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May 2019 Newsletter

Since our last newsletter, we have an addition to the JJFS family – little Chloe Jeffrey who was born in February. On another personal note, Simon Jackson has been out churning up the miles in his first ever Duathlon. Photos and more information available on the click through links below.

Our other articles in this issue include SSAS funds and how to invest in commercial property, some new tax rules now in force that you should be aware of, a note about the National Insurance contributions that many families may be missing out on, and for those of you who like to be organised and plan ahead, we have a useful document template that you can download and use to record all your personal and financial details in one place.

We hope you enjoy the articles and find them useful.

In this issue:-

Tax-Efficient Ways to Use Your SSAS
New Tax Year – New Tax Rules
Parents losing out on state pension
The “When I’m Gone” List
Introducing Baby Chloe
Simon’s First Ever Duathlon

Tax-Efficient Ways to Use Your SSAS

We have previously written on the subject of using a SSAS to purchase commercial property, specifically, the premises from which the business of the scheme member(s) operates, but there are other ways to use the funds held within a SSAS tax-efficiently and to help grow your business.

A SSAS or “small self-administered scheme” is an occupational pension scheme for directors and key staff of an organisation, each of whom are designated a trustee of the scheme.

If the business is in need of capital, and it owns the premises from which it operates, then SSAS funds can be used to provide this capital in two ways. Firstly, it can purchase the property from the business thereby injecting the needed funds and at the same time providing a rental income for the scheme for the benefit of the trustees. A SSAS is not restricted to investing in property owned by or rented to a business of a scheme member so it could be used to purchase commercial property for letting to third parties. However if there are problems finding tenants the ongoing costs of simply holding the property can quickly escalate.

An alternative use for the pension funds is to inject capital via SSAS employer loans whereby up to 50% of the value of the SSAS can be loaned back to an employer linked to the scheme. The loan must be secured against an asset of at least equal value to the loan itself which can be a commercial property owned by the business or an asset that is not connected to the business at all, as long as there no existing charges or liens in place.

It is important to note however that a SSAS can only invest in commercial property and there are strict criteria around what constitutes “commercial” versus “residential” property. If HMRC deems the investment to be residential, then punitive tax charges will apply. There are also tax pitfalls around the purchase of fixtures and fittings within a commercial property (or “tangible moveable property”) and the fact that all transactions must be carried out at arm’s length. We therefore highly recommend taking professional advice to explore your options.

To find out more please contact your usual JJFS contact or email us on justask@jjfsltd.com.

New Tax Year – New Tax Rules

The new tax year on 6th April brought in a number of changes and we would like to draw your attention in particular to the following:

Residence Nil Rate Band – this has increased from £125,000 to £150,000 and can be added to the basic IHT allowance of £325,000 where a property in the estate that was the main residence of the deceased, has been left to a direct descendant eg child or grandchild. However, if the total estate exceeds £2million the RNRB will be tapered by £1 for every £2 the estate is valued over £2m even if the actual property earmarked for RNRB is worth much less than this.

Pension Lifetime Allowance – is now £1,055,000 up from £1,030,000. The annual allowance remains at £40,000 and where a pension is in draw down the annual allowance is £4,000. Click here to read our factsheet “Annual Allowance for Pension Contributions – Know Your Limit” [link to factsheet].

ISA allowances – the adult ISA limits remain the same at £20,000 per person whereas Junior ISAs have increased to £4,368 per child.

Capital Gains Tax Allowance – has risen from £11,700 to £12,000. The rate of CGT remains at 10% for basic rate tax payers and 20% for higher and additional rate tax payers.

If you have any questions regarding the above, please contact your usual JJFS contact or email us on justask@jjfsltd.com.

Parents Losing out on State Pension

According to data provided to HMRC earlier this year, up to 200,000 parents could be losing out on state pension benefits where one parent either does not work or earns less than the lower earnings limit due to childcare commitments and the other parent is the higher earner and is claiming child benefit.

Registering for Child Benefit enables the individual to build up State Pension entitlements if they are not already paying Class 1 or 2 NI contributions. If the parent does not register for child benefit, they may have insufficient qualifying years to entitle them to a full state pension when they reach state pension age.

NI credits are attached to child benefit and can be transferred from one parent to another by changing the child benefit claimant from the earning parent to the parent with low or no income. Alternatively, the earning parent can remain as the claimant and just transfer the NI credits to the low/no income parent.

This also applies where a family member is caring for the child (who must be under 12 years of age) and who themselves are not claiming NI Credits. The credit from the child benefit claimant can be transferred to the family member. For more detailed information including who qualifies as a ‘family member’ please refer to the HMRC factsheet: Specified Adult Childcare Credits: Fact Sheet.

The “When I’m Gone” List

It is a fact of life these days that many of us have to keep track of numerous financial and personal details including bank accounts, investments, pensions, insurances, household accounts, insurances and utilities and a growing number of online accounts relating to email, social media, shopping and hobbies. The list goes on. It is understandably difficult keeping track of everything yourself let alone a family member or close friend trying to do so on your behalf.

We have therefore created a useful document where you can record all of these details, as well as your funeral wishes, in one place so that if you were suddenly incapacitated or worse, it will help your loved ones trace the important information that will be needed.

This is not to be confused with a Will, it is simply a document to help you organise and record your personal information. As a Word document it can easily be amended to suit your needs and you can pick and choose the sections you wish to complete. You can print it out and use it in hard copy or keep it electronic, but either way, store it in a safe place and let your family or close friends know about it.

Your details will probably change over time so it should be updated regularly, perhaps annually, or when your circumstances change.

Please click here to download the ‘When I’m Gone’ List.

This is a useful document to store with your Will but if you have not yet made a Will, we strongly recommend you do so, and we can put you in touch with our recommended Will Writer.

If you have any questions regarding the above, please contact your usual JJFS contact or email us on justask@jjfsltd.com.

Introducing Baby Chloe

We are delighted to announce the arrival of Chloe Elizabeth Jeffrey at 9.23am on 13th February 2019, weighing in at 8lb 11oz. Chloe is Helen’s second daughter, and little sister to Eloise who is now 2 years old.

Helen is back to work part-time and husband Simon Jeffrey is resigned to continuing life in a female-dominated household!

Simon’s First Ever Duathlon

Simon’s first competitive race this year was his first ever Duathlon on Saturday 23rd March. He competed in the Super Sprint Distance, comprising a 5K run followed by a 23K cycle ride followed by a 3K run. Simon completed the course in 1 hour 41 minutes and finished an impressive 3rd in his category, the Vintage Veterans (don’t ask…).

The event took place in and around the Mumbles with great views along the route and afterwards Simon and his team mate and personal trainer Phil, celebrated with some well-deserved fish and chips by the sea.