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Incapacity Crisis: Why you need a Welfare Power of Attorney

The number of people living with dementia worldwide in 2015 was 47 million; by 2030 that figure will reach 75 million.  A new case is diagnosed every 3.2 seconds.  

With these shocking statistics it is not surprising that there is a widening gap between the rising number of people likely to lose capacity and the relatively small number who have arranged a Health and Welfare Lasting Power of Attorney (H&W LPA).  Only 928,000 H&W LPAs have been registered with the Office of the Public Guardian. This suggests there are 12 million people at significant risk of losing mental capacity who have not made proper arrangements for their care in old age.

The majority of people are still avoiding important conversations and practical actions to make their preferences known about their end-of-life care and final affairs.  We do need to talk about end-of life care and how we would want to be treated if we found ourselves in circumstances where our quality of life is extremely poor.  Often people tell us they simply want to be comfortable, hydrated and well cared-for.  However, if they have not legally empowered trusted individuals to make these wishes known, it could be that this is not what actually happens.

Part of the reluctance to make our wishes known is the misconception that the `next of kin,’ (which is a term widely used in health & social care decisions) has an automatic right to act on behalf of an incapacitated relative.  In fact, the term has little basis in law, the next of kin are not automatically empowered to make any decisions. The authority to make decisions still lies the professional within the health or social care system.

H&W LPAs are useful documents offering protection and control as they allow you to appoint your chosen attorneys. Conversations with relatives are important, but it’s also necessary to empower those chosen people in writing.  The best way to do this is to express your wishes in an H&W LPA; this eliminates doubt and gives legal validity to your choices.

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The Royal Wedding: how marriage impacts Wills and changing family structures

The marriage of Prince Harry and Meghan Markle marks many historical changes for the royal family. Meghan is one of a few Americans and the first black woman to be welcomed into the royal family; she has previously been divorced which in the royal family’s past has been frowned upon by the Church of England. It is not only in the royal family that we are seeing changes in family structures in the UK. We are more frequently seeing people marry more than once, become part of a blended family and emigrate overseas. Changes like these can make the estate administration process when someone has passed away much more complicated, especially when no Will is present.

An important aspect of getting married is what effect the marriage has upon your existing Will, as it could have a significant impact on your wishes after you have passed away. When a marriage takes place, any existing Will becomes invalid as it is automatically revoked. If you were to pass away after you had got married but before you created a new Will, your estate would be distributed in accordance with the rules of intestacy. This means your spouse or civil partner would not automatically receive all of your estate if you have children, grandchildren or great-grandchildren. Your spouse or civil partner would receive the first £250,000 of your estate and then half of everything that is remaining above that amount. The other half would be distributed to your children, grandchildren or great-grandchildren. Any joint bank accounts and property held as joint tenants will also automatically pass to the other owner by survivorship outside of the intestacy rules.

By way of illustration if you die without a Will leaving a spouse, 2 children and an estate of £450,000.  Your spouse takes your personal effects and £250,000 plus half of the remaining £200,000.  The children take £50,000 each when they reach 18.  If the children decide that they want the money straight away your spouse could be forced to sell the property they are living in.

No matter the value of your estate, your age or status, it’s highly important to make plans for the future to ensure your wishes are heard and your legacy is protected after you have passed away. Creating a valid Will and keeping it up-to-date is the only way to guarantee that your estate is distributed in accordance with your wishes.

Sue Jenden – Sue Jenden Associates

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Who’s Involved in Selling a Business?

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Selling a business is not easy – selling it well is quite a challenge. This will be one of the most important transactions a seller will ever undertake and being properly prepared and having the right advisers around him/her is critical to achieving a good outcome.

The Team & Roles

A Business Broker will advise on business valuation, lead the marketing activities to identify potential buyers, support buyer meetings, manage the negotiations, draft the Heads of Terms and coordinate the legal stages.

A good broker will charge only a small amount upfront (enough to ensure commitment from the seller), with the majority of fees contingent on success.

An Accountant will advise on the tax implications of a sale, including share vs assets, how to handle surplus cash in the business etc The accountant also needs to be proactive in producing up to date financial information, both statutory and management (a potential buyer understandably has a strong thirst for up to date information) and also support the due diligence process.

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MPAA and Implications of Reduction

From 6th April 2017, the Money Purchase Annual Allowance will fall from £10,000 down to £4,000 for those who have accessed their pensions and are taking an income. This strategy is clearly aimed at setting the allowance as low as possible without impacting on Auto-Enrolment.

For the purposes of the consultation, the Treasury outlines the situations where ‘accessing a pension flexibly’ – and therefore the new cap – applies:

  • Flexi drawdown including short term annuities.
  • Taking a lifetime annuity that allows actual or possible decreases in the amount of annuity payable.
  • Taking an uncrystallised funds pension lump sum.
  • Those without earnings who cannot normally “recycle” pension withdrawals by putting money withdrawn from a pension back into a pension, although contributions of up to £3,600 can be made, unsupported by earnings.
  • A stand-alone lump sum payment, made where the person has primary protection and a protected tax-free lump sum right which is greater than £375,000.
  • Where a pension scheme delivers the DC pension directly – a “scheme pension” and there are fewer than 12 individuals receiving a scheme pension.
  • Payment of one of the types of benefits listed above is from an overseas pension scheme that has benefited from UK tax relief.
  • The MPAA restriction applies from the day after the above trigger event has occurred.

Pension options that do not constitute accessing benefits flexibly include:

  • Receipt of a pension commencement lump sum.
  • An individual commences flexi-access drawdown, either by a new designation or through conversion of a capped drawdown contract, and does not receive any income.
  • An individual holds a capped drawdown contract that was set up before 6th April 2015, and does not receive income above the maximum income limit for the contract after 5th April 2015.
  • Receipt of payment from a standard lifetime annuity or scheme pension.
  • Receipt of a small lump sum or trivial commutation lump sum.
  • Receipt of income from a dependant’s drawdown contract.

Once triggered, the restricted allowance applies for the rest of the tax year and each subsequent year. Perhaps most importantly it is not contract-specific: if it applies, it covers all of a client’s money purchase arrangements.

If contributions exceed £10,000 in 2016/2017 or £4,000 in tax years from 2017/2018 onwards this will result in an annual allowance excess, with no option to carry forward from earlier years.

The remainder of the standard annual allowance – called the ‘alternative annual allowance’ – can be used to accrue defined benefits, to which carry forward can be added.

In most cases, the trigger event will occur part of the way through a tax year. As it is only money purchase contributions after this that are tested against the MPAA, that year must be apportioned. Contributions that were paid before the trigger are tested against the alternative annual allowance along with defined benefit accrual; all other contributions are tested against the MPAA. For instance, a monthly contribution to a group personal pension of £1,000 gross paid by a member who triggers the MPAA half way through the tax year will have the following annual allowance test: £6,000 tested against the MPAA; £6,000 tested against the alternative annual allowance.

Subsequent tax years are much simpler because the MPAA applies for the whole year.

Planning Opportunity

With this in mind a good trawl through the client bank is necessary, and all clients approaching the stage where they may access benefits need to be notified that the next 2 months or so is vital to their financial planning, with the option to pay the maximum allowance using carry forward still available, allowing a contribution of up to £170,000.

Sean Donald – Chartered Paraplanner, Timebank

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Avoiding Mistakes When Selling a Business

Research has shown that many business owners fail to achieve the full or fair value of their businesses when trying to exit, simply through poor plrogeranning and preparation. There’s still enough time to learn from the experience of others……

You’ve had enough and so you’ve suddenly decided to sell?

The decision to sell a business should not be taken lightly as there could be many things to be done to try and make the chance of selling a business a lot easier.  

Poor preparation without up to date accounts, legal entity records and other important paperwork will simply put potential buyers off.  Don’t think you can hide bad news or skeletons in the cupboard as these usually get discovered in the due diligence process – deal with the issues before you decide to sell. 

Always work to a realistic time scale (it can take up to six months to find a buyer and six months to sell a business) – turn a business around first and then sell.

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Succession planning – it’s never too soon

For many people, the prospect of letting go of their hard won business is often too difficult to contemplate, so they put off thinking about exit strategies and succession planning and, as a result, are forced to act under less than ideal circumstances and fail to realise the full value of their business.

If you want to capitalise fully on your personal investment in your business, start planning early.

The owners of one business I worked with were always looking for potential successors whenever they made a senior recruitment and started serious planning seven years before they intended to retire.

I started working with them two years later and within three years their successors had virtually taken over running the business and since the founders left, well recompensed by their successors, the business has gone from strength to strength.

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Are you happy to pay more tax?

In this post I highlight some of the nasty tax increases on their way following the last Budget and I recommend some courses of action to take to combat these tax rises.

The Budget on 8th July, the first of the new Conservative Government, was not good news for small business owners and landlords.

There was a shock announcement of an extra tax on business owners who receive a large part of their remuneration from their companies as dividends.

The extra tax is due to take effect from 6th April 2016 and, apart from the first £5,000 of dividends which are tax-free, the tax is an additional 7.5% on dividends received.  This will typically equate to increases in personal tax bills ranging from a few hundred pounds to several thousand pounds, depending on the level of dividends received.

The injustice of the new dividends tax is that it does not just represent a breach of the Government’s pre-election promise not to increase income tax, but it is a tax on income that has already been taxed once in the form of 20% corporation tax. Business owners can therefore be forgiven for thinking that they are being taxed twice on the same income – because they are!

Landlords who have mortgages on their properties were also hit hard in the July Budget. From April 2017 there will be a reduction in the tax relief received on mortgage interest, phased in over 4 years, so that only basic rate 20% tax relief will be given on the mortgage interest. Many landlords who are higher-rate or additional-rate taxpayers therefore face big rises in their tax bills.

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What does your corporate voice say about you?

Every business, like every person, has a tone of voice. It can vary depending on circumstances, just like being in a bad mood can put an edge in your voice, whether you intend it to be there or not.

Unfortunately, unlike a teenager throwing a wobbly, a business won’t be easily forgiven for getting stroppy with a customer.

Times have moved on from ‘Annoyed of Craven Arms’ pulling out the green biro to share their discombobulation with the weekly paper and its audience. Now it’s instant opprobrium courtesy of social media channels that you need to fear.

It never ceases to amaze me what staff and even owners and managers believe they can get away with when communicating with audiences. The phrase “the customer is always right” might not actually be true, but surely it should be the starting point?

Let them think they’re right, then delicately and skilfully move them to your position – but whatever you do, don’t insult them.

You can’t speak for every individual in your business, or write every email in your own personal, impossible-to-misinterpret style. Instead, the tone of the business needs to be set, to be laid down in no uncertain terms.

Then it has to be monitored and transgressions picked-up. It has to be reinforced, practised by everyone from senior management down and defined into the daily working practice.

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Have you got news for them?

Are you kidding . . . of course you have!

Every business has something interesting lurking in their armoury which could drum up extra trade – the art is pinpointing precisely what it is, and then working out how best to broadcast it to the wider world!

There’s no denying that the explosion of social media has dramatically changed how we unleash an eye-catching news headline.

Digital media has made it much easier for anyone to splash a headline. But the sheer weight of information out there on the superhighway means it’s also more important than ever to do it ‘right’ if you want to be noticed.

Technology may be moving on apace, but the way in which words are manipulated, or ‘spun’ to gain our interest, has barely altered for generations.

Twitter has only reminded us of one of the most important journalistic lessons – that information is always at its most powerful in short, sharp doses.

So if you can’t sum up your headline message in 140 characters, then you might want to consider whether you are making it too complicated.

A team of market researchers (clearly with too much time on their hands!) produced a document a few months back which reckons the average reader only soaks up 28 words of a story.

If that’s true, though, you wouldn’t still be reading . . . would you?

Publicity is actually a complex science. It’s about hitting people with the right message at the right time, in the right place – and that magic formula varies from one business to the next.

Shouting about your latest company expansion, extolling the virtues of a new product, or presenting new members of staff to the world is all meat and drink PR fodder which will raise your profile.

But that’s not the only way you should be harnessing the power of the media.

Sometimes, you have to prove a need for your product or service, and persuade potential clients that it’s something they can’t afford to be without.

It’s like creating a club, and making a compelling argument for why people need to be in it.

Every piece of information you put out there needs to meet what I call ‘The W formula’:

  • Who is it about?
  • What are you trying to say?
  • Where are you coming from?
  • When is your message most relevant
  • …and most importantly, Why is it important?

Does your current marketing and PR strategy answer all of these questions? If not, how can you prove you are relevant to your clients.

So, have you got news for them now?

Carl Jones is editor of Shropshire Business Today magazine, and a presenter on Big Centre TV, and BBC Shropshire.

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Be Ready to Recover

Although the loss of business critical data is costing UK businesses millions of pounds each year, recent reports suggest that a considerable number of organisations are not taking the preventative steps to protect their information assuming it will never happen to them.

As a result, they’re putting themselves at significant risk.

The financial implications are huge, and 80% of businesses that suffer major data loss close within 18 months.

Your business operations can be disrupted by a number of unpredictable incidents from a power cut to a computer virus, or even human error.

Making sure you have a data recovery plan in place can make a massive difference in the amount of downtime your business could suffer.

A disaster recovery system is one of the most important investments a business can make, but many don’t realise they need it until it’s too late.

Server downtime for instance will strike all businesses in some form, and it can not only have damaging financial implications, it could also impact its reputation and stakeholders too.

Many small companies assume they can’t afford critical data protection and server recovery, but it really should be a question of whether they can afford not to have it. Even larger organisations with some form of disaster recovery are losing data because their systems aren’t saved in real-time and backed-up automatically.

45% of businesses suffered from server downtime last year, and with most businesses affected by data loss of some sort during their trading life, it may not be a case of if, but when.

Whether your Disaster Recovery needs refreshing or you are looking at Disaster Recovery for the first time, it is an important factor which you should be implementing into your business.

Want to know more about Disaster Recovery? Rockford IT’s Disaster Recovery Workshop is on the 9th of July in Telford. Available to sign up for here –

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