Organising your legacy

Understandably, it can be very upsetting to think about how your loved ones will react when you are no longer here. But by considering the financial complexities that may arise, you could put meaningful plans in place that reduce some of the burden. Dealing with a deceased’s affairs can be complex and potentially very expensive. The executor of your estate – usually a family member – will have to apply for special legal authority (probate). Amongst the range of responsibilities, they’ll have to find all your financial documentations, send death certificates to organisations who hold your money, pay off any debts you have, follow the instructions of any will in place, and work out whether your estate has an inheritance tax liability.

The last point is especially important. If the value of all your possessions is above your individual threshold – £325,000 if you’re single or divorced, or up to £650,000 if you’re married or widowed – everything above it will be subject to inheritance tax, charged at 40%. The gradual roll out-of a residence nil rate band – worth £125,000 for the 2018/19 tax year – can help you leave a property you have lived in to a direct descendent. However, not everyone can benefit from this additional allowance.

Although these threshold amounts seem high, it might surprise you how much your estate is actually worth. Your estate includes everything you own – property, cars, jewellery, savings, investments and even antiques.

A growing issue

The amount of annual revenue the government has raised through inheritance tax has more than doubled since the 2009/10 tax year – with a record high of £5.2 billion collected in 2017/18 *. The Office for Budget Responsibility forecasts further significant increases in revenue over the next few years. When you die, the executor of your estate will be tasked with providing accurate information on the value of your possessions, and they’ll need to get it right. HMRC will carefully examine the calculations and has shown it’s prepared to challenge valuations.**

Even with recent record inheritance tax intakes, HMRC has revealed there’s a £600 million shortfall between what it collected and what it believes it’s owed.  If your estate has an inheritance tax liability, in most cases your loved ones will have six months to find the money to pay it, or interest is charged on top. The estate usually can’t be released until inheritance tax is paid. So it could cause a lot of headaches and frustrations for your family, if they have to deal with an inheritance tax bill.

What are your options?

With inheritance tax bills typically running to thousands of pounds, it makes sense to consider it as part of your planning. With the right plans in place, you could reduce or even eliminate a liability. By speaking to a financial adviser, you can benefit from an expert helping you build the kind of legacy you want to leave behind, whilst minimising any burden on loved ones. This includes looking at whether inheritance tax is something you need to plan for.



Levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor. The Financial Conduct Authority does not regulate taxation & trust advice.



Apprenticeship scheme provides rewards

Work experience during his time at school helped Billy Toulson to decide on what career path to take. Out of the five different businesses Billy worked at, he most enjoyed his week working in an account department within a local business.  He didn’t want to commit to going to university so enrolled at Lincoln College.  During his time at College, Billy took his Level 2 and 3 AAT exams, this confirmed his choice of career and after approaching a couple of accountancy firms, he was offered a position at Nicholsons in June 2016 on the apprenticeship scheme run by Lincoln College under the watchful eye of Nigel Hullett. Billy continued with his studies and past his Level 4 AAT exam within the first year.

During his second year at the firm and as part of the apprenticeship requirements Billy had to study to gain his Level 4 Business Skills so that he could complete the apprenticeship scheme which came to an end in October 2017.

Billy has recently started studying for his ACCA and has just passed his first exam, he now has another nine exams to take and hopes to become a fully qualified accountant within the next three/four years. Once he is qualified, he would like to work in the agriculture department dealing with farm accounts.

During his time at Nicholsons Billy has been working in the agriculture team under the guidance of Senior Accountant Graham Pogson.  He also works closely with Richard Grayson, Head of the Farming team. Being a key member of the agriculture team has given him the opportunity to work on the accounts of some of the firm’s larger clients as well as being the key contact for several of the firm’s smaller clients, especially those that do their VAT returns monthly/quarterly. The number of clients he deals with is steadily growing giving Billy the chance to develop his role.  He also crosses over into the audit team as some of his work involves carry out audits.

Throughout his training Billy has worked hard to achieve his goals and as he continues to study his work within the agriculture team increases giving him more responsibility.

Billy is a member of the Farming Group as well as a member of the firm’s social committee and is active with ideas in helping to raise money for Charity and sort out events.

The value of Financial Advice

Only four in 10 UK adults trust regulated financial advisers, according to the Financial Conduct Authority’s (FCA) Financial,  Lives Survey, published in June 2018.* This is despite 42% of the near 13,000 people who took part in the study admitting they are dissatisfied with their financial circumstances.  Only one in 20 have received regulated financial advice in the last 12 months related to investments, saving into a pension or retirement planning. Another quarter state they might need financial advice.

Many of us face a whole range of long-term financial decisions; from planning for retirement, investing for the future, to choosing the right mortgage for our circumstances. Speaking to an expert adviser could help you to make more informed decisions. Yet 34% don’t know where to start to look for an adviser.

Are you confident to make your own decisions?

This lack of trust in financial advice comes despite the fact the FCA also found we have low levels of confidence in making our own major financial decisions. Just 27% of UK adults feel they know enough about pensions to choose ones suitable for their circumstances, without consulting a financial adviser. 29% know enough about investments to make their own choices. Even with mortgages, only 39% know enough to decide a suitable product without an adviser.

Only 16% of us believe we are highly knowledgeable about financial matters. Making a poor financial decision could have significant ramifications. It could leave you worse off in the longrun, potentially prevent you from achieving your goals, or cause you to downgrade your lifestyle or expectations. If you don’t feel you know enough about the options in front of you, there could be a greater risk of getting it wrong.

Speaking to a professional

When it comes to servicing your car, you rely on a mechanic. If you’re feeling unwell, you trust a doctor to provide a qualified opinion. And when it comes to your personal finances, it can also pay off to speak to a relevant professional. An adviser can take the pressure and workload from you. They will take the time to understand your objectives and circumstances, to research and recommend suitable options for you to consider. They’ll ask important questions you might not have considered. Their in-depth knowledge of the products could help you to make more informed decisions. Even if you’re financially savvy, an adviser can offer the extra knowledge and insight you may need.

There is a fee to pay, which can be off-putting some people. But with the right advice, you could ultimately make better financial decisions that – in the long-run – more than offset the charges involved. July 2017 research by the International Longevity Centre shows that people who take financial advice are £40,000 better off on average compared to those who don’t.**  Ultimately, a financial adviser can leave you feeling more confident about the future. And that you have the right plans in place towards achieving your long-term ambitions.



The value of your investment can go down as well as up and you may not get back the full amount invested. Investments do not include the same security of capital which is afforded with a deposit account.

The hefty cost of renting

It’s an age-old debate: is it better to purchase your own home, or to cut out the hassles of property ownership and just rent? Is having a mortgage a huge burden, or is renting just throwing your money down the drain?

According to June 2018 figures by the housebuilder  Strata, the financial difference – over a lifetime – is vast. If you rent for life, it will cost you £1.1 million more than purchasing your own home. The research compared the cost of owning a UK home to average monthly rental payments, over a 60-year period. An average first time buyer will spend around £430,000, whilst lifetime renters will reach a total of £1.6 million – 280% higher.


how will the 2017 general election affect business in lincoln

Mind the state pension gender gap

The UK state pension can be a valuable source of income during your retirement – especially for men.  April 2018 research by Which? found that – over the course of a typical 20-year retirement – men receive an average of £29,000 more state pension than women.

In August 2017, the average weekly amount women received was 81.9% of the amount received by men. This is a slight improvement on recent years, although still a considerable gap. Of the 12.9 million people currently receiving state pension, the amount that 8.4 million receive is based solely on the National Insurance (NI) contributions.

You currently need to have made 35 years’ worth of NI contributions to qualify for the full state pension, but many women – who may have taken a career break to have children, for example – fall short of the full criteria.

Interview questions about health conditions

I recently read what I thought was a staggering statistic which was that 25% of employees experience a mental health condition each year. This statistic comes from Mind, the mental health charity who make the point that one in four people in the UK will experience a mental health condition each year. This often results in time off work but can you do anything at the interview stage to determine whether a potential employee has a mental health condition or would this be unlawful?

From my own experiences, many people who experience mental health conditions are often somewhat reluctant to talk about them openly and even less likely to voluntarily offer this information at an interview.

I would very strongly suggest that you do not ask any potential employee at a job interview any health-related questions as this would not be legal.

The Equality Act 2010 states that an employer must not ask about a job applicant’s health (including whether they have a disability) before offering them any work. The Act does give one exception and that is where you have a duty to make “reasonable adjustments”. In relation to this duty, you are able to ask questions of the potential employee to determine whether or not you need to make any adjustments for them during the recruitment process.

Many employers will be genuinely concerned about the physical qualities needed to carry out certain jobs, even allowing for reasonable adjustments. The starting point is that an employer must not discriminate against any job applicant in deciding to whom a job should be offered. (Section 39 of the Equality Act.)

Pre-employment enquiries about disability and health are not permitted before making an offer of work or shortlisting for a position. (Section 60 of the Equality Act). Strictly speaking an employer does not contravene the rules merely by asking a prospective employee about their health but they lay themselves open to an accusation of discrimination if subsequently a job is not offered; and defending such an accusation at an employment tribunal will be much more difficult.

However, employers are protected and may ask relevant questions in certain specified situations:–

  • Where it is necessary to carry out an assessment of an individual before offering the job or to find out if the duty to make reasonable adjustments will be necessary for the purposes of an assessment. This relates to the selection process.

In order to determine if the prospective employee will be able to carry out a function that is intrinsic to the work concerned. A very important point is that this provision applies after any reasonable adjustment would be made. So, if an employer takes the view that certain physical characteristics are essential relevant questions are permissible.



Other matters addressed in the 2018 Budget

Extension of offshore time limits

Draft legislation has been issued to increase the assessment time limits for offshore income and gains to 12 years. Similarly the time limits for proceedings for the recovery of inheritance tax are increased to 12 years. Where an assessment involves a loss of tax brought about deliberately the assessment time limit is 20 years after the end of the year of assessment and this time limit will not change.

The legislation does not apply to corporation tax or where HMRC has received information from another tax authority under automatic exchange of information.

The potential extension of time limits will apply from the 2013/14 tax year where the loss of tax is brought about by careless behaviour and from the 2015/16 tax year in other cases. The amendments will have effect when Finance Bill 2018-19 receives Royal Assent.


The current assessment time limits are ordinarily four years (six years in the case of carelessness by the taxpayer). The justification for the extension of time limits is the longer time it can take HMRC to establish the facts about offshore transactions, particularly if they involve  complex offshore structures.

The legislation cannot be used to go back earlier than 2013/14. If there has been careless behaviour HMRC can make an assessment for up to 12 years from 2013/14 in respect of offshore matters but HMRC could not raise an assessment for 2012/13 or earlier (unless there is deliberate error by the taxpayer).

Penalties for late submission of tax returns

Taxpayers are required to submit tax returns by specified dates. When taxpayers submit their returns late they generally incur a penalty. Draft legislation has been issued which sets out a new points-based penalty regime for regular submission obligations. Returns have to be submitted more frequently in some circumstances. Depending on the frequency of the return submission obligation, a defined number of penalty points will accrue to a threshold. Once this threshold has been reached, a fixed penalty will be charged to the taxpayer.

After this each late submission will attract a fixed penalty, until the taxpayer meets all submission obligations by the relevant deadline for a set period of time. Once this happens, and a taxpayer has provided any outstanding submissions for the preceding 24 months, the points total will reset to zero. Points will generally have a lifetime of 24 months after which they expire, so if a taxpayer accrues points but does not reach the threshold, the points will expire after 24 months. Taxpayers will have a separate points total per submission obligation.

Penalties for late payment of tax

Draft legislation has been issued to harmonise the late payment penalty regimes for income tax, corporation tax and VAT. Late payment penalties are charged when customers do not pay, or make an agreement to pay, by the date they should, and do not have a reasonable excuse for the failure to do so.

The penalties will consist of two penalty charges, one charge based upon payments and agreements to pay in the first 30 days after the payment due date and another charge based upon how long the debt remains outstanding after the 30 days.

Interest harmonisation

Draft legislation has been issued to change the VAT interest rules so that they will be similar to those that currently exist for income tax and corporation tax.

This will mean:

  • late payment interest will be charged from the date the payment was due to the date the payment is received
  • HMRC will pay repayment interest when it has held taxpayer repayments for longer than it should.

The provisions are expected to take effect for VAT returns from 1 April 2020.

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