Thursday, 29 December 2016

6 Retirement Planning Questions To Ask Yourself!

It has been said “Only two things are certain in life. Death and Taxes”, but what about before we reach the former? As we move into our 50’s and look towards our 60’s, health and retirement become more important than ever before. Assuming we are in reasonable health the big question we should ask ourselves is “will I have a comfortable retirement?”

Too many of us retire without any planning and things often do not turn out as we would have wished, and as we get older many of us cannot rely on others for support, we will be on our own, so maybe we should be planning and thinking about retirement a little earlier?

We cannot advise on everything about retirement and certainly you wouldn’t want us to, but below are a few questions to consider that may help you focus on the issues BEFORE you retire and maybe help you to think about some of the practicalities of retirement.

1.       Are you sure you want to retire?
2.       Have you set a date?  Are you flexible on your retirement date?
3.       Have you considered life away from work?
4.       Where are you going to live? 
5.       Have you discussed retirement with your family?
6.       Can you afford to retire financially?
  1. Create an investment plan.
  2. Do a dry run.
  3. Know what your expenses will be in retirement.
·         Visualise your new lifestyle, any (new) sources of income and price out revised costs.  More leisure, more family time, more charitable work, “pocket money” income, non-executive income, investment management time
·         What can you expect
i)         Early years expenses to be near pre-retirement levels but these should drop off as the routine of retirement kicks in BUT, at some point, health care & medical costs may drive expenses back up and you should be prepared for this.
ii)       If you have an employer-sponsored retiree health care plan, consider the possibility that your employer might cancel or trim this benefit in the future.
iii)      On average, retirees spend anywhere from 11% to 16% of their after-tax income on expected health care BUT don't forget (to plan to pay for) unexpected health care expenses, too.
d.       For couples, plan for two eras in retirement;
i)         when both are living, and
ii)       when either one is the survivor.
iii)      Pension choices can range from 0% to 100% to the survivor. Your initial retirement choice has a massive effect on the second retirement era.
e.       Get a good feel for life expectancy
i)         Life expectancy is the #1 driver for calculating your savings requirements

There is a lot more thought needed to retiring than first meets the eye and if you need guidance on pre-retirement planning then talk to us, we can help you focus on achieving your goals and helping you set a financial plan that will work for you.

Wednesday, 28 December 2016

Getting The UK “Match Fit” for BREXIT!

The Chancellor Philip Hammond announced that his first Autumn Statement will also be his last.  In future the main Budget announcements will be made in the autumn rather than the spring.

We were not expecting that many tax announcements, and many that were made we already knew about. He could not afford too many give-aways as he expects the economy to have a bumpy ride during the BREXIT transition.

There will still be a Budget next March but thereafter the annual Budget will be in the Autumn to allow longer consideration of the announcements and draft legislation before enactment the following summer.

Personal allowance to increase to £11,500 in 2017/18, rising to £12,500 by 2020/21
Higher rate tax threshold to increase to £45,000 in 2017/18, rising to £50,000 by 2020/21
National Insurance threshold to be raised to £157 a week for employees and employers
Corporation tax rate to reduce to 17% in 2020
Business tax “roadmap” to continue, in particular new rules for company losses
Insurance premium tax to increase from10% to 12% from 1 June 2017
More anti-avoidance measures, in particular a new VAT flat rate percentage for “limited cost traders”


The Chancellor made a number of announcements that were intended to help those families that a just about managing, given the acronym - JAM. Raising the personal allowance to £11,500 and higher rate threshold to £45,000 will mean they pay less income tax and keep more of what they earn.

This group will also benefit from the increase in the National Living Wage to £7.50 an hour and the changes to Universal Credit.

The Universal Credit taper rate will be cut from 65% to 63% from April  2017 which will mean that fewer benefits will be clawed back as claimants’ income increases. The planned reductions in the overall benefits caps will however go ahead.


Many of the corporate tax changes had already been announced and are set out in the business tax "roadmap" which details the government tax strategy for the life of this Parliament and beyond.

The currently 20% corporation tax rate is planned to fall to 19% from 1 April 2017 and then to 17% on 1 April 2020. The government is committed to keeping the UK corporate tax rate the lowest in the G20 and there is talk of a rate as low as 15% in the future.

The Chancellor raised concerns that there continues to be a rise in tax-driven incorporations as there are still tax savings compared to unincorporated businesses operating at a similar level of profit. That may suggest that the government is still considering the introduction of a new “look through entity” suggested by the Office of Tax Simplification so that the tax treatment will be the same, thereby creating a level playing field.

The new flexible corporate tax loss rules announced in the spring budget have been subject to consultation and will go ahead from 1 April 2017.


From 23 November 2016 to 31 March/ 5 April 2019, businesses will be entitled to a 100% First Year Allowance (FYA) for the cost of installing electric charge-point equipment for electric vehicles. This measure is intended to complement the 100% FYA available for low CO2 emission vehicles and to encourage their uptake.


There has been much speculation that the government would further limit tax relief for pension contributions by removing higher rate tax relief. That measure would save the country £34 billion in tax but the only change announced concerns a new lower limit on amounts that can be saved in a pension when individuals have started drawing down from their private pension.

Currently the net effect of pension tax relief for a higher rate taxpayer is that saving £10,000 in a pension costs £6,000. The taxpayer pays £8,000 into their pension and the government tops this up by £2,000 with a further £2,000 deducted from the individual’s income tax liability, reducing the net cost to £6,000. For additional rate taxpayers the net cost would be just £5,500.

Remember that there is currently an annual pension input limit of £40,000 which caps the combined contributions by an individual and his or her employer. For those with high income this is tapered and can be as low as £10,000.

One new pension restriction that was announced was a measure to limit pension “recycling”. Those individuals who have started drawing down their personal pension will in future only be able to reinvest up to £4,000 in their pension.  Please contact us if you want to discuss pension planning further.


Many employers now provide flexible remuneration packages that allow employees to give up some of their contractual salary in exchange for benefits in kind. This can have the effect of saving tax and national Insurance contributions for both the employee and employer, particularly where the benefit provided is exempt from tax.

These tax and NIC advantages are to be withdrawn from 6 April 2017. Arrangements involving pensions, childcare, Cycle to Work and ultra-low emission cars will be excluded; existing arrangements will be protected for a transitional period until April 2018, and existing arrangements for cars, accommodation and school fees will be protected until April 2021.

The Chancellor has announced a wider review of the taxation of benefits, with the intention of making this area ‘fairer and more coherent’. This appears likely to have a significant effect on any employee who is in receipt of benefits from their employer.



An employee who repays to their employer, or ‘makes good’, the cost of a benefit, avoids a tax charge. As previously announced, from April 2017 such making good will have to take place by 6 July in the following tax year if it is to be effective.


As announced in March, from April 2018 termination payments over £30,000, which are subject to Income Tax, will also be subject to employer’s NIC. Tax will only be applied to the equivalent of an employee’s basic pay if their notice is not worked. The first £30,000 of a genuine termination payment will remain exempt from tax and NIC.


The VAT flat rate scheme is a simple scheme that enables small businesses to calculate and pay their VAT based on a flat rate percentage of total takings rather than deducting input tax on purchases and expenses and deducting that from total output tax on sales in the period. HMRC believe that the scheme is being abused by certain traders who have minimal costs who charge 20% VAT to their customers and then pay a lower percentage over to HMRC.

The flat rate percentage varies depending on the nature of the trade, ranging from 4% for food retailers up to 14.5% for IT consultants and labour only construction workers. A new 16.5% rate will apply from 1 April 2017 for businesses spending less than 2% of their turnover or less than £1,000 per year on goods, excluding capital goods, food, vehicles and fuel. Any business affected will almost certainly be better off returning to the normal VAT system with effect from that date. If you are currently using the flat rate scheme please contact us to check whether this change is likely to affect your business.

Please call us and we’d be delighted to discuss the above further.
APJ Accountancy | ☎ 020 89310165 | ☏ 07900537459 | ✉

Wednesday, 21 December 2016

The Theory Of Marginal Gains

Sir Dave Brailsford, Performance Director of Team Sky, and previously British Olympic Cycling, has been instrumental in leading a period of huge success in sport. He has transformed the sport during his tenure in terms of thinking, performance, and results, winning eight gold medals at the last three Olympics, and masterminding Tour de France wins in 2012, 2013 and 2015. So what can we learn from this and how could the theory of marginal gains be applied in business?

Brailsford’s philosophy of 'marginal gains' came from the idea that if you break down everything that goes into riding a bike, and then improved each by 1%, you will get a significant increase when you put them all together.

As well as looking at traditional components of success such as physical fitness and tactics, Brailsford's approach focused on a more holistic strategy, embracing technological developments and athlete psychology. He is noted for his emphasis on constant monitoring of key statistics, developing training regimes which target any observed weaknesses, however minor.

So how can this theory be applied to your business?
Start by identifying your goals. Consider where you want to be and how you are going to get there. Analyse relevant data and see if there is statistical evidence to support the attainment of your goals over time.

Next, spend some time thinking about the gap between current performance and your goals. Create a tangible measure for assessing how far away each goal is, and how well the business will need to progress in order to achieve those goals.

Now consider what is needed to close that gap. Break the gap down into its component parts and identify the differences between where the firm is now, and where it needs to be in order to achieve its goals. Look at successful firms in your industry sector and create a comparison document. What do they do well that you could implement in your business?

Execute your plan. Commit to carrying out the plan meticulously and reassure employees of the importance their roles and responsibilities play in the process. Use KPIs and regular reports to monitor progress and continually refine and tweak your plan as you move towards achieving your goals. If you stick to your plan you should get there in the end.

Tuesday, 13 December 2016

Millennials vs Generation Z: What Businesses Need to Know!

Generation Z (Gen Z) is a demographic group born after 1995. The oldest members of Gen Z are turning 21 this year, which means that some have already graduated from University. Gen Z is a much smaller demographic cohort than Gen Y (also known as millennials).

It would be easy to assume that Gen Z are just an exaggerated version of the generation that came before them, spending even more of their lives on social media, doing even more of their shopping online, and demonstrating an ever-greater collaborative nature. But Gen Z grew up in a starkly different historical context than millennials, which has given them a distinct outlook on the world.

Millennials invented Facebook, shopped from their smartphones, and moved from satellite TV to Netflix. Gen Z, meanwhile, doesn't remember life without these basics of 21st century life. Millennials came of age during a time of economic expansion and were shocked to find a diminished, difficult job market after university; whereas Gen Z sees a tough job market as the norm. They are a generation that has been shaped by the recession and are prepared to fight hard to create a stable future for themselves.

Market research has shown that compared to any generation before them, Gen Z is less trusting of brands. They have grown up in an era where information is always available via the internet, social media, etc. They can research products and brands and see other users' reviews of them online.
Gen Z are financially cautious.

They grew up hearing horror stories about how many millennials ended up living at home after university, sitting on a mountain of debt, so they tend to save more and spend less than millennials. In a recent study, 89% said they remain optimistic about their futures, which is higher than any other generation on record.

So what should you be aware of when you are thinking about hiring Gen Z employees? Gen Z wants to do work that makes a difference and has a positive impact on the world. But they’re also more concerned about job security than the generation just before them.

They were at a very impressionable age during the financial crisis. This implies Gen Z would rather develop a career in one place than hop from employer to employer.

Saturday, 10 December 2016

Speech Recognition Technology

Speech recognition applications have been around for a long time but until recently haven't seen a huge uptake by the business community. With high accuracy and professional apps available for mobile devices, is voice recognition a technology that your business could make effective use of today?

Many business users may have already experienced what voice recognition can offer. Apple's Siri is already quite popular but Windows 10 users have Cortana, which moves the digital assistant to a whole new level of functionality. More importantly for today's businesses is the fact that Cortana is available on phones, tablets and desktop PCs offering a level of integration and familiarity across several devices being used across most firms.

Users can set up their systems to easily trigger voice recognition. They can use these systems to check calendars, book travel tickets or dictate rather than type. Being able to dictate at normal speaking speed and have your words accurately transcribed is a huge productivity bonus that most businesses can benefit from.

If your business requires typing the same blocks of text into numerous documents, speech recognition applications can have special commands defined that will enter these blocks of text for you. This is useful for standard clauses in contracts or email signatures.

Businesses in highly specialised sectors such as professional services or finance are in an ideal position to take advantage of what voice recognition can offer. All of the systems are learning machines - the more you use them, the more accurate they become. If your business often uses specialised terminology, voice recognition systems can learn these terms over time to ensure high levels of accuracy.

Ultimately, it's the time-saving factor that attracts businesses to voice recognition. Being able to spend less time typing and more time working on other things, is why an increasing number of businesses are adopting voice recognition into their IT systems.

Wednesday, 7 December 2016

What Can We Learn From Disruptive Innovation?

Disruptive innovation is a term, created by Clayton Christensen, to describe a new invention or product that alters its market. It typically refers to innovation that results in changes on a large scale. For example, the digital camera which replaced Kodak's traditional film cameras or digital streaming services which have effectively replaced CDs as the primary way to consume and listen to music.

With each innovation, there is risk taken on by the firm that introduces it and there is disruption faced by the users. The businesses that promote the new product or service innovation face uncertainty in not knowing if it will succeed since they are challenging an established market. They are introducing an alternative, which, if it catches on, will mean that users have to adjust and accept a new way of doing things.
So, what can we learn from disruptive innovators which we can then apply to our own businesses? For a start, not all innovation has to be on a large-scale; small changes can make all the difference. For example, process innovation could have a positive impact on the profitability and efficiency of your business. Aim to create a benefit to your business; e.g. to reduce the time it takes to produce a product or service or a new, more efficient way of delivering your end product or service to your customers.
As with any innovative development, your employees will probably see a disruption to their day job. Perhaps they have to learn a new way of doing things or even learn how to use a completely new system. The business is taking a risk in changing what has always worked and the employees may be unsure as to how the changes will impact them. They will need time to become accustomed to new ways of working and this could create a degree of disruption across the firm. 
That said, with appropriate training and change management processes, you should be able to ensure that your new innovations are adopted quickly and with minimum fuss. And as with any change in business, success is all about planning.