of CST Wealth Management Ltd which is authorised and regulated by the Financial Conduct Authority.

Increase in Research & Development Tax Relief

The already extremely generous relief available for companies who carry out qualifying Research & Development (R&D)[1] has been increased yet again as of 1 April 2015.

The (R&D) tax credit will rise from 225% to 230% for SMEs.

This means that for each £100 of qualifying costs, the company will get a further deduction of £130 on top of the £100 spent against its taxable profits.

The rate of the above the line credit[2] for large companies will also increase from 10% to 11%.
On the downside, there will be restricted relief on qualifying material costs that form part of a product that is sold.

Should you have any queries relating to R&D in your company then please get in touch with us by ringing 01656 867196 or emailing us on tellmemore@clayshawthomas.com and we will be more than happy to help.

 

[1]The company or organisation can only claim for R&D Relief if an R&D project seeks to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty – and not simply an advance in its own state of knowledge or capability.

[2]The ‘above the line credit’ is the form of R&D available to large companies rather than SMEs – it is the percentage of R&D that can be claimed as a tax deduction or repayment if they are loss-making.

Budget 2015: What was announced and how could it affect you?

The Chancellor of the Exchequer delivered his Budget 2015 statement to Parliament yesterday. This was the last Budget statement before May’s General Election and one of the last major scheduled chances for George Osborne and his party to reflect on our current economic status and look forward to forthcoming policies.

To help explain the impact of Mr Osborne’s announcements, we have prepared a Budget Summary, breaking down the details of the policies discussed and reflects on how they could impact the economy, the markets and each of our personal situations. Click on the following link to download our Budget Summary 2015.

We hope that you find the Summary a useful aid to interpreting yesterday’s announcements. If you would like to talk any of them through in more detail, or discuss how they may affect your personal circumstances, then please do not hesitate to get in touch with us on 01656 867167.

Budget 2015 – A Summary

The Chancellor of the Exchequer gave his Budget to Parliament today, at 12.30pm.

 

A summary of what some of the things announced can be seen here:

 

  1. The UK had the fastest growth in the G7 in 2014.
  2. Debt will be falling as a share of GDP in 2015-2016.
  3. The tax-free personal allowance is being increased in April 2017, to £11,000.
  4. A new Personal Savings Allowance will take 95% of taxpayers out of savings tax altogether.
  5. Introducing the Help to Buy ISA – every £200 people save towards their first home, the government will put in an extra £50, up to a maximum bonus of £3000.
  6. People will have complete freedom to take money out of an ISA and put it back in later in the year.
  7. £1.25 billion for children’s’ mental health services.
  8. Cancelling the fuel duty increase scheduled for September.
  9. Cutting beer duty for the third year in a row.
  10. Up to five million pensioners will be given the freedom to sell their annuity for a cash lump sum.
  11. Charities will be able to claim more gift aid on small donations.
  12. Farmers will have more time to average their profits for income tax.
  13. Abolishment of the annual tax return.
  14. Support for all regions across the UK.
  15. Making sure banks pay their fair share.
  16. Increased support for the oil and gas sector.
  17. Faster broadband and better mobile networks.
  18. Introducing postgraduate research loans.
  19. Further investment in science and innovation.
  20. The government will consult on a tax relief for local newspapers.

 

We realise as a business that there are a lot of issues that need to be resolved and we will be keeping you up-to-date on the outcomes of the Budget that are relevant to you over the coming days and weeks.

 

Source:  gov.uk/government/news

The full Budget 2015 report can be read on the Government’s website

Access the Treasury’s set of Budget 2015 infographics, explaining some of the key announcements here.

This article is for information only and does not constitute financial advice. Please contact your usual adviser at CST Wealth Management Ltd if you have any questions relating to your own personal circumstances or if you would like to make an appointment to discuss your financial plan. Contact details can be found on our Meet the Team page or by contacting us via  info@cstwealth.co.uk or 01656 867167.

The Financial Conduct Authority does not regulate tax advice.

CST Wealth is the trading name of CST Wealth Management Ltd which is authorised and regulated by the Financial Conduct Authority.