N E W S L E T T E R

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2020

AVOID THE COST OF HMRC INVESTIGATION

Tax investigations by HMRC have been on the rise for a number of years. Anyone can be selected for an investigation by HMRC, whether you are a business, a director or an individual taxpayer. What does an investigation involve and why does it happen?

Put simply, a tax investigation is when HMRC decides to take a closer look at your finances to ensure you, or your business, is paying the right

amount of tax, both now and historically. Although it may seem alarming, it does not mean you have done anything wrong. Although HMRC is using more sophisticated technology to identify suspect businesses, they also carry out numerous random investigations in their attempts to reduce the deficit related to tax collection.

Quality Advice • Quality Service

AVOID THE COST OF HMRC INVESTIGATION... Continued

• £33 billion is the estimated tax gap between what HMRC collect and what they should be collecting • £17.5 billion of that gap is attributed to small businesses (£14.1 billion) and individuals (£3.4 billion) • Tax and VAT investigations are a key tool in reducing this deficit If you are selected for investigation, it is a

process with which you must legally cooperate. This is also the point to contact your accountant.

The preparation for an HMRC visit can take some time, as can the visit itself along with any subsequent work requested by HMRC. So, get in touch as soon as you are advised of the visit as you will need to agree a plan of action.

HMRC inspections and the related work, can be lengthy and as a result costly, as unfortunately a tax investigation is not covered by your usual accountancy fees. This is why Greaves West & Ayre offers clients a fee protection service that will safeguard you against unforeseen professional costs arising from any correspondence or visit relating to an enquiry from HMRC.

By taking advantage of this service you can be safe in the knowledge that the HMRC enquiry process will be handled by a team you are familiar with and who understand your business. We will work on the case for as long as required to ensure you get the best possible outcome, without you worrying about escalating accountancy fees. That way you can continue to dedicate your time to the important task of running your day to day business. In addition, you will have access to a Business Support Helpline which gives legal, employment and health and safety advice to your business.

Sadly, no taxpayer is immune to HMRC investigations. That is why we strongly advise that clients take up the fee protection service. The stress and cost of an investigation can be considerable and a small premium will deliver you peace of mind knowing that the people you trust will provide you the best support if HMRC comes knocking.

If you would like more details about our fee protection service or if you have any worries or concerns about an HMRC tax enquiry, please get in touch.

Changes in tax legislation later this year mean that battery electric vehicles (BEV) and some plug-in hybrid electric vehicles (PHEV) will soon be exempt from company car tax. The new rules come into force from 6 April 2020 and may mean that buying ‘electric’ makes a company car purchase more attractive.

From April 2020, the UK will adopt the Worldwide Harmonised Light Vehicle Procedure (commonly known as WLTP) to establish CO2 emissions for all new car registrations. This means the taxable benefit for all company cars registered after 6 April will be based on these new emission figures.

As a result, company car drivers who take delivery after 6 April of a new company vehicle which emits more than 50g/km of CO2 are likely to see an increase in benefit in kind (BIK) rates due to the forecasted increase in CO2 values the new WLTP test regime will bring.

In short, an identical car registered on or after 6 April is likely to see an increase in the BIK payable versus an identical car registered the day before, on 5 April. Depending on the specific car

and driver’s personal tax rate the difference could be as much as £50 a month.

Is an electric car a better alternative for business owners?

For fully electric vehicles business owners may be able to use the total cost of the electric car, either purchased or leased, to reduce business tax. The company will accommodate all of the costs, which will be tax deductible and you will pay no personal tax. This means that if you buy a fully electric vehicle for £25,000, your taxable profits should reduce by £25,000.

Plus, there are National Insurance contributions to consider. If you provide a vehicle to an employee, or if it is your own company, to yourself, contributions are payable on the BIK value. If the BIK is 0%, that means National Insurance contributions will not be payable on the vehicle.

Is an electric car a better alternative for employees?

To encourage more environmentally friendly

COMPANY CARS – IS NOW THE TIME TO SWITCH TO ELECTRIC?

MAKING MTD EVEN EASIER - HINTS AND TIPS SEMINARIn April it will be a year since VAT registered businesses had to provide their returns data to HMRC digitally.

Greaves West & Ayre has been pioneering the Making Tax Digital (MTD) path for 10 years, becoming a Xero partner in 2010 and last year being awarded Xero Platinum Partner status.

After the success of our original seminars to assist with the switch to MTD, we have continued to provide support on an individual basis to ensure clients are as comfortable as possible with the demands of the digital process.

As always, we prefer to take a proactive route and are looking to organise further seminars in March focusing on hints and tips on how to make the most of your MTD software and make the filing of your VAT return even easier.

The dates and venues have still to be confirmed, however if you are interested in attending one of these free seminars please send an email to events@gwayre.co.uk. That way you can be sure that you will be the first to know once the details have been finalised.

choices, the government is clearly trying to reward drivers who choose a low emission car. As a result, all employees driving a fully electric car with zero emissions over the 2020/2021 tax year will enjoy a 0% BIK rate - the current rate can be up to 16%. This will be followed by an incremental yearly increase to 1% in 2021/22 and to 2% in 2022/23 but even these rates are still very low.

In addition, electricity is not considered to be a ‘fuel’. This means that employees can use electricity paid for by their employer for both business and private journeys without triggering a fuel benefit charge. This is a sizeable saving when compared to a diesel or petrol car. If an employee pays for their own electricity, they can be

reimbursed at a rate of 4p per mile without triggering a tax bill, however it is worth noting that fuel charges are still applicable for a hybrid car.

If you want your business to be even greener you may be able to take advantage of the Government’s Workplace Charging Scheme and claim 75% of the purchase and installation costs of charging sockets for electric cars and supply electricity free of charge to employees BEVs and PHEVs.

The impact on your personal and business tax will depend on your unique situation and requirements. However if you would like to understand how these changes may affect your business and your employees please do get in touch. If you intend to pass on money or assets

following your death, your heirs could face an inheritance tax (IHT) bill of up to 40% of your estate.

If the value of your estate is below the Nil Rate Band (NRB) of £325,000 or you leave everything above the threshold to your spouse or civil partner, there is normally no tax to be paid. However, if the value of your estate is above £325,000, then the part of your estate above the threshold might be liable for IHT.

One way to reduce the value of your estate for IHT purposes is by making a gift to your family or friends while you’re alive, an option which also provides an immediate benefit to the recipients. However, if the asset is gifted less than seven years before your death the recipient will still be liable to pay IHT or a percentage of IHT depending at what point during those seven years the gift was made. This percentage is known as taper relief

If this sounds confusing, this is just one of a myriad of rules related to IHT. Last year the Office of Tax Simplification (OTS) undertook a review of the system of raising and collecting IHT and concluded it was inefficient and overly complicated.

One of the OTS recommendations was the seven-year gifting period should be reduced to five years and taper relief be removed. As a result, you may have a better chance of surviving the gift and the tax paid by your loved one being zero. But if you do not survive long enough, there will be more tax to pay as there is no taper relief.

It should be stressed that these are only

proposals at present and not current legislation, but reform is looking increasingly likely – at the last Conservative Party Conference, Chancellor Sajid Javid announced that he was considering scrapping IHT altogether.

In addition, as recently as last month, further changes have been proposed. A group of cross-party MPs have called for radical changes to IHT, suggesting the current 40% rate be reduced to 10% and then rising to a maximum of 20% on estates of more than £2m. Their suggestion is that instead of the current system which applies an IHT rate of 40%, and also has an extensive array of complex reliefs, there should instead be a flat rate. In addition the seven-year rule should be replaced with a 10% tax on all lifetime gifts above £30,000 each year.

Change is never popular for all. We know many parents and grandparents use gifting as an option to pass on wealth while they are still alive, to allow family to get on to the housing ladder or help pay for education. In addition, the abolition of tax reliefs will have significant implications for business owners.

We will naturally keep you informed should any of these proposals come to fruition. Notwithstanding, it is important to review your IHT position as you may be able to mitigate the amount of tax paid in advance of any proposed changes should they occur.

If you have any questions about inheritance tax or the options available to you please get in touch.

The UK government has confirmed that working parents, and adults with parental responsibility, who suffer the devastating loss of a child will be entitled to two weeks’ statutory leave. Parental Bereavement Leave (PBL) will be introduced on 6 April 2020 and will apply to all employers and businesses, regardless of their size.

PBL is available for any employee (not agency workers or self-employed contractors) if they lose a child under the age of 18, or suffer a stillbirth from 24 weeks of pregnancy with no minimum period of service, therefore the right is applicable from day one of employment.

The leave may be taken in complete weeks either as one period of two weeks or two separate periods of one week. The leave can be taken within 56 weeks, notably covering the first anniversary of the child’s death.

Where employed parents meet the necessary conditions, they will also have a right to Statutory Parental Bereavement Pay (SPBP). Parents must have at least 26 weeks’ continuous service with their employer and be earning more than the

lower earning limit to be eligible for SPBP. The rate to be paid will be £148.68 per week (for 2019/20) or 90% of average weekly earnings where this is lower.

The government has confirmed SPBP will be administered by employers, just like other types of family-related statutory payments eg. Statutory Paternity Pay.

A 2018 XpertHR survey found that the current average paid bereavement leave entitlement offered by companies is five days. We would therefore recommend with 6 April 2020 drawing near, employers should be reviewing and updating their policies to comply with the new law. We would encourage employers to approach this matter both compassionately and sensitively. Acas already have some practical guidance in relation to the new laws concerning PBL, which you may find useful www.acas.org.uk/absence-from-work/time-off-for-bereavement.

Should you have any questions in relation to PBL or SPBP please get in touch with the Partner who looks after your affairs or contact our dedicated Payroll team on 01289 306688.

CHANGES AHEAD FOR INHERITANCE TAX

INTRODUCTION OF PAID PARENTAL BEREAVEMENT LEAVE

COMPANY CARS – IS NOW THE TIME TO SWITCH TO ELECTRIC?... Continued

We hope the work with local organisations brings benefits to our region economically, socially and culturally. Some of the initiatives we have supported this year include:

A YEAR OF GIVING

Throughout our 100-year history we have supported the communities surrounding our offices in Berwick-upon-Tweed and Haddington.

As we wrap up 2019 and wave farewell to our centenary celebrations, we thought we would do a quick reckoning of some of our contributions over the past 12 months.

Many of our partners and staff actively support local charities, clubs and causes, volunteering in an advisory capacity or helping with fundraising initiatives. Our partners also assist charities on a pro-bono basis, as part of our policy of “giving back” to those less fortunate. As a firm we sponsor regional events and our staff are amazing in their efforts to raise money through a variety of ways, be that dress down days, bakes (always popular), raffles and sporting challenges.

For a number of years, we have encouraged every member of staff to nominate a local cause that may benefit from a little bit of extra funding. Over the past 12 months this staff community incentive has donated £1,400 to local clubs and groups from Kelso to Glanton and many places in between.

Our teams have also pulled out all the stops for other regional and national charities. These include Children in Need (top photo), MIND, Movember, Jeans for Genes and the Great North Ambulance raising over £2,300. Our collection points for the Cash for Kids Mission Christmas campaign saw four big deliveries of gifts, which benefitted children across the Borders and Lothians.

We believe our ongoing commitment to the local community has been an important part of the success of Greaves West & Ayre and reinforces our position as one of the leading

chartered accountants in our area and beyond. We look forward to continuing our community efforts and hopefully making a difference in years to come.

The Alwinton Show Ancrum Spinners Berwick Operatic Society – The Sound of Music Berwick Amateur Rowing Club (8) Berwick Cricket Club Berwick Food & Beer Festival Berwick Rangers Football Club (10) Berwick Rangers Junior Football (9) Berwick Rugby Football Club Berwick Wheelers (11) Berwickshire Hunt Pony Club (2) Border Crop and Grassland Management Competition The Border Union Show (5) Borders Art Fair Breastfeeding Northumberland A Bridge Too Far Cycling Sportive (3) The Curfew Run The Dalkeith Show Dunbar Christmas Lights (7) Duns Football Club Duns Golf Club Duns Show Eyemouth Cub Scout Group (1) Floors Castle Horse Trials Glanton War Memorial Hall

Glen Golf Club The Glendale Show Goswick Golf Club The Great North Air Ambulance Haddington Pipe Band Haddington Rugby Club The Haddington Show High Sheriff of Northumberland’s Youth Against Crime Award Scheme The Holm Show Horncliffe Beer & Music Festival Magdalene Field Golf Club Meeting of Minds Minto Golf Club Party on the Parade - Berwick The Red Balloon Pre-school Reston Ploughing Association Scottish Limousin Club Spittal Rovers Spittal Variety Group – Chitty Chitty Bang Bang Swinton Gala Day (6) The Grove School (12) Tweedmouth Amateurs Football Club Tweedmouth Middle School Tweedmouth Prior Park First School (4)

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We are delighted that Joe O’Brien has been awarded the Personal Finance Society’s (PFS’s) Fellowship status.

Fellowship of the PFS is the most prestigious qualification awarded to those working in the profession and is an accolade that recognises dedication to work, self-improvement and ability.

Joe joined Greaves West & Ayre’s wealth management team in January 2015 as an Independent Financial Advisor and achieved chartered status at the end of 2018. He made the trip to Threadneedle Street in the City of London at the end of last year to receive his Fellowship award.

Joe said, “I always aim to excel at everything I do and I am delighted that after 19 years in the financial services profession I am now a Fellow of the PFS, the highest qualification awarded by the Chartered Insurance Institute (CII).

“Reaching this milestone reflects my efforts to exceed people’s expectations of me in terms of

industry knowledge, ethics and client trust. It has been a lot of work but the recognition of that work has also made it really rewarding.”

In addition to his Fellowship, Joe is also a Chartered Financial Planner and Certified Financial Planner. He is a member of our growing team of experts who focus on wealth management and financial planning for personal, corporate, charity and trust clients.

Greaves West & Ayre’s Managing Partner, Colin Frame said, “We are delighted for Joe. Gaining Fellowship is testament to the dedication to his own professional development, Greaves West & Ayre and most importantly our clients.”

The ongoing programme of education and training provided at Greaves West & Ayre is a very important part of our business. The level of qualifications held by all of the staff we believe helps set us apart from many other accountancy and wealth management firms.

JOE O’BRIEN RECEIVES TOP AWARD

Photo: Adam Owen (President of the Personal Finance Society) (left), Joe O’Brien (centre), Keith Richard (CEO of the Personal Finance Society) (right)

IMPORTANT CHANGES TO CAPITAL GAINS TAX (CGT) FROM APRIL 2020

As we highlighted in previous newsletters, changes are coming to the way that Capital Gains Tax (CGT) must be reported and paid following the sale of a second property.

At present CGT is payable by 31 January following the tax year of the disposal or sale, providing anything from a 22 month to a nine month pay window. However, from 6 April 2020 individuals, trustees and personal representatives selling or making gifts of residential property will be expected to make a disclosure of the disposal to HMRC within just 30 days. This will be done by submitting a ‘residential property return’ with interest and penalties being charged if the 30-day deadline is missed.

At the same time, a payment on account of the estimated CGT due will also need to be paid. At the time of completing the return it may be unclear at what rate CGT will apply – it is currently set at 18% for basic rate tax payers and 28% for higher and additional rate taxpayers. HMRC are therefore requesting that reasonable estimates

are made during the filing process. If, on finalisation of an individual’s tax affairs for the year, the payment has been over-estimated, a repayment can be claimed. Likewise, any shortfall will need to be made should you discover that your ‘reasonable estimate’ was understated. There are exceptions where the new rules will not apply. These would include cases • where a private residence is disposed of • where the gain is below the annual exemption (currently £12,000) • when a transfer is made between husband and wife • when the gain will be covered by unused capital losses.

If you are thinking of selling a residential property after April 2020, keeping accurate, up-to-date paperwork will be even more important with such a narrow window to prepare and calculate CGT. We would also recommend highlighting any plans you may have to your solicitor as well as ourselves, as your accountant, to ensure everyone involved is as prepared as possible and that payment and return deadlines are met.

If you have any specific queries about what these changes mean for your future plans then please contact GWA and we shall be happy to assist and advise you.

Financial advice is often considered to be a luxury, taken up by those with sizeable wealth. However, research suggests that actively seeking financial advice can play a valuable role in increasing the assets of those that seek advice, regardless of their initial financial status¹. The study confirmed that those who received financial advice in the period 2001-2007 accumulated significantly more financial assets and pension wealth than their unadvised peers by 2012-2014, only some 5 to 13 years later. This increase, depending on individual circumstances, equated to over £40,000¹.

The number of people having received regulated financial advice is increasing, but in 2018 it was still only one in ten UK adults². So why do more people not take advice, especially when nine out of every ten of people are satisfied with the advice they receive².

Is it the expectation of initial-consultation fees or ongoing charges? Is there an element of trust which should play a key role in adviser-client relations?

Greaves West & Ayre is very aware of the importance of trust, having provided accountancy, tax and business advice to clients for over 100 years. We offer a free initial consultation offering clear, non-obligatory advice for anyone who may be reviewing their future finances. As for ongoing advisory charges, we offer a competitive framework of service levels - clients only pay for what they need, with total fees ranging from 1.20% of assets under management (AUM) to 2.00% per annum, depending on each client’s attitude to risk and ethical views.

A difference of over £40,000 in value between the investments of the advised versus the non-advised seems considerable. However, closer examination of some of our in-house fund offerings shows that this is hardly surprising. Our Balanced Portfolio has delivered an average of 8.67% gross return per annum for our clients over the last five years (inclusive of fund charges, but before adviser and product charges)³. This outperforms the market benchmark and the FTSE All Share Index over the same period.

As independent financial advisers we are not limited to a few products or providers. Instead we examine the whole of the market, bearing in mind your unique requirements – whether you are looking to secure a deposit for a first-time home; build a retirement fund or even pass on funds to grandchildren. That means you can have

THE £40,000 VALUE OF FINANCIAL ADVICE

Our centenary timeline is also available on our website and we would encourage you to take a look.

www.gwa100.greaveswestayre.co.uk

¹ International Longevity Centre – UK – Publications – The Value of

Financial Advice – 13 June 2017 ² FAMR 2018 Survey

³ Morningstar 01/11/2014 – 31/10/2019

As we start a new decade, we have been reflecting back on our last 10 decades. We hope that some of you were able to join us at our various events we held over the 12 months of our

centenary celebrations. We have also tried to keep a permanent record of what has occurred over the past 100 years to add to everyone’s memories.

If you have visited our offices recently, you my have seen a display in our reception area depicting the timeline of our 100 year history.

It has been a pleasure meeting, working with and supporting the many people who have played a part in the history of Greaves West & Ayre. We are looking forward to providing the “Quality Advice – Quality Service” that has allowed us to thrive over the past century for the next 100 years to come.

A CENTURY PAST - A NEW DECADE AHEAD

Disclaimer - for information of users: This newsletter is published for the information of clients. It provides only an overview of the regulations in force at the date of publication and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting

or refraining from action as a result of the material contained in this newsletter can be accepted by the authors or the firm. Greaves West & Ayre is registered to carry on audit work in the UK and licensed to carry out the reserved legal activity of non-contentious probate in England and Wales by the

Institute of Chartered Accountants in England and Wales. It is also authorised and regulated by the Financial Conduct Authority for investment business (FRN 100825).

17 Walkergate, Berwick-upon-Tweed, Northumberland TD15 1DJ Tel: 01289 306688 Email: berwick@gwayre.co.uk 8 St Ann’s Place, Haddington, East Lothian EH41 4BS Tel: 01620 823211 Email: haddington@gwayre.co.uk

@GreavesWestAyre www.greaveswestayre.co.uk

We have an assortment of staff news to start off the year, from people joining the GWA family to celebrations for longstanding service.

Appointments We are delighted to welcome a new face to our team in Berwick - Becky Wilson has joined us as a Trainee Accounts Technician. Also, Ryan Emmerson will be starting with us in March and, along with existing staff member Stuart Gilchrist, will be commencing their Chartered Accountant training.

Work anniversaries From ‘newbies’, to those remarkable staff who are celebrating noteworthy work anniversaries. Denise McCandlish, who is based at our Haddington office and Daphne Bell, from our Berwick office, reached 30 years’ service towards the end of last year. Stephen Gilchrist, from Berwick is also celebrating a significant work anniversary of 20 years in February. Congratulations to them all.

Qualifications With International Women’s Day not far away, it seems fitting that the latest three members of staff who have gained their Chartered Accountant qualifications are all women, namely Anna Spowart, Sarah Strathdee and Kim Turnbull. All the hard work has paid off, well done.

Births Finally, our congratulations go to Alisdair Hamilton, from our Commercial Accounts team, and his wife Helen on the birth of their son, Peter at the end of 2019. We wish all the family all the very best for the years ahead.

STAFF NEWS

the utmost faith that when we say we believe something is the best option for you, we really mean it.

The UK financial services industry is now more regulated than ever before - meaning that there has probably never been a better time to get in touch with an adviser. Next time you think to yourself, why get financial advice? Answer yourself this, why not?

If you would like more information on Greaves

West & Ayre’s wealth management services, or would simply like to talk to someone about how to ensure your financial wellbeing is best managed, please do come and have a chat with one of our qualified advisers. Please be aware that your capital will be at risk when you invest, and that you may get back less than you invested. Greaves West & Ayre Wealth Management is a division of Greaves West & Ayre, a firm authorised and regulated by the Financial Conduct Authority for Investment Business (FRN 100825)

THE £40,000 VALUE OF FINANCIAL ADVICE... Continued