Pension Awareness Day, 15th September 2015 – Top Tips

With huge pension reforms in place and lots of opportunities for savers, we’re pleased to see National Pension Awareness Day is hitting the Press today.

We’re working with our clients to help them make the most of the changes and plan for the future they want. Here are some tips from Scottish Widows to celebrate Pension Awareness Day:

  1. Don’t rush decisions
    First, remember to take your time. You have a lot to consider with a variety of savings options and new Pensions Freedoms. It’s important you don’t feel pressurised when deciding what to do, especially as some decisions can’t be changed. You could spend a long time retired – nearly one in five people currently in the UK will live to see their 100th birthday. Source: Age UK.
  2. Make use of the help available to you
    To help you understand your choices there’s a lot of support available online and in person. Do your homework and read all the information offered. We can arrange a free and impartial initial consultation to help you weigh up the pros and cons of different decisions. Your Financial Adviser can also share their expert opinion and discuss the options available to you.
  3. Plan the retirement you want
    If you don’t have a plan for the future, it’s important to focus on the sort of life you want first – and then find the retirement solutions to fit with it. You can fund your retirement with more than just your pension savings so consider all of your options and don’t forget to include the State Pension.
  4. Don’t pay more tax than you need to
    Consider how you take money from your savings as it can affect how much tax you will have to pay. For example, spreading your income over different tax years could dramatically reduce your tax bill. And if you take some of your pension pot while you are still working, it is added onto your salary for tax purposes. Tax rules can change.
  5. Scams awareness
    We know you may be concerned about who to trust and making the right decisions when it comes to retirement. Unless you know or recognise the brand name or company, be cautious if you are offered a free pension review. A great starting place is your existing provider, employer etc.


For further advice, please contact our Wealth Management team on 0191 285 0321.

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

All statements concerning the tax treatment of products and their benefits are based upon our understanding of current tax law and HMRC practices both of which are subject to change in the future. Levels and bases of reliefs from taxation are also subject to change

Tax planning is not regulated by the Financial Conduct Authority.

Buy to Let investors – what did the Summer Budget mean for you?

Following the Chancellor’s Summer Budget announcement, we have summarised the tax changes that Buy to Let investors should be aware of….


Relief for furniture and fittings

At present, a wear and tear allowance is given at 10% of the net rents received in respect of fully furnished let properties. This will be abolished from 6 April 2016 and, in its place, all landlords of residential property (whether fully furnished or not) will be able to claim only the actual cost of replacing furnishings. The deferral of capital expenditure until after 6 April 2016 to optimise tax relief should therefore be considered.


Relief for mortgage/loan interest for BTL investors

Individual landlords currently receive tax relief at their highest rate of income tax on all the interest they pay to finance their letting business. From April 2017, the amount of interest eligible for tax relief at the higher and additional rates (40% and 45%) will be restricted to the following:

  • 5% of the interest paid in 2017/18
  • 50% of the interest paid in 2018/19
  • 25% of the interest paid in 2019/20

The balance of the interest is not deductible in calculating the profit, but it does give a tax reduction equal to 20% of the interest, whether you are a basic rate or a higher rate taxpayer. Having modelled the effect of the new rules, some landlords will find that their annual tax bill will now exceed the cash rental profit being earned, if no action is taken.

These rules will not apply to the rental of commercial property or to properties that qualify as furnished holiday lettings. The rules will apply to the letting of residential properties by a partnership or LLP. Where a person has a loan which is used partly for residential property and partly not, the interest on the loan will have to be apportioned between the two elements.

BTL investors should start planning now

Individual property investors should start immediate planning to ensure the correct structure for their property rental business is in place.

It is increasingly popular for landlords to incorporate their property business and this should remain the case. The Limited Company will not be affected by the proposed restrictions to mortgage interest relief and it also provides several other opportunities from a tax perspective, including:

  1. The low rates of corporate tax, especially with the forthcoming reductions in the rate of corporation tax from 20% to 18% in coming years, means higher post-tax profits can be retained for reinvestment or be used to repay borrowing. When the corporate rate is 18% for every £100 of profit earned by a company, there will be £82 left after tax to reinvest, compared to £55 for an individual who pays income tax at the 45% rate.
  2. Despite the increases to dividend taxation to come into effect from 6 April 2016, there is still the opportunity for tax efficient remuneration from the company.

Should I incorporate my property business?

A reduction in the tax payable on the rental income by holding properties in a company is important, but this has to be balanced against the comparative treatment of capital gains as between a company and an individual.

If you are contemplating the transfer of properties, there would also be a need to manage potential liabilities to Stamp Duty Land Tax and/or Capital Gains Tax on those transfers.

Finally, if the properties are subject to a mortgage there will need to be negotiations with the lender about the proposed transfer of the properties to a company.

In summary, the incorporation of a property rental business is a matter which requires detailed consideration of the tax and practical issues of such a proposal. We have experience of guiding clients through these issues.

We strongly advise that you take advice based on your individual circumstances.

If you would like further advice about the changes outlined in the Summer Budget, or for planning the right structure for your property rental business, please contact Alastair Wilson on 0191 285 0321 or

Summer Budget 2015 – New tax regime for dividends

One of the major changes from the Summer Budget is that the taxation of dividends will be reformed from 6 April 2016.

The 10% dividend tax credit is abolished and, in its place, individuals will have a £5,000 dividend tax allowance. An individual will pay no income tax on dividend income received up to that amount. However, dividend receipts in excess of £5,000 will be taxed at:

  • 7.5% for basic rate taxpayers (previously 0%)
  • 32.5% for higher rate taxpayers (previously 25%)
  • 38.1% for additional rate taxpayers (previous 30.56%)

The new dividend allowance will represent a significant tax increase for owners of small companies who have been able to extract profits from their business with a tax-efficient mixture of salary and dividends.


In 2015/16, Alan takes a dividend of £27,000 net (£30,000 gross) from his personal company. His only other income is salary equivalent to his personal allowance. He pays no income tax on this combination of salary and dividend because it’s all covered by his personal allowance and basic rate band.

In 2016/17, Alan takes a dividend of £27,000 (gross, no tax credit) from his company and a salary equal to his personal allowance. He pays tax at 7.5% on £22,000 of that dividend after deducting the dividend tax allowance of £5,000. In 2016/17 he will pay income tax of £1,650 on the dividend.

The ‘tax lock’ prevents the Chancellor from raising the rate of income tax. The tax rise illustrated above is achieved by reducing the rate of tax on dividends from 10% to 7.5% while simultaneously removing the tax credit that balanced the 10% tax charge.

Some initial reactions from commentators were that people would switch back to paying salary instead of taking dividends. However, we ran calculations for different levels of Income Tax and NIC and it is still beneficial to take a dividend rather than salary, although the saving has been reduced. The saving is still particularly pronounced for a dividend if employee’s NIC would be payable on any salary at 12%, rather than at the 2% rate.

We are also exploring other options for profit extraction such as charging interest on credit balances on directors’ loan accounts and employer pension contributions. There can be a requirement to deduct 20% tax at source on interest payments by the company. Tax relief on pension contributions in respect of higher income individuals is to be restricted, but with the new pension freedom rules, pension contributions are more popular than they have been for some time.

When we prepare tax returns for clients for the year ended 5 April 2015, we will discuss the additional tax that they would have had to pay if the level of any dividends received had been taxed at the rates applicable from 6 April 2016. This will give them a good guide based on their own income profile in regards to how the increase in income tax payable on dividends is likely to affect our clients from 2016-17, if they decide to keep the same income profile going forward.

The effect of this tax hike is likely to be felt at 31 January 2018 when the self-assessment balancing payment for 2016/17 will be due for payment.

Depending on individual circumstances and future income needs, some clients may decide to stockpile a certain level of dividend income before the end of this current tax year ending 5 April 2016, in advance of the increase in the effective rate of tax payable on dividends. This will typically only be beneficial if a certain level of dividend income is already taxed at the current effective higher and additional rates of 25% and 30.56% respectively.

In summary, taking a higher salary is still not likely to be beneficial in tax terms under the proposed tax regime. The low salary with the balance of income requires being taken by dividend is still the cheapest option, however the overall Income Tax and National Insurance contributions savings will not be as great as they have been once the new rules are introduced.

Please feel free to discuss the effect of these changes with your usual contact at Tait Walker.

Summer Budget 2015 – tax changes


Our Tax Associate, Chris Hodgson shares his thoughts on the tax changes announced in yesterday’s Budget…

In the first majority Conservative Budget since November 1996, George Osborne set out his stall on the direction of travel for taxation and welfare over this Parliament. There are a large number of changes, many of which are inter-related.

The Tax Lock will mean that in addition to VAT, rates of Income Tax and National Insurance will not change during this Parliament. However, the amount of income that you have to earn before paying 40% tax is to increase by about £600 for 2016/17. On the other hand, the amount of NIC payable will increase and so the net effect is a saving of about £5 per month.

The introduction of the National Living Wage and the increase in personal allowance will increase the net pay for a low income family, but the reduction in tax credits will offset against that extra income.

This places a greater financial burden on employers who will be paying the National Living Wage. To try to help those companies the Employment Allowance, which subsidies the cost of employer’s NIC, is to increase by £1,000 per annum. In addition, the rate of corporation tax is to fall from 20% to 18% by the end of this Parliament.

The Chancellor mentioned several times that this is to be a One Nation government and there was further evidence of those with the broadest shoulders being asked to bear a large proportion of the financial pain. Pension tax relief for 45% of taxpayers is to be restricted, loan interest relief for buy to let landlords is to be limited and the additional nil rate band for Inheritance Tax will not benefit those with estates worth more than £2.7 million.

Families receiving tax credits who are already paid more than the proposed National Living Wage will also suffer from this Budget, as the loss of tax credits is likely to exceed any benefit from the increase in personal allowance.

Overall, this is a more balanced Budget than might have been expected and it gives an indication that the government may be trying to benefit the whole nation.

For further advice regarding the tax announcements in yesterday’s Budget, please contact Chris Hodgson on 0191 285 0321 or email

July Budget – what does it mean for employees?

Today’s Budget saw some good news for employees with an increase in the tax-free personal allowance, as well as an increase in the higher rate income tax threshold.

In a change from predictions, the Chancellor did not mention salary sacrifice. However, it has been stated that those earning £150,000 will have their annual tax-free pension allowance tapered from the current limit of £40,000 per year to a minimum of £10,000. This impacts significantly on retirement and tax planning and further highlights the need for comprehensive financial planning.

In addition, dividend tax credits have been replaced with a tax-free allowance of £5,000 for all taxpayers. This is good news for Pension & ISA savers as their funds remain exempt from the changes and will remain tax-free.

From 2017 there will be an additional £175,000 inheritance tax allowance for properties on top of the current £325,000 standard allowance, supporting those who wish to leave their homes to their children and grandchildren. This relief will taper for those with estates of more than £2m, so now is the perfect time to consider Inheritance Tax Planning.


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

Summer Budget – A reaction from the North East


Andrew Moorby, managing partner at Tait Walker

The scope of the changes planned for the coming years is so wide reaching that at this stage it’s difficult to assess who the winners and losers are.

That said, the Budget was distinctly lacklustre when it came to the issues pressing to the North East. Any discussion of the Chancellor’s “Northern Powerhouse” was short of mentions for our region, whilst Yorkshire and Lancashire featured heavily. I have real concerns that our influence as a key player in the UK’s economy is being overlooked and that we are being left behind.

With the interaction of Corporation Tax changes, wage increases, income tax, dividend taxation and welfare cuts, it will be difficult for SMEs and other businesses to assess the impact on them and their employees until everything is in force.

Most changes are set for next year and beyond, therefore giving the region and businesses time to assess and plan for what will undoubtedly mean increased business costs and issues for employees at the lower end of the pay scale.

As a region we have high numbers of workers on benefits, so the cuts will be more keenly felt across the North East. If the government is able to pass welfare costs on to the employer with wage rises etc. then businesses need to plan for increased cost.

Mini Budget Predictions – the proposed inheritance tax (IHT) changes

Britain's Chancellor of the Exchequer Gordon Brown holds his briefcase as he leaves Downing Street to unveil his Budget in the House of Commons in London, March 17, 2004.   REUTERS/Stephen Hird

Our Tax Associate, Chris Hodgson shares his predictions ahead of tomorrow’s Mini Budget….

Having been heavily featured in the media, the extra nil rate band for Inheritance Tax for homes is almost certain to be included in tomorrow’s emergency Budget.

It will also be interesting to see whether the second half of the proposed changes that were leaked in March (when there was a Coalition government) will be implemented. That proposal, which was to help to pay for the extra nil rate band, would see the nil rate bands of persons with more than £2 million of assets being tapered away. If these rules are implemented, there will be no nil rate band for those who have assets of more than £4 million.

Tapering away the nil rate band would make sense – to help hard working families whilst putting government finances back on track. However, to avoid heaping more tax on to people who might be seen as being the natural constituency of the Conservative Party, this part of the proposal may not be included in the Budget.

For tax advice, please contact Chris Hodgson on 0191 285 0321 or email

Energy Saving Opportunity Scheme (ESOS) – what you need to know

The Energy Saving Opportunity Scheme (ESOS) is the UK implementation of new EU legislation, requiring a mandatory programme of energy audits for “large enterprises”. This blog post will provide answers to some key questions about the new legislation.

Who does it apply to?

ESOS applies to any “large enterprise”, which is a business with more than 250 employees, a turnover exceeding 50m euros and a balance sheet exceeding 43m euros (these criteria should be met from 31st December, 2014).

It is also important to be aware that companies viewed as standalone SMEs can also be applicable if they are part of a UK or EU group containing other UK entities which are large.

What do you have to do to comply with ESOS?

You must perform an audit of 90% of total energy use for a one year period and identify/evaluate efficiency opportunities, informing the Environment Agency of these.

Your first energy audit must be conducted by 5th December,2015. The approximate cost to each business will be £6,600 over a four-year cycle.

You will also need to appoint a ‘Lead Energy Assessor’ – this person will need to be registered through an approved professional body.

What will happen if you do not undertake an ESOS assessment?

Failure to notify the Environment Agency of compliance will result in a penalty of up to £50,000 and/or an additional daily penalty of £500 for each day that your business remains non-compliant. These details may also be publicised.

Important points:

  • Plan ahead – there is a greater risk of penalty if you leave it until the last minute and it will also be more difficult to find and book in a lead assessor. Use your assessor early in the process to find out the best way to save time and money.
  • The penalty is final – failure to comply will result in the penalty as outlined above. You cannot simply pay a fine to void non-compliance.

For further advice regarding ESOS, please contact us on 0191 285 0321.

NECC Business Tips Book Released


As part of its 200th anniversary celebrations, the North East Chamber of Commerce (NECC) has worked with Activ Technology and Microsoft to compile and publish a book of their top 200 business tips.

With tips and insights in a wide range of business areas including leadership, strategy, recruitment, marketing, HR and finance, you can find some expert advice which may prove to be very useful for your business.

Click here to access the book.

Could you get caught out by the July Budget?

Our Head of Investment Services, Nick Swinhoe shares his thoughts on what the Chancellor may announce in regards to tax relief in his July Budget…

Financial commentators are expecting a change in respect of the tax relief available on pension contributions. The outcome could be a cut to the annual allowance in respect of pension contributions for the highest earning individuals (those who earn over £150,000 per annum).

In doing this, the chancellor would limit the level of tax relief available to those within that earnings band, thus saving the treasury millions, which could then be used to fund the other pre-election promises that he made.

In the past when similar changes have been made, anti-forestalling legislation has been used to close the window of opportunity between the budget and the proposed changes becoming law. It is unlikely that it will be different this time.

If you could be caught by this change you should consider making your annual pension contribution before 8th July rather than waiting until after the budget. Remember, you can also carry forward any unused allowances from the previous 3 years meaning that you could invest up to £180,000 and get tax relief of up to £81,000.

For further advice, please contact Nick Swinhoe on 0191 285 0321 or email



This blog represents my interpretation of current and proposed legislation and HMRC practice as at the date of publication.  This may be subject to change in the future.  The purpose of this blog is to inform and should not be interpreted as a personal recommendation or advice.

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


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