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Low cost financial planning

The Financial Conduct Authority and HM Treasury have published a report called the Financial Advice Market Review (FAMR).

The report was commissioned because there is a problem getting good financial advice out to people. At the moment only the very rich can afford financial advice. The problem is that there are no longer any large commissions so advisors need to charge fees, which can run into thousands of pounds.

The report recommends technology is used to bridge the gap and provide advice.

Websites are being launched which use algorithms to suggest automated investment portfolios based on customers’ goals and attitude to risk. The value of money being managed this way is forecasted to grow 2,500% between now and by 2020.

Here are three:

Fiver a Day
Money on Toast
Wealth Horizon

This Websites may not be a replacement for holistic financial planning but you can use our life planning system for free to help create a plan for yourself.

If you want to review your plans get in touch.

The power of a checklist

Would you get on a plane if the pilot didn’t go through the pre-flight checklist? Would you be happy for a surgeon to operate on you without using the checklist recommended by the World Health Organisation?

I didn’t think so – most people on the receiving end of an important service would prefer the person delivering the service to use checklists.

Checklists are very powerful. A simple five step hygiene checklist was tested in an Intensive Care Unit in 2001. The results were amazing – after 12 months the 10 day infection rate was down from 11% to 0% and after 15 months it had prevented 43 infections, 8 deaths and saved £1.3m in post infection costs.

Checklist is something every small business can use to grow and get a competitive advantage but it’s not to implement easy.
Many people (especially experienced) don’t like checklists because they don’t think they need them and/or they don’t like feeling controlled.

Here are some strategies to help implement checklists in your business.

– Share your company’s non-financial purpose so your team buy into your vision. Link the use of the checklist to the outcome you want to create in the world

– Explain that it’s not about the checklist; it’s about the culture of discipline and teamwork

– Remind yourself and your team that the most intelligent well trained people in the world, like surgeons and pilots, use checklists

– Start with key systems and grow the number of checklists

– Get your team to build the checklist

– Celebrate the impact of checklists

– Explain the cost of not using systems and how this impacts everyone financially and non-financially

– Make sure systems are available at the right time in the right place

If you’d like to find out more we recommend reading The Checklist Manifesto by Atul Gawande.

March 2016 budget

Full details of the March 2016 budget are available on the governments Website .

Here’s our summary of the main points.

Dividend Tax

The new dividend tax is confirmed; you can read more about it here.

Personal Allowance

From 6th April 2016 the will increase by £500 further to £11,500 in April 2017.

Tax Higher Rate

From 6th April 2016 40% tax will kick in £2,000 later at £45,000.

Corporation Tax

The rate will reduce 17% by 2020.

Director’s Loan Accounts

From 6th April 2016 loans to directors not repaid within 9 months will be taxed at 32.5%.


A new allowance is being introduced for the 2016/17 tax year which means basic rate taxpayers won’t have any tax charged on the first £1,000 of savings interest. Higher rate taxpayers have £500.

Employment Allowance

This is increases to £3,000.

National Insurance Contributions

Class 2 National Insurance Contributions will be abolished from April 2018.


The rules on closing a company using a Members Voluntary Liquidation are changing. It will not be possible to pay tax at 10% on company assets.

But, the rate of Capital Gains Tax for basic rate taxpayers has been reduced from 18% to 10%. For higher rate taxpayers the Capital Gains Tax rate will reduce from 28% to 20%.


The Government is looking to introduce “pay-as-you-go” tax accounts with flexible payment rules,. This means you can pay tax as soon as the income is received. More details will be released during the year.

Self employed and happy

David Cameron commissioned Julie Dean OBE the founder of The Cambridge Satchel Company to carry out an independent review of what additional support could be provided to the growing number of self-employed people.

This could have been triggered by the concern that if the growth continues to be concentrated at the lower end of the income, then this could mean more people become eligible for the working element of tax credits, while the additional tax revenues that come with rising employment will be smaller.

The self-employed now account for 15% of the total UK workforce. At the start of 2016 there are an estimated 4.6 million people choosing to become self-employed.  According to research, 43% of self-employed people are now over 50 and 11% are under 30. The number of women choosing to become self-employed has grown. From 2009 women have accounted for more than half of the overall growth in the sector.

Recommendations following the review included:

  • Government should consider reviewing how well information on its official website signposts the self-employed to access the advice and support already available
  • More flexible mortgage solutions are needed for the self-employed, and trade organisations should play a key role in signposting these
  • The location and availability of shared work spaces should be better communicated, and consideration should be given to incorporating such spaces in local libraries and community centres


The reason for growth in the numbers of self-employed could be found in a study by think-tank Bright Blue. They found that self-employed people have much better levels of job satisfaction than employees.

Their report found that 80% of self-employed people were happy with their working life. This was even true for those who were classed as living in a ‘low income’ household, where the total earnings are less than 60% cent of the average household income.

Do you have significant control?

The new Small Business Enterprise and Employment Act will impact all companies and Limited Liability Partnerships (LLPs).

There are many changes being implemented in 2016 including:

  • Restrictions on use of corporate directors
  • Extension of duties of shadow directors
  • Replacement of the annual return with a process for confirmations
  • Option for a private company to elect to use the central register
  • Procedures for rectification of the register relating to the company’s registered office
  • Shortened periods for striking off companies
  • Changes to the disqualification of director’s regime and introduction of a new compensation mechanism in relation to insolvent companies
  • Easier and simpler to remove the details of falsely appointed directors from the register.


One change is the need to keep a record of People with Significant Control (PSC) so they can file a “confirmation statement” at Companies House.

A PSC includes people within a company or LLP who meet the following conditions:

  • Owns more than 25% of the company’s shares
  • Holds more than 25% of voting rights
  • Holds the right to appoint or remove company directors
  • Exercise influence or control of the company.


The information required for an individual is the name, month and year of birth, nationality and service address will be publicly available, together with details of the interest concerned.

If you would like with any of the new rules let me know.

Secrets of business success

Over the years I’ve been researching what makes some businesses really successful and what makes others average or worse fail.

On the face of it it’s fairly simple – sell something for more than it costs. The truth is that it is easy when you’re your own. The problems seem to start when you start working with other people, employees and sub-contractors.

What I think a business needs is an effective people management system. And, from looking into this I believe this starts with the way you recruit. You need to attract the right type of people to work with you.

But, before you can do this you need to think REALLY carefully about who you are. Questions like these can help:

• What do you want to achieve?
• What do you care about?
• How do you expect people to behave?
• What do you stand for?
• What won’t you stand for?

In business speak these are your vision, values and purpose.

Once you have these in place I suggest you focus on something called “engagement”. This is about people having a positive attitude to work and willingly giving their best.

To do this effectively I think you need a few things:

• A compelling business plan so everyone know where there business is going and why
• Clear position agreements so people know their role in the plan
• Support for people to help them perform to the best of their ability
• A culture where people can provide feedback to the business
• Accountability and transparency in all aspects of the business
• Frequent communication so everyone knows what is going on

If you would like to explore engagement to improve business performance let me know and I will set up a On Track session.

Year end tax planning

The UK national debt is growing at over £5,000 a second and tax revenues are the only way for the government to stop this growing and pay it off.

Starting April 2016 the government is committed to denying people basic tax reliefs. This will divert personal and business cashflow into the Treasury.

We have highlighted three issues which will have a significant impact:

  • Private landlords
  • Higher rate tax payers
  • Owners of small limited companies


Private landlords
Owners of furnished, residential property will pay more tax because the 10% wear and tear allowance is replaced by a more restrictive replacement cost relief.

Stamp duty is also going up for landlords and next year sees tax relief on loan interest being restricted to the basic rate. This last change could seriously impact the ability of landlords with high debt to property values to maintain their property holdings.

Landlords considering buying a new property should think about bringing the completion date forward to before 1 April 2016.

If you need to replace furniture in a rented property then wait until after 5 April 2016. In this way you can claim for the full wear and tear allowance 2015-16 and next tax year you can claim the new replacement furniture relief.

Higher rate taxpayers
The governments focus here is the reduction of tax relief that can be claimed for pension contributions.

The law is already in place to reduce the amount of pension relief for additional rate (45%) tax payers to just £10,000 a year. Now, there is speculation that 40% or 45% tax relief will be scrapped altogether and a lower threshold set.

Consider maximising your pension contributions before the end of the tax year.

Limited company owners
From 6 April 2016, the first £5,000 of dividend income is tax free, but any additional dividends, will be taxed at:

  • 7.5% if the dividends form part of your basic rate band
  • 32.5% if the dividend forms part of your higher rate band, and
  • 38.1% if the dividend forms part of your additional rate band.


If you use dividends to take out profits from your company, consider stripping out any available company reserves to 5 April 2016 as dividends.

If this can be done without pushing your overall income into the higher rates you will have no additional income tax to pay. Even if the distribution pushes you into the higher rates there may still be overall savings to be made.

Management development is vital for success

As part of our commitment to help our clients be successful, Sackmans keep up to date with the latest research on what makes businesses successful.

Unfortunately, we have not found a magic wand but we have established a few key principles that we believe guarantees success. The first principle is that business growth comes after personal growth of the business owner. One core skill is business management.

To highlight the importance of management training, an article published by the Chartered Management Institute (CMI) revealed that bad management accounts for 56% of business failures.

The problem is an attitude of under-investment by small businesses as they are half as likely to invest in management training compared to big businesses. However, investing in management training can pay off – the example given in the CMI article was a house building business in Northern Ireland.

David Law of WL Law saw an opportunity for growth by land acquisition. But the company didn’t have the resources to buy land and the banks were not interested in lending.

They repositioned the business brought in an equity partner which has brought the business back to profitability.

Here are the five steps to making your business a success

  • Focus
  • Communicate
  • Calibrate
  • Delegate
  • De-risk


Sackmans can support and help you with your development, especially with calibrating because that’s about measuring and analysing. The key is to test your business ideas by using data to find the best way forward.

Using financial and non-financial key performance indicators is a key element of Improving the Numbers. If you’d like to invest in the management of your business get in touch





Time for landlords to think again

Landlords and letting agents were surprised by an attack announced in the autumn statement.

Following the restrictions on mortgage interest for residential buy-to-let-property, from 1st April 2016 an additional 3% stamp duty will be payable on any buy-to-let or second home bought over £40,000. This means the duty on a £150,000 purchase will increase 10 fold from £500 to £5,000.

Not only will prospective landlords have to pay far more than conventional residential buyers, they also face much heavier taxes on their profits.

The restriction of tax relief on mortgage interest kicks in on 6th April 2017. From then on the maximum tax relief from 45% and 40% to just 20% could wipe out profits or create losses.

There could be a rush to get properties completed before the new stamp duty kicks in. But, investors need to think twice because losses will be more likely if interest rates increase.

One option landlords could consider is buying property in a limited company. There will be no restriction on mortgage interest relief and tax rates on profits will be 18% by 2020.

However, there is a problem for landlords with existing properties. If you transfer a property from your name to a company there is a sale and Stamp Duty and Capital Gains Tax will need to be taken into account.

If you have property as part of your pension planning we recommend you complete a personal financial planning review.

Sackmans can help with with our online financial planning tool.

Make or break?

Xero have released the “Make or Break” report on what makes the difference between entrepreneurs who succeed a fail.

It’s based on 2,000 business owners in the US and UK and the results provide insights and ideas on how you can create a more successful business.

Six out of ten entrepreneurs believe family time is crucial to being effective. This includes keeping evenings and weekends free. However, just 28% turn off their phone and laptop off out of normal business hours.

Five out of ten invest in technology and strategic initiatives. And, 50% of successful business spend money on marketing campaigns (social media, advertising, PR), compared to 20% of those whose business failed.

Interestingly, when it comes to financial software – 58% of businesses that survive use software whereas only 14% of failures do.

Business survival rates are boosted with Xero. 88% of Xero customers operating after five years, compared to an industry average of just 41%.

Another interesting insight was the use of professional advisers – 33% of successful entrepreneurs sought outside help compared to just 14% of owners who had to close.

This is why we recommend all businesses consider using their accountant to help them  increase the chance of success. To support this Sackmans offers “Improving the Numbers” as a service option. This is a business planning and budgeting service for business owners who want to maximise their results.

A start-ups relationship with their accountant is important for survival. The Xero research supports our approach – 42% of survivors describe that relationship with their accountant as “excellent,” compared to 27% of those whose company failed.