The self-employed pension crisis

business owners pension lincoln

The former Government Pensions Minister, Steve Webb, didn’t mince his words. In a report he published last April, he stated that selfemployed workers are heading for old-age poverty in their droves. A month later, the Federation of Small Businesses published figures showing that only 31% of self-employed people are paying into a pension, and that 15% don’t have any retirement savings of any kind.

If you are one of the 4.7 million UK people who run your own business, the focus that comes with it could understandably mean you haven’t started to adequately consider your own financial future. It might be tempting also to prioritise ploughing all of your savings into growing your business. But when it comes to deciding when you want to retire, you could be storing up some big problems.

Without an employer helping you to set up and contribute into a pension, you may be lacking provisions to fund retirement.

The value of pensions

There are significant tax advantages available from saving up via a pension as opposed to, for example, a regular deposit-savings account. If you’re still years away from retiring, it might be time to address any lack of pension provisions by arranging one now.

Although most self-employed people have the disadvantage of no employer making additional contributions into their pension, you can still benefit from income tax relief.

If, for example, you are a basic rate taxpayer who is charged 20% tax on your earnings, your pension provider will claim this back. What this means is that, for every £80 you pay into your pension, you end up with £100 in your pension pot. Higher rate and additional rate taxpayers could benefit even further.

These pensions do not include the same security of capital which is afforded with a bank or building society savings account.

The role of state pension

The basic state pension is a weekly income that everyone starts receiving when they reach a certain age – although the amount you are entitled to will depend on your National Insurance contributions.

It currently pays a maximum of £155.65 per week, which works out at less than £9,000 a year. The state pension will certainly help support you in retirement, but on its own this level of income might not be enough.

The future of your business

Many self-employed people will consider the business they own to be their retirement nest egg – but this still needs careful planning.

You may, for example, be looking to sell your business or pass it down the family. Others retire but remain the owner – or at least one of the owners – of the business. The potential advantages of doing so include receiving regular company dividend payments, which you can use as an income.

What you do with your business is a huge decision – both for you and your family. The sooner you start to consider its long-term future, the more time you will have to implement suitable plans towards a smooth transition.

Ask for help

Being self-employed is no picnic. Many people miss out on regular employee benefits such as sick or holiday pay; others find themselves working extremely long hours or getting by on an inconsistent level of income.

Dealing with these pressures for many years, a happy and contented retirement should be your reward for your blood, sweat and tears. By speaking to a financial adviser about your future, you can start to assess if you are set to have the provisions you need for a happy retirement – and if there is more you could be doing.


Dealing with Employee Rest Break Issue in HR Practice

issues with rest break in HR practice

Rest Breaks

A question that I am regularly asked concerns the law as regards rest breaks. The law is quite straightforward on this issue. If an employee works one minute more than 6 hours in a working day then they have a statutory right to a 20 minute, uninterrupted break. If however they work only 6 hours or less then they have no statutory entitlement to a break (although there may be a right contained within the contract of employment).

However this is only part of it, there are a few other factors to be considered;

  • If a working day exceeds twelve hours, only one rest break needs to be provided – there is no statutory entitlement to two 20 minute breaks.
  • Where the employee is entitled to this 20 minute break this should be taken at some point during the working day and not at the beginning or end of it. It cannot be used so that the employee can start later or finish earlier.
  • Please remember that you cannot force an employee to take any rest breaks indicated by the Working Time Regulations (WTR). If an employee chooses to work right through the 20 minute rest break, that is entirely down to the employee.

At a recent Tribunal case, the Judge was asked to consider rest break entitlements under the WTR, especially with reference to whether the employee must request the break or whether the employer is obliged to ensure that they are provided. This was the question before the Employment Appeal Tribunal (EAT) in Grange v Abellio London Limited 2016. Mr Grange (G) was employed by Abellio London Ltd (A) as a relief roadside controller to monitor and regulate A’s bus services.

G initially worked 8.5 hours per day, the intention being that he would take a half hour unpaid rest break during his working day, although he often found this difficult due to the nature of his work. On 16 July 2012 A e-mailed G stating that he was to now work straight through for eight hours, i.e. without any break, and leave 30 minutes earlier than he would have done under the previous arrangement. This is clearly in breach of the WTR.

G worked this way but in July 2014 raised a grievance claiming that A had failed to provide him with any statutory rest breaks. When this grievance was rejected, he brought a claim in the tribunal claiming that he had been denied his right to rest breaks under the WTR. The tribunal found that G had not been denied this right as he had never made an actual request to A for any rest breaks. G appealed to the Employment Appeal Tribunal (EAT).

The EAT held that an employer has a duty to provide a worker with a statutory rest break and confirmed that the rest break does not need to be requested. It went on to say that the entitlement under the WTR will be deemed to be “refused” if the employer puts in place any working arrangement that fails to allow a 20 minute rest break to be taken. However, please keep in mind that the Employee does not have to take the rest break if they do not wish to.

To know more about HR related issue, contact Andy Tomlinson or visit his LinkedIn page below.


Business Professionals Cycled from London to Lincoln

A group of 5 cycling enthusiasts cycled from London to Lincoln on a four-day journey just in time for the launch of the Knight’s Trail. The ride by the Knights on Bikes was to commemorate the 800th anniversary of the Battle of Lincoln.

It was also a ride inspired by Pedal Pride, one of the 36 Lincoln Knights showcased around the city on from 20th May – 3rd September.

Pedal Pride is a cycling-themed knight painted by Erin Fleming in a tribute  to her ex-professional cyclist father Brian Fleming. Pedal Pride is the chosen knight sponsored by Nicholsons Chartered Accountants.

The five men comprised of David Jockel, David Burgess, Simon Hall, Richard Hallsworth and Paul Harrison arrived at King’s Cross earlier to support Visit Lincoln and the Knight’s Trail in promoting tourism in Lincoln.

Simon Hall and Richard Hallsworth are two staff from Nicholsons Chartered Accountants who joined the group to mark this special occasion.

“This will be a great way for us to commemorate the Battle of Lincoln through our love for cycling and support to local artists who have painted the Knights” said Richard Hallsworth, Director of Nicholsons Chartered Accountant.

“Our active lifestyle and love for cycling goes in hand with Erin’s artwork which is why we decided to choose Erin as our artist” added Richard Hallsworth.


Firm Holds Bake Off Competition for Charity

Staff from Nicholsons held its Great Nicholsons Bake Off in conjunction of World Baking Day to raise funds for The Little Princess Trust following the success of the Cake Break event for MS Society in March.

The in-house competition saw a great number of staff submitting their bakes for a chance win the Great Baker title. The cakes were judged based on their shape, surface, texture and flavour by Aimee, a baker when she is not with her calculator for the day.

Becky Wells won the competition with her carrot cake topped with candies. Emma Murray, a Director at the firm said “It is a great way for us to engage with our staff and raise money for a selected charity at the same time”.

The day ended with a cake sale from the submission received. All funds raised goes to the Little Princess Trust.


Nicholsons Showcased Footie Skills at Sincil Bank for Charity

 

The team played at the HSBC Charity Football Tournament at Sincil Bank, the grounds of the newly crowned National League champion Lincoln City Football Club during the weekends.

Runners-up last year, the team has been looking forward to go one step better and Sincil Bank has been a good inspiration for Team Nicholsons. However, losing the opening and final group meant Nicholsons will not be qualifying for the semis this year.

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Nonetheless, the team is happy to have played at Sincil Bank in the name of charity. “We will be looking forward to the tournament next year. We are a bit disappointed but the best team wins and good to see businesses taking time off to play for charity” said Richard Hallsworth, Director of the firm.

 


Is the lifetime ISA for you?

The government is rolling out a new type of ISA from this April, aimed at supporting people buying a house or saving for retirement – but is it a good option?

Buying a house and building your pension are arguably the two biggest financial challenges of the modern era. With house prices having shot up over the last two decades, getting on the property ladder is a real challenge for first time buyers, while further on in life, achieving a comfortable retirement is becoming even more difficult.

Before Brexit and the great political shake-up within the Government, last April the now ex-Chancellor George Osborne unveiled his latest idea to address these concerns. The Lifetime ISA was born, and from this April people will be able to start using it to save for the future.

What is the Lifetime ISA?

If you’re aged between 18 and 39, the Lifetime ISA will allow you to save up to £4,000 a year tax-free and receive a government bonus worth 25% of your contribution – up to £1,000 a year – until you reach 50. Lifetime ISA savings can be used to buy a first home, or accessed from the age of 60 to help fund your retirement. In the unfortunate event that a terminal illness strikes, you can also use the savings to support you.

Let’s say you’re 29 and save up £4,000 a year in a Lifetime ISA for the next 20 years; when you reach 49, you’ll have saved £80,000 yourself – with the government contributing a further £20,000 on top. Any growth your £100,000 pot of money achieves will be completely tax-free, and this approach could go a long way to funding your desired retirement lifestyle.

What’s the catch?

There are a few, and it’s very important to be aware of what they are before committing down this route.

Firstly, if you’re using a Lifetime ISA to save for retirement instead of a workplace pension, you’ll miss out on employer pension contributions. If you are paying a sizeable part of your salary into a pension and your employer is matching it, this could work out better than the government’s 25% bonus paid in the Lifetime ISA.

And then there are the exit penalties. If you need to use your Lifetime ISA before you reach the age of 60 other than to buy a first home or to fund retirement, you’ll lose 25% of your savings. And 25% isn’t just the government bonus you’ve received, it can be applied to any growth your savings have achieved.

Finally, on using the Lifetime ISA to buy a first home, you can only use it for a property worth up to £450,000. That might sound like a lot, but May 2016 research by Emoov suggests the average UK home could reach £457,433 by 2030. And within areas like London and the South East, this average could prove to be significantly higher.

What should you do?

There is no doubt that the tax incentives offered by Lifetime ISAs make them an attractive option. This approach to saving for the future could be right for many people, but on its own it might not offer the full solution.

Certainly – when it comes to retirement – it might not be time to abandon saving into a pension all together. As with all long-term financial planning, it can really make a difference to sit down with a financial adviser and discuss your options. They can help you to devise a strategy that’s right for your situation and ambitions, including making the most of the tax planning opportunities that are available to you.


The Pedal Pride Trip so far…

Just six more days to the launch of Lincoln Knight’s Trail, our knight known as the Pedal Pride will be unveiled to public at Michaelgate close to the Steep Hill today.

Pedal Pride will be Knight 17 of the Lincoln Knight’s Trail. The cycling-themed knight has since made a few public appearances, touring the Nicholsons’ office, and he of course got to spend some time with the Gelder Knight at the office!

Pedal Pride has also been displayed at the Craftea Café in a reception held earlier in March by the artist herself, Erin Fleming. The event gave the Directors a chance to contribute to the painting of Pedal Pride (Not a lot of course!).

He says “Hi” to everyone and is already looking forward to the Lincoln Grand Prix which will be held this weekend.

Pedal Pride will then be on guard for Lincoln and welcome visitors to the historic Bailgate as the city celebrates the 800th Anniversary of The Battle of Lincoln on the 20th May. Pedal Pride will be displayed until 3rd September.

Visit Lincoln Knight’s Trail for more information.

 


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