Author Archives: Martin Walby

Buy-to-Let – the tax change conundrum

There has been a rush of property transactions in recent weeks as those in the buy-to-let market try to minimise the impact of the upcoming tax changes from April 2016 and beyond. The main changes surround;- the restriction of interest tax relief on buy-to-let mortgages from the current marginal rates from 2017 to 20% by 2020, the annual wear and tear allowance of 10% scrapped and replaced with relief based on actual invoiced repairs, additional stamp duty of 3% on property purchases, (all second homes and buy-to-let properties), and the plan to apply Capital Gains Tax, (CGT), to investments within 30 days of sale. The latter is under consultation but could be implemented by 2019 and potentially would be a cash flow pressure on sellers if they were unable to mitigate gains with CGT losses.

The above, coupled with potential rises in interest rates could have a dramatic impact on those buy-to-let investors who rely on the rental income to cover the cost of loans and repairs. What were considered good profit margins on second home rentals may transform them into loss making, with a consequence that selling could become an option. Significant selling of properties in this market could have a negative impact on house prices in general, which may be seen as no bad thing for those wanting to buy either their first home or move up the property ladder.

With the Chancellors budget due in mid-March, where ratification of the April tax changes or further tinkering of tax may impact the buy-to-let market, planning for this year and the next few years should be uppermost in the minds of those with one or more properties.

Planning for your business is equally important as personal planning and sometimes the two are part of an integrated strategy.

MW Interim Finance delivers independent interim financial and business partnering support to owner managed SME’s, either on a full-time project or part-time basis, working with directors and entrepreneurs to deliver operational and strategic objectives.

For further information or a confidential discussion about your specific requirements, please contact Martin Walby FCMA CGMA on + 44 (0) 7876 566875 or email

martin.walby@mwinterimfinance.co.uk

2016/17 Tax Coding Notices – a shock for some but 2017/18 could be worse

“Tax does not have to be taxing” so says HMRC, but the mantra should be, “be afraid very afraid”, when it comes to reviewing the P2 2016/17 coding notices currently being distributed. With all the new changes to tax free interest and dividends be sure to check any adjustments to your code for these. The assumption HMRC uses is based on the 2014/15 self-assessment returns and may be substantially incorrect for the coming year. Even more issues are foreseen with 2015/16 self-assessment returns, where potentially increased dividends are paid out before 5th April 2016 before the £5k allowance takes effect. This is especially relevant to business owners, directors and senior managers who may face negative tax codes in 2016/17 and 2017/18.

Are you a business owner who uses dividends as a means of extracting income from their company? The planning of dividends, salary remuneration and pensions in the period up to 5th April 2016 and the impact for the next two years, is a critical part of business planning.

If your business needs objective guidance on this aspect, requires a strategic review or has a project that requires resource to implement, contact Martin Walby at MW Interim Finance for a confidential discussion on +44 (0) 7876 566875 or email martin.walby@mwinterimfinance.co.uk

A Christmas Carol – a business tale of hope

It was the night before Christmas and a lonely business owner was working hard well into the night, ruing the departure of his business partner some seven years ago. Back in the day they set up a business with a vision, focus and drive and created a successful and profitable enterprise. They had a good team of employees and after a few years were on the brink of significant expansion until one of the partners had a serious medical issue that quickly became terminal. The remaining partner took on all the work of the other and tried to manage the whole business and the employees. Gradually the business lost its focus and momentum, and eventually sales started to decline as did profits and cash, and staff departed to seek other opportunities.

“Why am I the only one who cares about this business and has to work so hard; humbug to my employees, suppliers, customers and family?” Finally, nearing midnight, he departed to his home, alone and deep in thought about his future. He needed help but had been too proud to ask but the situation could not go on indefinitely.

Just as the business owner was falling asleep a bright light appeared and he remembered all the good times of his early years and the friendship that grew into going into business with his partner. The light faded to be replaced with someone remarkably resembling Father Christmas, who showed him how everyone outside of his business was looking forward to seeing friends and family and enjoying their time away from work. Finally a dark and foreboding creature appeared and showed him how quickly he too could come to an untimely end if nothing changed and he continued to drive himself so hard.

When the next day dawned the change in attitude was immense, a weight was lifted and the spirit of Christmas returned. He knew that changes would be made in the coming weeks to his business, but first he needed to tell everyone how he felt and how he could help them. In time his generosity and willingness would be repaid but for the next few days he would enjoy himself.

All business owners should remember that what is past has gone but what happens in the present shapes the future.

If your business has lost its way or needs objective guidance on how to make improvements that will reinvigorate the owners and management to achieve a vision, contact Martin Walby at MW Interim Finance for a confidential discussion on +44 (0) 7876 566875 or email

martin.walby@mwinterimfinance.co.uk

UK Summer Budget 2015 et al – as many questions as answers for business

Following the budget last week there is good and bad news for companies, with SME owners and shareholders given mixed messages for their future growth strategies.

For example; the reduction in corporation tax is a boost, as is the permanent annual investment allowance of £200k and the increase in the national insurance employment allowance, however this is set against increases in the national living wage and a fundamental change in the way dividends are taxed, even with a new £5k dividend allowance. Payment of corporation tax for larger companies is being brought forward and insurance premium tax increases also impact operational business costs.

The staging dates for the auto-enrolment of all businesses have been issued by the Pensions Regulator and for many SMEs this is now becoming a critical planning activity, with the associated costs of employer contributions. Allied to this is the pension freedoms for those over 55, how this may impact the plans of those working in companies and the potential skill shortages once they retire. In addition, some SME owners may want to re-assess their pension contributions, especially where tax allowances may restrict contributions, and exit strategies as part of their business planning activities.

The budget has provided a myriad of changes for the coming years and even more complexity for businesses, especially SMEs, and using an interim business partner to review your company’s business plans and potential scenarios for the future from an objective viewpoint is beneficial.

MW Interim Finance delivers independent interim financial and business partnering support to SMEs and larger corporates, either on a full-time project or part-time basis, working with directors and owners to deliver operational and strategic objectives.

For further information or a confidential discussion about your specific requirements, please contact Martin Walby FCMA CGMA on + 44 (0) 7876 566875 or email martin.walby@mwinterimfinance.co.uk

Press Release – June 2015 responsive website launch

MW Interim Finance announces the launch of an improved and responsive website for all mobile devices, www.mwinterimfinance.co.uk , and continues the provision of an independent finance director dedicated to implementing business transformation.

MW Interim Finance delivers independent interim financial and business partnering support to SMEs and larger corporates, either on a full-time project or part-time basis, working with directors and owners to deliver operational and strategic objectives.

For further information or a confidential discussion about your specific requirements, please contact Martin Walby FCMA CGMA on + 44 (0) 7876 566875 or email

martin.walby@mwinterimfinance.co.uk

UK business landscape – another five year plan

Following the result of the UK election, with the Conservatives surprisingly gaining an overall majority, the continuing austerity driven economic recovery should be possible. However should the excessive debt and borrowing figures not be eliminated, a failure from the Government’s first term in office, then the voters in 2020 will react accordingly. Other factors surrounding welfare spending, housing and net immigration will also be measured by the electorate.

Businesses have been wavering over the first few months of 2015, with the uncertainties of the election outcome, in putting into place their strategies and implementation activities. Now there is a clear result, and assuming the March budget announcements are implemented, there are significant opportunities for companies to consolidate their recovery and grow their businesses both organically and by acquisition. Outstanding matters on business rate reviews, borrowing and the impact of a potential vote on Europe will provide food for thought over the near to mid-term, but leveraging the strength and potential of SME’s is essential in the improvement of the economy.

Immediate senior management resource issues could play a part in SME’s not being to exploit their growth strategies and a solution is the use of a commercially focused independent executive on an interim basis.

MW Interim Finance can assist you in compiling or reviewing your business / risk plan in key commercial areas of your business, in addition to providing an independent CFO/FD resource on an interim basis. For further information or a confidential discussion about your specific requirements, please contact Martin Walby FCMA CGMA on + 44 (0) 7876 566875 or email martin.walby@mwinterimfinance.co.uk

Has your business lost its “One Direction”?

 

It can happen at any time in business, just as in a boy band, where a key member of your Board or senior management team decides to leave suddenly disrupting the growth, momentum and stability of the business. Larger companies can look from within to promote however SME businesses may find they have a significant gap in resource. Initially the reaction is to either survive for a period whilst diverting other resource to backfill or use their auditors or other professional advisors to provide support. Using temporary cover is also another option however they usually need to be managed and are on short notice with the risk that they may also move to another role.

The use of an independent career interim, that tends to operate at Board level, is a solution that can provide the necessary resource to a business and also take on the recruitment of a permanent alternative. They provide the functional responsibilities to ensure the minimum of disruption the direction and momentum of the company and will contribute objectively. Commercially focused interims can perform a number of activities including forensic review of the business, the development and implementation of strategic and operational initiatives, assist in restructuring or identifying change requirements in business processes, controls and systems.

Their dedicated focus is to deliver results with objectivity, accountability, flexibility and are immediately productive and efficient. Unlike consultants or temporary staff, where costs tend to drop to the “bottom line”, interims focus on the delivery of benefits to your business. The outlay on the cost of an interim should be matched by a multiple of benefits over time.

MW Interim Finance can assist you in compiling or reviewing your business / risk plan in key commercial areas of your business, in addition to providing an independent CFO/FD resource on an interim basis. For further information or a confidential discussion about your specific requirements, please contact Martin Walby FCMA CGMA on + 44 (0) 7876 566875 or email martin.walby@mwinterimfinance.co.uk

UK Budget 2015 – kitchens, vans and Eton mess

The Chancellor, George Osborne, delivered the final coalition Budget speech before the election in May with a few surprises, some omissions and both sides of the House of Commons commenting on personal aspects of the leaders and parties they represent. Milibands two kitchens and two fridges being controlled by an app, the colour of vans, white or labour pink as they cross the Severn bridge and Cameron’s Eton scribes of the party manifesto. The speech however was dominated by statistics on growth, inflation, deficits and borrowing and politically charged.

In terms of business there appears to be an effort to ensure stability and progress to support the economic recovery and the initial reaction of markets seemed to concur as the FTSE 100 rose by over 100 points on the day. Major announcements related to diverted profits tax, an increase in the bank levy, assistance to charities, reductions in petroleum revenue tax, regional stimulation, infrastructure projects, boosting science and technology investment and changes in employers national insurance for younger workers and apprentices. Interestingly however a number of key issues were recognised but deferred until after the election including, business rates and changes to annual investments allowances. In addition public sector expenditure was almost ignored and of course no talk of the cuts in benefits and tax credits implemented already plus other tax rises, something Ed Milliband was keen to expound in his response to the Chancellors speech.

For the general populous the news on pensions was expected with flexibility on annuities for both new and existing pensioners, but with a further restriction on the lifetime allowance to £1m. Good news though for most taxpayers with the introduction of an allowance on savings interest, for basic rate taxpayers at £1,000 and those on higher rate at £500. Another piece of good news on form filling as the annual HMRC tax return is to be abolished and replaced with a “digital tax accounts”, however the robustness of data collection systems and accuracy of the information will be challenging for HMRC. Personal allowances are set to rise but only by £200 in 2016/17 and another £200 the following year, together with small increases in the higher rate tax threshold. There is more flexibility with existing ISA products but a new Help to Buy ISA is being introduced for first time house buyers, whereby for every £100 saved an additional amount of £25 will be funded by the government. Minor tinkering with duties, including the freezing of petrol duty again, which is in fact not a saving as the current duty still has to be paid. Cutting duty would reflect a true saving as in the reductions in beer, cider and whisky cited in the budget speech.

All the above and more would, in past years, have been debated ad nauseam however with an election in a few weeks it is policy rhetoric that will be the focus of all parties trying to engage the electorate. Apart from the general populous we wait and see what the young and silver voters make of the political marketers efforts.

What a start to 2015………

The Tesco fiasco continues with Morrison’s also making changes at the top. Stock market jitters driven by low priced oil, a possible Greek Eurozone tragedy and unfortunate extremist activity across the world. The UK has at least benefitted in the last few months with lower inflation, cheaper fuel and supermarkets dropping prices, (after a period of overpricing to increase margins). The latest news on growth for the next two years is promising and the Bank of England base interest rate may not be raised until early 2016, bad news for savers and house prices but good news for mortgages.

Election fever again will take over the first half of the year with possibly four or maybe five parties in the running for a coalition, and the uncertainty on who will be governing the UK politically will no doubt be cited as a reason for business to “hold station” on implementation of change. Opportunities may however be lost by procrastination.

Businesses, SME’s and larger corporates should periodically review their business plan models and update annual budgets as there are opportunities to re-assess their competitive position. Reviewing strategy and operational effectiveness, and enabling changes internally and through investment, can provide step changes in growth. Inaction or not adapting to competition in a timely manner could reverse a growth trend.

If there are internal resource constraints for strategic or operational review and senior management are focused on the “day to day”, there is an opportunity for utilizing an independent financial resource on an interim basis to assist in review and implement changes to positively transform your business.

For further information or a confidential discussion about your specific requirements, please contact Martin Walby FCMA CGMA on + 44 (0) 7876 566875 or email martin.walby@mwinterimfinance.co.uk

Pension Freedoms………..personal versus a business viewpoint

In April 2015 the much publicised changes in pension flexibility are due to come into force and there has been much media and other commentary on the likely choices individuals may make. Some people could choose; a flexible drawdown approach, review whether annuities still provide the best option, fund other pensions from income from another pension, (within statutory limits), or even “blow the lot” on an expensive car, luxury home or fritter away on other activities such as holidays. In the latter case it must be noted that the balance of pension withdrawn, over and above the tax free maximum of 25%, will be added to any other income earned and taxed at the relevant marginal rate.

If you have reached or are approaching retirement age then there could be interesting decisions to be made, assuming that a significant “pension pot” has been accrued. For those in their twenties and thirties there is some attractiveness to being able to access a pension more flexibly, however the age at which they will be able to do this may well be moved upwards by successive governments.

A more interesting point is for businesses that possibly will have a number of the senior management team approaching retirement age or perhaps considering early retirement. If succession planning has not been part of a company’s risk strategy or no attention has been paid to the replacement of key personnel, then potentially critical business knowledge will depart with those retiring. There could be a significant loss to businesses of all sizes over the next couple of years if the risk and business plans of a company do not address pension flexibility.

MW Interim Finance can assist you in compiling or reviewing your business / risk plan in key commercial areas of your business, in addition to providing an independent CFO/FD resource on an interim basis. For further information or a confidential discussion about your specific requirements, please contact Martin Walby FCMA CGMA on + 44 (0) 7876 566875 or email martin.walby@mwinterimfinance.co.uk

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