Will the Chancellor’s pension reforms increase investment in Buy to Let, and is it really the best value for money?


Following the changes to pension rules in last month’s Budget announcement it has been speculated as to whether this will increase the number of people taking advantage of these changes to get into Buy to Let.

In the biggest pensions shake up in almost a century, George Osborne announced that people will now be able to take up to 25% of their pension fund as a tax-free lump sum, and the balance of the pot as a lump sum which will be subject to tax. This has led to some industry experts suggesting that this ability to take the full pot will lead to increases in investment in Buy to Let in order to maximise returns.

However there are a number of factors to be considered in comparison to, for example, an Annuity, which was the route many pensioners took before the changes.

A key consideration is the level of tax that will be paid on the sum withdrawn to invest in a property – as anything above 25% of the pot will be subject to tax. In contrast, investing in an Annuity allows tax-free investment of the full amount, although the annuity is subject to tax.

Another key advantage of an Annuity compared to property investment is that it is a guaranteed source of income, whereas there is obviously no guarantee that you will find a tenant to let the property, as well as it being likely there will be additional costs related to maintenance.

While there is the option of inflation-linked Annuities, many people opt against this choice. Therefore, in general, the income level of an Annuity will remain the same throughout retirement without taking into account inflation. However, with Buy to Let there is the potential to annually increase rent, offsetting the effects of inflation. In addition Buy to Let offers the option to sell the property in the future, whereas once an Annuity has been bought there is no going back.

It is also worth taking into account the simplicity of an Annuity; once it’s paid for it requires little attention. The opposite is true of Buy to Let, where the property and tenants will require constant attention, communication and maintenance.

So, which is ‘better’?

Of course, there are advantages to each option, as explained above, and each person’s differing circumstances will affect the overall outcome. However, in general, Buy to Let should be seen as a higher risk option, which will require more input and there is no guarantee of any higher returns.

For more information please call us on 0191 285 0321 or email steven.whitehead@taitwalker.co.uk.


Buy to Let mortgages are not regulated by the Financial Conduct Authority.

Tait Walker Wealth Management is a trading style of Tait Walker Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority.

Auto Enrolment charge cap set at 0.75%


Pensions Minister Steve Webb recently confirmed the planned charge cap on auto enrolment pension schemes will be set at 0.75%. Over the next 10 years this cap will allegedly take £200m from the profits of the pensions industry into the pockets of savers. While the cap will not include transaction charges, this is something which will be reviewed as part of the DWP and FCA consultation.

This charges cap, originally planned to be introduced this month, was delayed until at least 2015 after protest from pension providers.

Webb said that the government was working to improve the transparency of charges, and get an “iron grip” on pension charges, adding that “it’s time to put the saver first”.

It was also announced that from April 2016 auto enrolment schemes will not be able to pay sales commission using money from people’s pension schemes, and that they will have to stop offering active member discounts, also starting in 2016.


For more information on Auto Enrolment, or to discuss other aspects of payroll and employee pensions, call us on 0191 285 0321, or email ian.marsh@taitwalker.co.uk.


Tait Walker Wealth Management is a trading style of Tait Walker Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority.

Export Week – What tax incentives would make exporting more effective for North East companies?


I was presenting recently at our national MHA Manufacturing and Engineering roundtable event which was held at IMechE’s headquarters in London, on the subject of ‘what further tax incentives would encourage growth in the manufacturing sector’.

As part of the discussions, a North East manufacturing company asked the question “why is it not possible to encourage ‘import displacement’ measures, which would drive UK manufacturers to be able to produce goods locally at a lower overall cost than those which we currently import?”  The point they were making was based on statistical research they had carried out which showed that many products we import could actually be made at a lower cost in the UK (and in particular once transport costs are taken into account) but the industries died out some years ago and so we import rather than export those goods.

Exporting is an obvious ‘key area’ of potential growth for UK companies and as part of the research I carried out prior to presenting at IMechE I aimed to understand what is “possible” in terms of creation of a UK tax regime which will encourage export activities.

The starting point is that under global trade agreements, including those set by the World Trade Organisation and also the EU, as a developed economic nation trading on a global stage, the UK can’t offer “export subsidies” which would damage the interests of businesses in other nations, as this would be deemed to distort trade (it would make the cost of those exports artificially low).

By way of a comparison, there are nations who can offer direct export subsidies but the countries are limited to a prescribed list of developing nations (typically in Africa, the Middle East and Asia). Typically the incentives they offer are tax incentives for marketing and promotion of exports from those countries.

The UK is therefore limited to offering tax incentives which apply equally to all companies based in the UK, whether they trade wholly internally within the UK, trade wholly with export markets or trade with both internal and export markets.

Over the last few years the UK has deliberately created a series of highly tax efficient measures for companies who are producing goods and services in the UK, whether they trade internally or externally, including a 20% corporation tax rate, R&D tax reliefs, Patent Box reliefs, Creative Sector tax reliefs and NIC exemptions for employment of under 21’s.   The UK also has a well-developed set of tax treaties with the majority of major nations which seek to minimise the tax administration burden on cross border transactions wherever possible.

The message from the Government is clear; the UK is a highly tax competitive nation to do business “in and from”, but you will be treated equally whether you are an exporter or trade wholly internally within the UK.


Author: Alastair Wilson, Tait Walker


Thinking of doing business abroad? Check out one of our 24 ‘doing business guides’ here

Before you start processing the new tax year…

The start of this week kicked off the new tax year, so we’ve got a checklist for you of all the things you need to make sure you’ve done before you start processing the new year using your Sage Payroll software.

  • Process and update your final pay period for 2013/2014 and send your final FPS and, if applicable, EPS.
  • Check that you’ve installed your new tax year update so you’ve got the correct legislation to process. Go to Help > About, and your version should be v20.01, v19.04, v18.05, v17.08 or v16.11. If it’s not, open Help > Check For Updates.
  • Update your employees’ tax codes. From 6 April, all L suffix tax codes increased by 56 (for example 944L will now be 1000L) and you should remove all week 1/month 1 flags.
  • Check your small employer’s relief status. If you’re classed as a small employer, make sure you’ve got the check box selected so that you can reclaim the correct amount of any statutory maternity, paternity or adoption pay. Your company will normally qualify for small employers’ relief if your liability for national insurance (NI) contributions was £45,000 or less in the last complete tax year prior to the employee’s qualifying week, or in the case of adoption, the matching week.
  • If you’re eligible, select the new employment allowance check box to claim up to £2000 off your employer NI liability.
  • If applicable you should also advance your holiday year and calculate any Class 1A NI.


For more detail on the year-end process please contact Claire Brown or Claire Richardson on 0191 285 0321 or via email at claire.brown@taitwalker.co.uk or claire.richardson@taitwalker.co.uk.

We are currently offering 10% off RRP on all Sage products until the end of April, so please get in touch to discuss how our Sage specialists can help you.

Sage Platinum Partner

Do you pay business rates? Improve your cashflow and act now to spread the cost over 12 months instead of 10

If you pay business rates, the Government has recently announced an opportunity for businesses to make a formal request that their business rates are paid to their local council over twelve months (opposed to the normal 10 month payment cycle currently used by most councils) from the 2014/15 year onwards.

This gives a formal opportunity for businesses to improve cashflow by spreading business rate payments over a longer cycle.

Once requested by a business, this 12 month payment cycle will remain in place until the business requests otherwise (so there is no need to renew the request on an annual basis).

To request to move to the 12 month payment cycle, the business rate payer simply has to contact the council, but in some instances this has to be carried out before 15th April 2014 to benefit from the full 12 month payment cycle for the 2014/15 financial year – so time may be of the essence! If the request is received by the council after 15 April they can instead spread payment over the number of months left in the 2014/15 year.

We have set out below the contact details for the departments where the requests can be made at some of the major North East councils, along with the guidance notes from those councils.


Newcastle City Council   0191 278 7878 http://www.newcastle.gov.uk/sites/drupalncc.newcastle.gov.uk/files/wwwfileroot/business/nndr_booklet_2014-15_internet_.pdf


Northumberland County Council 0845 600 6400



South Tyneside Council 0191 424 4298/99



North Tyneside Council 0191 643 2365



Durham County Council 03000 268 997



Middlesbrough Council 01642 726007



Stockton Council 01642 397108


Stressed by debt? Take action now, before it’s out of control!


R3’s latest personal debt snapshot for the North East, Yorkshire and Humberside shows a higher level of concern at personal debt levels compared to the national average and previous years.

Historically, reliance has been placed on house price increases allowing people to re-mortgage to maintain day-to-day living costs, however since the recession this hasn’t been a widely available option. With savings depleted and the ability of support networks of family and friends no longer able to cope, there is now a growing cost of living crisis. With a reliance on credit cards to meet both emergency expenses and day to day living costs, and where credit cards are no longer available, there appears to be increased usage of “pay day loans” to meet this expenditure.

A blessing for many has been the Bank of England’s insistence on holding down interest rates allowing many families to get by. Unfortunately for them 2015 is likely to bring about a potential rate rise, and 2015 isn’t that far away!

My belief is that as interest rates rise, panic may set in. Families are unlikely to cope with an increase in their mortgage payments; first time buyers benefiting from low repayments with no experience of high interest rates may have failed to budget for the higher rates and could struggle.

While house prices have increased across the country and the picture overall is said to be improving, the North East is seeing unexceptional house price growth (0.6%), however once banks and loan companies see equity within the housing market they will become more likely to consider options to recover debt. The real likelihood is that we will start to see more people needing formal debt solutions and are likely to see creditors being more pro-active in recovery action taken.

Ideally individuals need to start budgeting for rises now, but typically there is no spare cash to take up the strain. Therefore even those sensible enough to know there are issues around the corner may be unable to do much to improve their situation.

Based upon my experience of over 24 years dealing with personal debt and insolvency, I have listed some pointers below to help reduce monthly costs:

  • Compare and switch – follow general internet guidance and switch providers of household services (e.g. gas & electric) to those with a lower tariff. Alternatively, consider a fixed tariff: ideally one with minimal penalties should a decision be made to change later.
  • Plastic power – consider switching credit cards to those with 0% balance transfers and review the time period you are likely to repay over.
  • Review mortgage providers – can the mortgage be switched to an alternate provider? What are the penalties? Can this – or indeed should this be fixed?
  • Back to basics – switch supermarkets, swap brands to the supermarkets own.

Most importantly, if you feel your debt is or may get out of control, seek early advice and ensure the best route for your circumstance is taken as informal plans often are not the right answer.


Author: Lynn Marshall, Tait Walker Turnaround & Insolvency


0191 285 0321

How simple questions can help you to sell your business and maximise your price

Do you ever ask yourself simple questions and find them the hardest to answer?  Children do this all the time – Why is the sky blue? Why is water wet? – and often the answers to the simplest questions provoke the deepest meaning.

General - Kids with Balloons

So as businessmen and entrepreneurs, do you ask yourselves the following simple questions:

  • Why do I work the way that I do?
  • What’s in it for me?

Answering them may just be the secret to maximising your value as shareholders and developing your exit strategy.

Why do I work the way that I do?

Understanding this allows you to identify what you most value in your business:

  • do you want a lifestyle business or one that is driven to maximise profits / shareholder capital value?
  • do you want to grow a business and with it accept the risks and rewards of success or failure?
  • do you want your business to be passed to your next generation, and if so, how do you want your business to look when you hand over the reins?
  • do you want to accept the change that could be inevitable in order for you to meet your aspirations?
  • do you know what you want and how to achieve it?
  • do you have the right team around you to achieve it?

Most businessmen will be able to answer these questions fairly readily, but some may have to allow themselves time out of the business to reflect on their position and that of their business so that the more insightful answers arrive. This is truly strategic thinking.

What’s in it for me?

This appears a selfish question and perhaps it should be.  The emphasis is for you to arrive at the right motivation to fit the strategic direction that you have chosen.

For example, if you want to grow your business with a view to maximise its capital value on a sale then what actions would you take?

  1. Take advice and start planning early (2 years) with experienced advisers.  Get your books and management information in order. Develop an exit strategy.
  2. Know and believe in your business plan and exit strategy to ensure you stay on track.
  3. Identify and address the key issues that impact your value: getting a customer contract, recruiting key management, identifying weaknesses and drawing up an action plan.
  4. Get a professional valuation and understand what drives that valuation from a buyer’s perspective.
  5. Timing – not only from the perspective of your business, but from the perspective of the market and your potential buyers.
  6. Identify buyers and start to think from their point of view. Where are they weak? How could you help them? If they are a competitor, how could you damage them? Look at alternative deal structures such as an MBO or a partial exit especially if shareholders have different agendas.
  7. Make the business attractive: stop unnecessary expenditure; improve your website; start a PR and press campaign; tidy up the property and if necessary add a splash of paint.

Author: Steve Plaskitt, Tait Walker Corporate Finance


0191 285 0321

What the 2014 Budget means for the North East’s manufacturing sector

Manufacturing - Gear Wheels

This year’s Budget has produced a relatively predictable mix of improving economic data, “positive” claims by the Chancellor about his management of the country’s finances and a package of new financial measures which mainly balance what financial assistance is being given with what is being taken away.  However, overall the Budget should be seen as generally positive for the North East’s manufacturing sector.

The increase and extension of the Annual Investment Allowance (AIA) will be a major boost for manufacturing businesses. Now running until at least the end of December 2015, the AIA gives a full first year tax deduction for investment in plant and machinery, helping to encourage investment and reduce tax bills. The relief is also being increased from £250,000 to £500,000 in addition to the extension, therefore if your business is considering investment in, for example new plant and machinery production lines or even acquiring premises which contain plant and machinery, the existence of this allowance up to 31 December 2015 should be considered as part of the decision making process.

For loss making manufacturing SMEs there has been an additional boost in the form of an increase in the rate at which R&D tax credits for loss making companies can be received, from 11% of the expenditure incurred to 14.5%, which will be a welcome cash generating step for many companies.

Enhanced capital allowances and extended tax reliefs on business rates in Enterprise Zones should also help to encourage manufacturing within these Zones in the region.

This Budget has provided some real incentives for businesses to help with addressing the shortage of employment opportunities for under-21’s. Alongside recent exemptions under the “Employers Allowance” to National Insurance for all employers from 1 April 2014, and exemptions for Employers NIC for employing under 21’s from April 2015, the extension of grant funding for apprentices for another 100,000 apprentices will help with encouraging manufacturing businesses to employ 16 to 24 year olds. The creation of Employee Shareholder Contracts, as well as recent improvement in EMI schemes, will encourage greater use of share ownership in manufacturing companies.

The only real criticism was a lack of incentives to increase funding, other than making the Seed Enterprise Investment Scheme permanent, which will encourage investment in start-up businesses. Whilst there were no major giveaways in terms of grant funding etc, we would recommend that companies in the North East’s manufacturing sector should continue to look at grants already available, such as Growth Vouchers, Innovation Vouchers and SMART awards or the EU’s 2020 Horizon program.

North East Budget Reaction – Alastair Wilson

Alastair Wilson Aug 2011 1

“A welcome set of tax measures for SME businesses”

The Chancellor’s Budget generally brought a welcome set of tax measures for SME businesses in the North East, and in particular the following measures will be beneficial for a large number of the businesses we advise – these are:

  • An increase in the “tax credit” that loss making SME’s carrying out R&D can claim from 11% of the expenditure to 14.5%
  • An increase in the amount companies who invest in plant and machinery can get as tax relief in the year of investment from £250,000 to £500,000 for the 2015 calendar year
  • An increase in the number of grant funded apprentices which will be available
  • An extension of the period that business rates relief and enhanced capital allowances will be available in Enterprise Zone

MAS Barometer reveals English manufacturing SMEs are ready to invest


English manufacturing SMEs appear determined to meet the industry call for greater investment according to the latest Manufacturing Advisory Service (MAS) Barometer, Q1 2013-2014.

Some highlights from the report include:

  • Half of the 682 firms questioned are planning to invest in new machinery and premises.
  • 67% are predicting future increases in sales turnover – highest recorded since survey began.
  • 82% of firms have gained new sales as a result of introducing new products or services in the past two years.

Click here to read the full summary report

The findings from MAS’s survey echoes what we are seeing with our manufacturing clients.   Our clients in the sector have indicated that they are finding lending easier to secure and when surveyed recently more than half of our manufacturing clients responded that they were intending to invest in plant and machinery.

The temporary nature of the £250,000 Annual Investment Allowance and the lack of clarity over what will happen after 1 January 2015 means that arranging investment in plant & machinery in advance of 31 December 2014 may be increasingly important for SME manufacturers.   Tait Walker are hoping that the Budget will bring an extension of the Annual Investment Allowance to encourage manufacturers to continue their investment strategies after 1 January 2015.

However, with RGF funding becoming more difficult to come by (as the RGF funds have reduced) and with the National Audit Office showing that there is typically a very significant time delay in actually getting cash funds out of the RGF program, we are finding that our clients are increasingly seeking to use alternative funding such as asset finance, JEREMIE funds or equity based fundraising to achieve their investment plans as grant funding is sometimes proving slow to produce the desired results.

Author: Alastair Wilson, Tait Walker LLP


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