Launch of the second Let’s Grow Campaign

Let's Grow Fund

I recently attended the celebration / launch of the second Let’s Grow Fund in Durham.

This is a £30 million grant for the North East which is run by The Journal and Evening Gazette and for which details may be found on www.be-group.co.uk.

The grant fund will be run on very similar lines to the first one:

  • A quarterly competition
  • 1 August 2014: first date for Expressions of interest
  • 29 August 2014: first date for the full applications
  • Future dates will be found on the BE Group website

As a trained statistician myself, I find the facts surrounding the first fund make for interesting reading:

  • There were 270 Expressions of interest, 186 of which were considered and 102 awards were made…so two thirds were good enough to be considered and 54% of those were awarded grants.
  • Surprisingly there were very few grants awarded in Northumberland (5%) whilst Teesside arguably got a little less than its fair share (22%).
  • £190m of private sector support was unlocked by the £30m of grants i.e. the grant typically represented 14% of overall investment.
  • 3,700 jobs were created or safeguarded at an average salary of £29,000, which equates to a grant per job of £8,100 and is better value for money than the £10,000 expected originally.

Going forward the best tips from yesterday’s event for anyone considering future applications was:

  • Get advice from your accountants and consult with BE Group throughout the process to increase your chance of your bid being acceptable.
  • Make sure you meet State Aid requirements (check out www.ukassistedareasmap.com) for guidance, or speak to an adviser.
  • Make sure you create or safeguard sustainable jobs without causing loss of jobs elsewhere in the UK.
  • Large companies can only apply for new activities which is a change to the previous rules.
  • Have a watertight argument to support the need for grant assistance.
  • The icing on the cake for the judging committee would be if the grant supported innovation, increased competitiveness or was seen to create apprenticeships.

Sadly the amount available to Teesside SMEs for each grant could be 5% lower than that available in the previous fund due to changes in State Aid regulations, however there is also another option available through Tees Valley Unlimited’s Compass Fund for those businesses.

Let’s Grow is a great source of grant funding for the North East but there are many others available, some of which may fit better. If you have any queries or would like to discuss a grant application or the funding required to go alongside your investment plans then please feel free to contact me.

Author: Steve Plaskitt, Corporate Finance Partner

steve.plaskitt@taitwalker.co.uk                                0191 285 0321

Xero Roadshow

Author, Stuart Moody (Tait Walker)

I’ve just returned from the Xero roadshow in Leeds and I’m totally convinced this is the right product for so many of our clients.

I’ve never been anywhere where I felt so much positivity in one room, clear testimony to the company’s recent accolade as the “Worlds most innovative growth company” awarded by Forbes.

The story of Xero is one of hyper growth and the company are now attracting high calibre internal staff who can obviously see the potential of cloud based accounting packages. Currently there are 3800 certified Xero users of which I am but one. Clearly the growth potential of Xero who now have 50k customers in the SME market is a mere fraction of the UK’s total SME market place which I am led to believe stands at a staggering  5 million entities.

What sets this company apart from the others is that we, as business partners are treated as part of the innovation cycle. We are listened to at just such events as today’s roadshow and I can’t help think that these events are a means not just to get us on board and raise the Xero profile but equally and more importantly where we as the user can influence enhancements to an already brilliant product.

A staggering third of all website hits come from mobile and tablet devices so it’s no wonder our end users now demand a shift away from desktop applications towards cloud based products. An example was given of sitting on the beach reconciling your bank… Is this really what we want? Clearly there is a demand for on the move accounting and the need for information at our fingertips.

Apparently 40% of new Xero customers are coming from businesses that have no existing computerised accounting system. This statistic sounds the death knell of paper bag accounting which can only be a good thing. But conversely the 60% who are switching to Xero must be a worrying statistic for established players in the market.

So what is it that makes Xero so appealing? It’s easy, friendly, cheap, clear and simple to name many superlatives. Your accountant is on hand to assist (24/7!!!???) and is always on the same page with live data and the same software version. If someone had told me 15 years ago as I studied for my ACA accounting would be described as beautiful, I would have laughed… But this is beautiful accounting. Reporting is clean and easily manipulated, it can show what we want, what the client wants and if it looks better with a picture, we can do that as well.

As I boarded the train back to Newcastle after a satisfying day, it was a great comfort to look at my phone and find two new leads both with the same thread…..”I hear you do Xero, please can you call me.”

Stuart.moody@taitwalker.co.uk

Tait Walker are Silver Xero partners and we would be delighted to take your business into the cloud.

Born on the 4th of July….no we’re not talking about Independence Day

images[6]

Born on the 4th of July…

No. I’m not talking about the film starring Tom Cruise or American Independence Day.

It is of course national employee ownership day in the UK!

This is a UK government inspired event to raise awareness of employee ownership.
Whilst such a scheme may apply to the John Lewis style of company ownership, where all the employees have a stake in the business, it also may inspire those currently in management to organise a management buy out.

The Government has announced a number of facts about the full employee ownership model, including:

• UK employee owned companies have a turnover of around 3% of GDP (over £30 billion) pa.

• There has been a 10% increase in the number of companies converting to employee ownership.

• Employee-owners have higher levels of job satisfaction, feel a greater sense of achievement and job security and are more likely to recommend their workplace than employees in non-employee owned businesses.

• Employee owned businesses operate in a whole range of sectors – though I guess they are most appropriate in professional / consulting environments and where employee high levels of commitment and service are critical to the business. (Isn’t that all businesses?)

Employee ownership as a concept has many tax consequences and so this needs to be carefully planned to maximise the benefits and avoid the pitfalls. Andrew Moorby and Alastair Wilson can help advise on this.

For further information about Employee Ownership Day 2013 you can visit http://www.eoday.co.uk.

For those inspired to explore a management buy out, then please get in touch with Tait Walker – as corporate finance advisers we’ve advised on more MBOs and MBIs then anyone else in the North since 2000 and advised on the North East’s ‘deal of the year’ (Winns Solicitors).

With confidence returning to the economy and funding available for the right deals, now is a good time to seek an MBO.

 

Author: Steve Plaskitt, Corporate Finance Partner

Fundraising in the North East: what are your options?

Our Tait Walker Corporate Finance team regularly meets new businesses looking to raise finance to help with anything from purchasing new machinery, taking an entrepreneurial idea to market, moving premises to aid growth or those looking to expand a product range. But how do you know which is the right type of funding for your business, now and in the long term?

new plant w clipping path

 

Your options…

There are broadly three main options for your business when it comes to funding: debt, equity or grant assistance. Here in the North East, we are extremely fortunate to have access to a range of debt and equity funding options, alongside opportunities to seek some great grant assistance. In particular the Finance for Business North East funds have been instrumental in driving growth in the North East economy since they began in 2010.

As we move into the fourth and final year of the Finance for Business North East Funds, now is a great time to consider bringing outside investment into your business to facilitate growth and development.

The six Fund Managers, NEL, IP Group, NorthStar, Rivers capital, FW Capital and Entrust all still have funds ready to be invested and are actively looking for robust, ambitious businesses to work with.

The funds are designed to help North East businesses who want to launch, grow or develop. This could be by investing in new equipment, developing new products, bringing in new staff with a particular area of expertise or investigating new domestic or overseas markets.

So if you are considering taking the next step in growing your business we would encourage you to move quickly as the funds are scheduled to close in December 2014. If you are interested in learning more about the funds, please contact Lucy Elliott on 0191 285 0321 or lucy.elliott@taitwalker.co.uk

Looking to the future it is hoped that Finance for Business North East will be able to secure up to £20m regional investment to continue investment through to December 2015; however this is as yet uncertain. Watch this space!

 

 

It’s not too late to book your place at our funding workshops on the 2nd & 10th July, where we will guide digital, IT  & creative businesses through the funding maze and explain the routes to finance for North East businesses in the sector. To find out more, please email kirsty.ramsey@taitwalker.co.uk or visit our website by clicking here.

Business owner applying for a mortgage? Make sure you don’t lose out on the house of your dreams…

mortgage2

Following the implementation of the new rules covering affordability under the Mortgage Market Review (MMR) in April, banks are already applying much stricter checks on mortgage applications.

A recent successful application that we assisted with on behalf of a couple where the husband owned 3 companies took 7 weeks to complete, but borrowers need to be aware that applications could take much longer and subsequently could lead to the sale falling through and you losing the house of your dreams!

As expected under the new MMR rules, the bank requested much more detailed information about not only the couple’s personal finances, but also financial information for all of the businesses owned by the husband. More than 35 pieces of supporting evidence were asked for in total, but borrowers should be aware that the details requested included:

  • 6 months personal bank statements (both individual and joint accounts)
  • 6 months business bank statements for each company account
  • 3 years full signed accounts for each business owned
  • A detailed business plan for each company including a copy of financial forecasts
  • A detailed income & expenditure questionnaire (including cancellable and discretionary expenditure such as mobile telephones, sky subscriptions, gym membership etc)
  • Detailed Assets & Liabilities questionnaire (to the point of asking for the make / model and value of vehicles owned)

In this case the client was very organised which helped to speed the process along and importantly he also had a Finance Director who had the business information readily to hand, but it still took 7 weeks…

If you aren’t as organised as our client your application may take much longer, and could potentially take so long to secure your mortgage that your sale falls through, and you could even lose your buyer.

If you’re a business owner who wishes to apply for a mortgage, we can provide a bespoke service to help you through every step of the process, to ensure that it goes as smoothly and quickly as possible so you don’t miss out on your dream house!

For a free discussion regarding how we can make your mortgage application process smoother, call us on 0191 285 0321 or email steven.whitehead@taitwalker.co.uk to find out exactly how we can help you.

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

Oil and Gas Survey – and opportunity for North East Supply Chain

I attended a seminar this week held by Bond Dickinson in association with the North East Chamber of Commerce and the AGCC.

No, I hadn’t heard of what the AGCC was either until this event, but I now know that they are very important for the North East Oil and Gas Supply Chain – as they are the Aberdeen & Grampian Chamber of Commerce.

Every year the AGCC publish a survey of the Oil and Gas market and this year, their 20th, they were able to present their findings in Teesside.  I am sure the detailed report will be available online, through the AGCC or through Bond Dickinson.

oil and gas

I learned a lot from the seminar and the survey, and I was particularly interested in one finding…

In response to a question about the location of major and minor suppliers of goods and services to the Aberdeen Oil and Gas marketplace, the following table was used to show the percentages for the locations of suppliers for major and minor products and services.

  Major Minor N/a
Aberdeen/ Grampian 58 38 4
Rest of Scotland 15 58 25
North East 13 39 48
Rest of UK 31 47 22
Outside of UK 49 33 17

 

Now, some of us are old enough to remember that Meatloaf once sang that ‘2 out of 3 ain’t bad’ and the above table shows a similar picture for the North East:

  • The North East is in line with the rest of Scotland for ‘major’ supplies - i.e. 13% of Aberdeen Oil and gas businesses use North East suppliers for major work whilst 15% of suppliers from the rest of Scotland are used in this way.
  • Similarly, the North East does very well for ‘minor’ supplies - i.e. 39% use North East suppliers for minor supplies whilst only 38% use Aberdeen suppliers.
  • Yet, 48% of respondents did not use North East suppliers.

This third point is a real opportunity for the North East Supply Chain, and our local chamber, NECC, and Steven Pugh at Tees Valley Unlimited are working hard to improve this for our local supply chain.

The opportunity for the North East is supported by two other external factors:

  • the drive towards lower costs in North Sea oil extraction should mean that North East suppliers will win more work from their more expensive, over-capacity Aberdeen rivals; and
  • the greater capacity at North East ports should help local fabricators to supply into the sector, and so drive more local services.

So these remain optimistic times.  £13bn was invested in extracting North Sea Oil last year and whilst this is predicted to reduce to £7bn in 2015/16 that is still a lot of money and with a predicted £1bn of decommissioning work in the future there are many opportunities for the North East.

Many of these opportunities will require funding and many will result in increased merger and acquisition activity, which in turn should provide further work for North East Corporate Finance advisers and professionals.

 

Author: Steve Plaskitt, Corporate Finance Partner

Pre-packs: the Good, the Bad & the Ugly

No one ever wants to see legitimate businesses fail – it is bad news for all concerned, however, of course, many do. Last year alone saw 2,365 businesses in the UK fall into administration, some 600 of which were subject to a pre-pack deal, whereby a deal is arranged to sell the assets of the failed company, which is agreed prior to the insolvency, and is then usually completed almost immediately after the appointment of the Administrators. Sounds like a reasonable proposition, yes? So why have pre-packs managed to gather such a bad name?

The positives about pre-packs:

  • They can preserve jobs – where there is a successful pre-pack, the company continues to trade and jobs are therefore secured
  • Pre-packs are cheaper than an upstream procedure:There are significant cost advantages of a pre-pack compared to an upstream (i.e. before formal insolvency) procedure, such as a scheme of arrangement. The costs of such schemes are larger and are typically only undertaken by large companies. By contrast, a pre-pack administration can be undertaken outside of the court and can be done without the involvement of the unsecured creditors or only limited involvement.
  • Deferred consideration, which is, by and large, paid: This occurs when a purchaser pays for the business over a period of time, rather than in a lump sum at the outset of the purchase. The high payment levels of deferred consideration research seen in Teresa Graham’s review report suggests that old company creditors are not unduly harmed by the presence of deferred consideration in a pre-pack deal.
  • Pre-packs may even benefit to the overall UK economy: The ability to pre-pack contributes to the UK’s flexible restructuring and insolvency framework, which can be seen as attractive to overseas companies looking to move their ‘centre of main interests’ to the UK. These relocations are a source of much needed inward investment to the UK and therefore a positive contribution to the economy.

What about the negatives?

  • They lack transparency – by their very nature pre-pack administrations lead to a lack of transparency before the sale as the parties work to secure the future of the business without risking the confidence of creditors, customers and employees. Unsecured creditors can feel disenfranchised by this secrecy. Improved marketing and a fuller explanation of valuation methodology would certainly improve transparency, as could the voluntary introduction of an independent opinion on the deal’s outline and why it was necessary to proceed in this way, particularly in connected party cases.
  • Marketing of pre-pack companies for sale is insufficient. The evidence of the Graham report research shows that where no marketing is carried out pre-packs return less money to creditors. Improved quality of marketing may in some cases, assist the administrator in receiving a better return. It may also improve creditors’ perceptions that they are getting the best deal available, helping improve confidence all round.
  • More must be done to explain the valuation methodology. In a number of cases an independent desk-top valuations are often conducted as part of the pre-pack process. Where there is a connected sale the purchase price often exactly matches the valuation figure. This can lead to suspicion that a purchaser has set a valuation as an indicator of how much it is prepared to pay, rather than the market value of the assets in question.
  • No consideration is given to the future viability of the new company. The insolvency practitioner has no legal requirement to look at the future viability of the new business emerging from a pre-pack sale. His/her only legal responsibility is to the creditors of the old business.

Gordon Goldie

 Author: Gordon Goldie, Partner

Customers are now able to invest more in premium bonds – plus more chances to become a millionaire!

Following the Chancellors announcement in the 2014 Budget pledging to support savers, the maximum investment limit for premium bonds has been raised from £30,000 to £40,000, starting from the 1st June 2014. The is the first time the maximum limit has been increased since May 2003 when it went from £20,000 to £30,000, and with the next planned increase to £50,000 expected in 2015-16, the commitment to supporting savers is evident.

In addition to the increased investment limit, the number of £1million cash prizes is being raised to two per month starting from this year’s August draw. Existing customers will also be able to purchase additional bonds via bank transfers using their holder’s number, making it quicker and easier to invest more and increase their chances of winning a prize in the monthly draws.

Currently there are over 21 million people who hold premium bonds, with £45.7billion invested, up from £19.7billion in 2003. Some of the keys draws for investors include the chance to win tax-free prizes each month, including the £1million jackpot, as well as the ease of buying and managing them online and over the phone.

There are a range of ways to buy premium bonds to suit all customers, including:

  • By bank transfer (for existing customers)
  • Online
  • By phone
  • By post
  • In the Post Office – over the counter

For advice on investments, including premium bonds, call us to speak to one of our advisers on 0191 285 0321 or email Geoff.cavanagh@taitwalker.co.uk.

 

Tait Walker Wealth Management is a trading style of Tait Walker Financial Services Ltd who are authorised and regulated by the Financial Conduct Authority. The purpose of this blog is to provide technical and generic guidance and should not be interpreted as a personal recommendation or advice.

Look after your family by making sure you have an up-to-date will

Research conducted by unbiased.co.uk and certainty.co.uk as part of their Write and Register a Will campaign* showed that 58% of the UK adult population haven’t yet written their will. Without a will you risk leaving your loved ones in a stressful and uncertain situation, during what will already be a hugely difficult time. This uncertainty could even lead to legal action between those who feel that they are entitled to a piece of your estate. Ensuring you have an up-to-date will that clearly lays out your wishes for your estate will eliminate these issues and make sure that your family and friends don’t have to suffer any unnecessary distress.

What happens if I die before I write my will?

If you die without having made a will, this is known as being ‘intestate’. Few people know how their estate will be broken up if this happens, but the Crown actually has very specific rules to deal with what happens* in this scenario. However, these rules may not split your estate how you would have liked, and they don’t take into account your wider family and friends so it’s unlikely that your wealth will be split between everyone you wanted.

How do I get started?

First you need to get a complete picture of your over financial worth. This will involve identifying all of your assets and what they are made up of. This includes things such as property, investments, pensions, life insurance and possessions like vehicles works of art and jewellery. You will also need to consider all the accounts that you hold, including current and savings accounts.

Next, you need to consider who you want to leave things to, and what in particular will be left to each person. Think about who needs your protection financially– your children and spouse/partner for example – and what would be the best way to ensure their protection using your estate after you’re gone. Also think about who in your wider friends and family you would like to leave something for or help out financially.

I’ve already written my will so this doesn’t apply to me, right?

Wrong. Even if you’ve already written a will, you still need to make sure you keep checking that it’s relevant and stays updated as you progress through life. You may get married/divorced or have more children, and this should be reflected in your will to make sure that the most important people in your life are looked after once you’re gone. Your financial situation may also change (whether it’s for better or worse) which may make you reassess the distribution of your assets. Having an out-dated will is almost as useless and likely to cause as much difficulty as having no will at all!

Finally, make sure your family knows where your will is kept! It’s no use making the will if no one knows where to find it.

If you would like to discuss your will and get advice on what should be included, please contact us on 0191 285 0321, or email phil.griffin@taitwalker.co.uk.

 

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

*By clicking this link you will be leaving our site, therefore we are not responsible for any of the content shown or advice given.

Pensions vs ISAs – which will give you the best return for your retirement?

Retirement jar

Recent changes to pensions and ISAs have reopened the debate on which is the best way to save for retirement. You can work out which will give you the best net return taking into account the various tax reliefs relevant to each option, but there are other factors which could be considered.

What’s changed?

For pensions, from April 2015:

  • anyone of pension age has complete freedom to take as much (or as little) from their Defined Contribution pension savings as they choose.
  • 25% will still be tax free. The balance will be taxed as income in the year it’s taken.

The Budget also announced some big changes for ISAs:

  • The annual amount that can be saved in an ISA will rise to £15,000 from July this year – an increase of 33% on last year’s allowance.
  • In addition, there will be no cap on how much can be invested in cash within that allowance.

There are no longer restrictions on what can be taken from a DC pension – just like an ISA – and the maximum savings into each are moving closer, meaning they have become easily comparable as options for long term savings.

Tax reliefs

Both pensions and ISAs pay no additional tax on investment growth and income; where they differ is on the reliefs available when paying in and withdrawing money.

When paying money in, there is no tax relief for payments into ISAs. However, for a defined contribution pension scheme, there will typically be basic rate tax relief added to the pension fund, with any additional relief claimed via self-assessment.

When withdrawing funds, all withdrawals from an ISA are tax free. Up to 25% of a pension fund can be withdrawn tax-free, with the remaining balance taxed at the saver’s highest marginal rate of income tax.

Other things to consider

There are other factors which should also be considered when deciding whether to opt for an ISA or a pension, including the fact that ISAs can be accessed at any age, meaning it could be used as more of a “rainy day” fund in case anything happens before aged 55 that requires the money to be accessed.

It’s also worth considering what taxes will be charged on your savings before being passed on after death; ISA’s currently form part of the estate unless underlying shares and stocks qualify for business property relief, and while the rules on pensions are due to be reviewed, it currently stands that the tax charge levied depends on whether clients have started to draw benefits.

There are strong arguments for using a combination of both pensions and ISAs, as this means you can utilise them to make the most of the benefits of each.

If you would like to discuss which option would be the best option for you to take when saving for your retirement please contact us to speak to an adviser on 0191 285 0321 or email geoff.cavanagh@taitwalker.co.uk or steven.whitehead@taitwalker.co.uk

 

Tait Walker Wealth Management is a trading style of Tait Walker Financial Services Ltd who are authorised and regulated by the Financial Conduct Authority. The purpose of this blog is to provide technical and generic guidance and should not be interpreted as a personal recommendation or advice. All statements concerning the tax treatment of products and their benefits are based on our understanding of current tax law and HMRC practices both of which are subject to change in the future. 

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