Pension Changes, fairness and succession planning for family businesses


Our Corporate Finance Partner, Steve Plaskitt shares his thoughts on our recent Pensions Update seminar…

Growing up in a family business, I am well aware that it is difficult to pass business/wealth to the next generation without diluting it or distributing it unfairly.  I am very lucky as a second son of a second son as, under traditional methods where all the inheritance would pass to the oldest child, I may have had a very different upbringing.  Thankfully, my Grandfather didn’t follow these rules and wanted to treat his offspring fairly.

These thoughts came to me after I attended the pension seminar run by Tait Walker Wealth Management last week hosted by Phil Griffin and Chris Hodgson.  The seminar aimed to easily explain the new pension changes that are due out in December 2014, their taxation implications and how that also impacts retirement planning.  And it did!  For those who follow the right advice, private pension pots can now be regarded as a tax efficient savings account which may be passed from one generation to the next.

For a fleeting moment I was able to understand everything and, in particular, the impact that this change could have on planning succession in a family business.  It may even be a way to address two difficult topics:

  • How to pass the family business to the next generation without diluting the quality of its management
  • How to try and treat offspring in a fair way when planning your will

For a simplistic example, consider the owner of a family business looking to plan for his retirement with a daughter involved in the business and a son who is not. Let’s also assume that the family business is worth £1m and the pension pot also worth £1m.

  • Dividing the shares in the family company between the two is likely to create future problems for the business as the shareholders may have different goals and ambitions; for a start, the daughter is building up value for her brother who is not involved.  And how would the family company be passed to the third generation?  It is no wonder that many third generation family business owners decide to sell.
  • The new rules allow the simpler and fairer way: give £1m of shares to the daughter and £1m of pension pot to the son.

Now of course, no family business is exactly the same and I have not yet come across the above situation, but I can clearly see that by allowing the value of pensions to be handed down to the next generation, the number of options available to the owner of a family business increase.

For those contemplating their retirement, a combination of corporate finance (pre-sale planning), wealth management and taxation advice could offer a fair solution that would be great for family harmony and for business.

To discuss the new pension changes, please contact a member of our Wealth Management team.

Make grants your New Year resolution…


Companies can benefit from grants in the North East, especially those thinking about their investment plans and those aiming to create or safeguard jobs.

The main regional funds are the Tees Valley Business Compass and the Let’s Grow Fund. Let’s Grow is a quarterly competition and the next expression of interest closes on 23rd January 2015.

Why should you apply for a grant?

186 of 270 expressions from the first fund were considered and 102 awards were made, so with careful thought, you could have a good chance of securing a grant.

We should be able to help you win a grant if:

  • You are planning on minimal levels of capital expenditure in three years, e.g. £100,000 or more in Tees Valley or £200,000 or more elsewhere
  • You are creating jobs and/or safeguarding them
  • You have, for example, 3-5 months before you want to start and are not already committed to projects

If you have any queries or would like to discuss any of these details further, please contact a member of our specialist grants team at or

Engineering skills fund launches


A £10m pot to allow small and medium-sized engineering companies to develop the skills of their workforce has been opened to applications.

Engineering businesses in England with fewer than 250 employees can apply for a share of the first £2.5m of the £10m fund to develop innovative company-specific training.

The match-funded cash pot forms part of a £30m initiative for investment in skills. Two previous tranches of funding have been provided under the project to improve engineering careers and develop female engineers.

This final round has been designed with smaller businesses in mind, with the minimum funding threshold reduced.

Skills minister Nick Boles said: “A company’s greatest asset is its people and making sure they have the right skills is vital in supporting the long-term economic plan.

“This funding gives employers the power to unlock the full potential of their workforce by designing and developing training catered to their specific needs. I encourage all small and medium sized engineering firms to consider how they could use this funding to take their business to the next level.”

Tim Thomas, head of skills and employment policy at EEF, added: “We are delighted that this scheme has now been opened to SME employers and that the minimum grant, which a company would need to match with their own money, has been dropped to £10,000.

“This makes the scheme far more accessible and reflects more realistically the amount many smaller companies may be able to invest in skills and training. It recognises the fact that many SMEs want to do more and provides solid support to help them achieve this.”

Applications will remain open until 27 February and the remaining £7.5m is to be opened up in the new year, if existing funds are taken up.

How long can the average UK household survive after a sudden shock to their income?

The latest Deadline to the Breadline report shows that the average UK household could be on the breadline in 29 days and, for working age families (18-64 year olds), this is reduced to just 14 days.

In comparison to last years’ report, it is an improvement – but it is still worrying to know that our UK households have just under a month before relying solely on state benefits and family and friends for financial support.

It is so important that families consider improving their financial security in order to protect their future – especially as people estimate that their savings will last 77 days. This is over 2 ½ times the actual deadline.

Wales has the shortest deadline in the UK (7 days) followed by the North East at 16 days, and over a third of UK households have no financial back up plan that they can use in the event of an unforeseen shock to their income. With the average weekly cost of living at £381, these figures are a cause for concern.

The report also found that only 36% of UK households are protected by life insurance and critical illness cover.

It is vital that you understand the importance of financial planning in order to protect yourself and your family. If you’d like to discuss managing your finances with one of our specialists, please contact us on 0191 385 0321 or email  


Tait Walker Wealth Management is a trading style of Tait Walker Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority.  Company Number 5674020. Incorporated in England.

What the 2014 Autumn Statement means for the North East’s manufacturing sector…


The news for the manufacturing sector in the Autumn Statement would be considered as a mix of some positive, and some negative outcomes.

The chancellor announced today that UK “manufacturing is growing faster than any other sector” but at a regional level when we look at figures published by the Office of National Statistics there is considerable regional variation in manufacturing employment.


The measures announced by the Chancellor in the Autumn Statement may be considered as variable in their likely impact on the North East’s manufacturing sector.

For example, the Chancellor announced that the government is “committing to the industry of the North with investment in new high value manufacturing research” and announced  headline investment in the North East is for a £20m Centre for Ageing Science and Innovation and an additional investment in the existing High Value Manufacturing Centre at Sedgefield and Wilton.

However, at the same time, a greater part of the investment was focussed on the  North West. Research Centres specialising in commercialisation and systems around product development based primarily in Manchester and Cheshire will receive investment of £348m with additional centres in Warrington, Leeds, Cambridge and London.

At a more general level, no announcement was made in the Autumn Statement to extend the timeframe of the £500k Annual Investment Allowance which enables companies to obtain a full first year tax deduction for investment in plant and machinery up to £500k.  Currently the allowance is only available until 31 December 2015 at this level and so there remains a risk that this allowance may expire on that date.

On a more positive note, with the manufacturing sector dominating UK R&D spending (in 2012 it accounted for 72% of the total), North East manufacturers will be pleased to hear that R&D tax relief for SME’s is increasing to 230% of qualifying expenditure from 225%. For profit making SME’s this amount to an overall 1% increase in the value of tax saved through the scheme. Large companies will also benefit from an increase in the R&D expenditure credit from 10% to 11%.

A further positive piece of news is that the government will be abolishing employer National Insurance contributions for apprentices aged under 25.

In summary, the measures announced today do provide additional support to manufacturing businesses across the UK and in the North East, but we do believe it is a missed opportunity to make a stronger commitment to the growth of the sector.

New ICAEW guidance on donations by a company to its parent charity


It is common practice for companies that are 100% owned trading subsidiaries of charities to donate all of their taxable profits to the charitable parent company. By doing so, as long as the donation is paid within 9 months of the year end, the subsidiary company can claim Gift Aid tax relief and reduce their Corporation Tax liability to nil.

Gift Aid payments out of company reserves

In some cases, taxable profit can exceed the accounting profit of a company (e.g. due to depreciation exceeding capital allowances, or disallowable items such as client entertaining being added back). Where a subsidiary of a charity makes a Gift Aid donation in this situation, part of the Gift Aid payment is effectively coming out of the company reserves.

The problem

Under Companies Act 2006, a company is not permitted to make a distribution of an amount greater than its profits. Previously the Charities Commission endorsed the opinion that Gift Aid payments were not akin to a distribution, therefore Gift Aid payments made exceeding profits available for distribution were still lawful.

The ICAEW has questioned this position and, after seeking counsel’s opinion, have issued new guidance in this area. In short, it is their view that:

  • A payment from a subsidiary to a charity is a distribution; and
  • It is unlawful for a distribution to be made in excess of the profits available.

Impact of the new guidance

In our opinion, most subsidiaries of charities will not be affected by this change in guidance. This is because the majority of subsidiary companies make Gift Aid payments within distributable reserve amounts.

Subsidiary companies that are most likely to be affected are those with low or negative reserves which generate a taxable profit and would normally make a Gift Aid payment. These companies must consider the impact of the guidance on both past and future distributions and decide upon what action to take. For example:

  • It may be prudent to contact HMRC to ask for assurance that they won’t seek to recover tax where historic Gift Aid claims have been made under the previously accepted guidance.
  • It may be necessary to take steps to increase the distributable reserves of the subsidiary company.

If you would like any further information on the new guidance, please do not hesitate to contact Louise Barker at or another member of Tait Walker’s Not for Profit team at

What you need to know if your employer becomes insolvent


When an employer becomes insolvent employees are often owed money. Employers and employees should be aware of the following:

  • An Insolvency Practitioner (“IP”) or the Official Receiver (“OR”) is usually appointed to deal with the employer’s affairs.
  • If an IP is appointed they will provide all employees with an RP1 form to enable a claim to be made. Generally this form needs to be returned to the IP and NOT the Redundancy Payments office.
  • Claims made are subject to a statutory limit – any claim exceeding the statutory limit can be made against the company itself. However, this amount will be a claim within the insolvency procedure and may be paid only if there have been sufficient funds received into the insolvency to enable payments to be made to the creditors.
  • The IP will pass on the claim forms received to the Redundancy Payments office allocated to deal with that case file, but this cannot take place until such time as the company is formally insolvent. For example if the company is going into liquidation, the RP1 forms cannot be forwarded until after the meeting of members and creditors have been held – as a result there may be a delay in an employee’s forms being issued to the Redundancy Payment Office (dependent on when they were submitted and the date of appointment).
  • The Redundancy Payments Office is responsible for calculating the money due to an employee based on the information provided. This is based on a combination of information provided by both the employer and the employee provided via the IP.
  • The current statutory limit is £464 per week.
  • The Redundancy Payments office state they aim to pay 80% of claims within 3 weeks and 93% of claims within 6 weeks of receipt; employees should note the date of receipt will be after the date of the formal insolvency procedure being put in place.
  • Funds due back to the employee may be paid in respect of the following:-


This is only payable if you have had 2 years continuous service with your employer.

The number of weeks used to calculate your redundancy depends on both your age and length of service.

Notice Pay

This is payable if you do not work your full notice or you fail to get notice from your employer of your employment coming to an end.

You will get one week’s notice for each completed year – the statutory maximum is 12 weeks.


You can be paid outstanding holiday pay for a maximum of 6 weeks up to the statutory limit.

Holiday is calculated in respect of your current leave year and is payable in respect of any holiday to which you are entitled that hasn’t yet been taken.

Arrears of Wages

Up to 8 weeks unpaid wages can be paid.


For any further insolvency advice, please contact Lynn Marshall on 0191 285 0321 or email  

Applying for funding for your business – a banker’s perspective


Steve Teasdale from HSBC gives his expert advice on applying for funding for your business.

Whether you wish to expand your company, develop new products, move into new markets or meet a short-term cashflow need, you are likely to need financial support at some point for your business.

There are a number of things you can do to support your application for funding that will improve your chances of getting approval. We like to know that you really understand your business and have solid plans in place. So a sound business plan and detailed financial forecasts will go a long way towards supporting your request with a considered and credible proposal. You’ll also need to demonstrate your understanding of your company’s key numbers, want the money for viable business reasons and be able to show how it will be repaid.

A bank needs to have confidence in your ability to make repayments and we will need to see evidence of this. Your business plan and forecasts can support your claims to be able to make repayments but so, too, will having a consistent flow of payments entering your business account, as will always having enough money to pay any cheques and regular payments you make.

Beyond this, we’ll be looking for a good credit history. If you are a start-up, this may be your personal history; if you are an established business, we’ll focus on your trading history. In either case, if you have missed loan or finance repayments in the past or exceeded credit limits, that may affect your ability to borrow. You can check your own credit rating through a credit bureau and if you believe your credit rating is incorrect you should challenge it through your bank or the credit agency used.

Banks generally like business customers – especially start-ups – to emphasise their commitment to the business by making their own financial contribution. For larger amounts, a bank will typically require some security. The government’s Enterprise Finance Guarantee scheme can help businesses that have a viable proposal but which lack security.

Overall, if you can demonstrate a sound financial position, good knowledge of your business, and that you have previously been responsible with repayments, credit limits and overdrafts, that will greatly increase the credibility of your application. Be honest throughout the process; don’t underestimate how much you need, and consider the full range of financing options available so you choose the right one for your specific needs.


Steve Teasdale

Help for exporters and A1 road users


Our Corporate Finance Partner, Steve Plaskitt discusses the expansion plans for the A1 and his experience at the ‘Doing Business in Durham’ event at Export Week…

It is great to hear that David Cameron has announced plans for the A1 north of Newcastle to be expanded.  This will no doubt create a couple of years of frustration and slow lanes for drivers during the construction phase, but it will eventually produce an improved infrastructure for the North East region and therefore help business.

It has been a frequent topic at North East business group discussions and seminars for many years, so it is fantastic to hear that the message has been picked up by Westminster and the funding has been secured.

I was reminded of the power of business leaders acting together for the greater good of the region yesterday morning when I attended the ‘Doing Business in Durham’ event supported by Insider, FW Capital and Swinburne Maddison amongst others.

James Ramsbotham from NECC reminded everyone that when the NECC started almost 200 years ago the ambition of local business leaders was ‘to achieve collectively what we cannot do individually’. At that time there were no trains, no railways and no great road infrastructure.

There were three main themes that I picked up from the discussion this morning.

  • Skills gap – how to address training gaps created by the absence in some sectors of training for 20 years.  One speaker outlined his plans to create an academy and training programme to recruit more apprentices, teach them the skills that they need and improve his business.  I know that this is a common issue and three Tait Walker manufacturing clients have recently done the same.
  • Funding – how to find the right funding amongst a plethora of funds, funders, grant providers and business agencies.  This is a common theme and, as a corporate finance adviser, one that I feel partly responsible for!  There are many funds available for businesses, each suiting different companies depending upon the stage of their business development, sector, location and whether the money is required for investment or working capital.  A good corporate adviser will help with this and we are grateful that many others in the North East corporate sector, such as bankers, lawyers, funders and Tees Valley Unlimited, can also signpost business leaders.
  • Support for exporters – during the North East’s Export Week this week, it was topical for this to be raised.  One speaker suggested that, given the success of R&D tax credits as a way to support businesses directly, there could be a way for a similar scheme of export tax credits to support exporters. There is already plenty of support for exporters from UKTI and other sources, including from banks.

At the end of the event, it struck me that I may have witnessed a little history – this was the first time I had heard the ‘export tax credit’ support described in this way.  A Google search shows that the CBI started calling for this in 2013 and I wondered whether this would become a topic that will be picked up by business leaders, and whether Westminster will do something about it just as they did with improving the A1.

For further advice on any of the topics raised in this article, please contact Steve Plaskitt on 0191 285 0321 or email

Day 5 – Selling a Business


Welcome to the final day of our Corporate Finance blog series focusing on selling a business – Day 5 sees the team looking at due diligence, legals and completion.

Due diligence

There are several types of due diligence:

  • Financial due diligence: involves a detailed examination of the financial affairs of the company with particular focus on the historic, current and projected performance of the business.
  • Commercial due diligence: if the purchaser is not already familiar with the market in which the vendor is operating, it may undertake some market due diligence either in-house or by commissioning external consultants.
  • Environmental: depending on the sector and activities of the target business, a buyer will often require environmental due diligence.
  • Customer due diligence: a purchaser will usually wish to speak to the company’s major customers to assess their level of satisfaction with the company and the prospects for their continued patronage. Clearly there are considerable commercial sensitivities involved in customer due diligence, but there are a number of strategies to overcome this problem.
  • Management due diligence: financial buyers will generally wish to carry out due diligence on the senior management team as well as meeting them on an individual and collective basis.
  • Legal due diligence: legal due diligence focuses on key contracts and other legal documentation of the company. The company’s exposure to litigation or other contingent liabilities and ownership of assets including its properties and intellectual property rights will also be reviewed.

The data room is a key element of the sale process. A data room should contain all detailed financial, commercial and legal information on the company. The data room is typically provided to purchasers in an on-line format via a secure third party on-line data room provider with password protected internet access. The data room can also take the form of an actual room full of information, typically at the advisers’ offices.

Important due diligence considerations:

  • It is essential to retain control throughout the due diligence process.
  • The release of information should be carefully controlled, for example it may be not be advisable to inform the purchaser about good news until a sticking point is reached in the negotiations or to counter any attempt to reduce the purchase price.
  • Keep duplicate records of everything you hand over as well as notes of everything you discuss. This will be helpful if there is a dispute and in any case will be needed for disclosure.
  • Where there is sensitive information in the business, consider only providing this at a later stage.
  • Always put the business first. If the business is suffering because of the demands of due diligence, request a period of time to focus on the business.


There are numerous legal documents required when selling a business, with the main being the ‘Sale and Purchase agreement’ (SPA). The buyer’s solicitors will normally prepare the first draft of the Sale & Purchase Agreement, which details all agreed deal terms and contains warranties and indemnities intended to benefit and protect the buyer.

The SPA usually includes restrictive covenants. The intention of these is to prevent the seller from competing with the buyer for a limited period.


To ensure that the financial position of the company upon completion is the same as what was agreed at the outset, ‘Completion Accounts’ will be prepared immediately.

For further advice regarding the final stages of selling your business, please contact a member of our Corporate Finance team.


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