Solicitors' Property, Taxes and SRA Update

PROPERTY, TAXES AND SRA
UPDATE SOLICITORS
SEMINAR
Introduction
NICK BARNES
E: NICK.BARNES@PKF-FRANCISCLARK.CO.UK
T: 01872 276477

 SRA Accounts Rules – Rosie Finch
 VAT update – Julie Towers
 CGT and SDLT – Steve York
 Financial planning – Andrew Newcombe
 Q&A
AGENDA

SRA ACCOUNTS
RULES UPDATE
ROSIE FINCH
Legal sector manager
Rosie.finch@pkf-francisclark.co.uk

OUR SPECIALIST TEAM
PROVIDES A WIDE RANGE OF
SERVICES TO THE LEGAL
SECTOR. WE ADVISE OVER 100
LAW FIRMS ACROSS THE UK
RANGING FROM TOP 100
FIRMS TO SOLE
PRACTITIONERS.
OUR CORE AREAS OF
EXPERTISE INCLUDE L EGAL
SECTOR ACCOUNTS, AUDIT,
TAX, BENCHMARKING, PROFIT
IMPROVEMENT, FORECASTS,
INCORPORATIONS, MERGERS,
RESTRUCTURING,
REGULATORY ISSUES, AND
SRA ACCOUNTS RULES
COMPLIANCE.

OVERVIEW
The importance of the SRA Accounts Rules:
- Safeguarding client funds and maintaining the
public interest in the legal sector.
- All employees of a law firm are required to abide
the SRA Accounts Rules.
- Poor compliance or fundamental breaches of
the rules can result in the Principals of the firm,
or their COLPs and COFAs being subject to
disciplinary action and financial penalties.
- Significant failures can lead to SRA intervention.
- Internal disciplinary actions.
- Loss of client funds.

OVERVIEW
Qualified Accountant’s Report Statistics
- 2008 approx. 9,500 firms of which 50% had a qualified report.
- 2015 approx. 10,500 firms of which 30% had a qualified report.
- 2018/19 approx. 11,700 firms of which 10% had a qualified report.
This means that the SRA will now scrutinise every
qualified report submitted.

THE HEADLINES
 New rules came into effect on 25 November 2019
 There are only 13 new rules in total
(vs 52 in the old handbook!)
 Principles based, rather than prescriptive
 No specific timeframes included
 Less in the way of detailed definitions
 Guidance notes have been pulled out of the rules
 Scope for procedural differences between firms

THE BASIC CONCEPT
Where has the
money come
from?
Can the firm
receive it?
Is it client
money or
not?
Where should
the firm put
it?
What should
the firm do
with it and
when?
What should
the firm do
with any
money left
over?

SET UP NEW CLIENT MATTER
Rule 8 concerns client accounting systems and
controls.
Rule 8.1 requires a firm to “keep and maintain
accurate, contemporaneous, and chronological
records”, which involves recording all transactions
relating to a particular client on a client ledger
identified by the client’s name and an appropriate
description of the matter to which they relate.
Implications
 In effect no change, but see SRA guidance called “Helping you
keep accurate client accounting records” for more detailed
information to aid compliance with Rule 8.1 plus best practice
advice.

Matter ref: T0423/2
Client name: Mrs R Tregolls
Matter type: Conveyancing
Description: Purchase of 1 Alverton Road, Manortown
Fee earner: Toby Truro
DR CR Balance DR CR Balance
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
ALVERTON SOLICITORS LLP
Date Narrative
Office Client

RECEIVE £300 ON ACCOUNT FROM THE CLIENT
Rule 2.1 [Definition of client money] :
“Client money” is money held or received by you:
a) relating to regulated services delivered by you to
a client;
b) on behalf of a third party in relation to regulated
services delivered by you (such as money held as
agent, stakeholder or held to the sender’s order);
c) as a trustee or as the holder of a specified office or
appointment, such as donee of a power of attorney,
Court of Protection deputy or trustee of an
occupational pension scheme;
d) in respect of your fees and any
unpaid disbursements if held or received prior to
delivery of a bill for the same.
Implications
 The term “office money” isn’t used or
defined, so all money is either client
money or not client money
 No distinction between professional and
non-professional disbursements so no
longer any different treatment
 No mention of agreed fees, so funds
received for agreed fees are client money
unless a bill has been raised
 Can’t take money from clients to cover
disbursements unless the disbursements
have been raised on a bill or the client has
been sent written notification

RECEIVE £300 ON ACCOUNT FROM THE CLIENT
Rule 2.3 says that client money must be paid
promptly into a client account, except for under
the following circumstances:
a) to do so would conflict with your
obligations as deputy or attorney;
b) the money is from the LAA for your costs;
or
c) you agree an alternative arrangement, in
writing, with the client
Implications
 The term “promptly” isn’t defined, so
potentially scope to not bank
immediately – important to check
the firm’s policy

Matter ref: T0423/2
01/12/2019 From client on account of costs - 300.00 300.00
- 300.00
- 300.00
- 300.00
- 300.00
- 300.00
- 300.00
- 300.00
- 300.00
- 300.00
- 300.00
- 300.00
- 300.00
- 300.00
Date Narrative
Office Client

Matter ref: T0423/2
05/12/2019 Search fees 285.00 285.00 300.00
285.00 300.00
285.00 300.00
285.00 300.00
285.00 300.00
285.00 300.00
285.00 300.00
285.00 300.00
285.00 300.00
285.00 300.00
285.00 300.00
285.00 300.00
285.00 300.00
Office Client
NarrativeDate

TRANSFER £285 TO THE BUSINESS ACCOUNT
TO COVER SEARCH FEES
Rule 4.3 covers the situation where you are holding
client money, and some (or all) of that money will be
used to pay the firm’s costs.
It says that you must send a bill (or other written
notification) of the costs incurred, to the client /
paying party before you transfer any money from the
client account.
It also says that the transfer has to be specifically for
the bill, and sufficient funds must be held on behalf of
the client to cover the transfer.
Implications
 Costs = fees + disbursements, so if
want to transfer money from a client
account, must first raise a bill or notify
in writing, even if for disbursements
 Can’t transfer more than what is held
in the client account for that client
 Doesn’t specify 14 day transfer time
limit, so firms will set their own
 The reference to “costs incurred”
replaces “properly required”, but still
implies the work has been done

Matter ref: T0423/2
05/12/2019 Search fees 285.00 285.00 300.00
07/12/2019 Client to office transfer 285.00 - 285.00 15.00
- 15.00
- 15.00
- 15.00
- 15.00
- 15.00
- 15.00
- 15.00
- 15.00
- 15.00
- 15.00
- 15.00
Date Narrative
Office Client

Matter ref: T0423/2
05/12/2019 Search fees 285.00 285.00 300.00
27/01/2020 Balance from client - 22,425.00 22,440.00
- 22,440.00
- 22,440.00
- 22,440.00
- 22,440.00
- 22,440.00
- 22,440.00
- 22,440.00
- 22,440.00
- 22,440.00
- 22,440.00
Date Narrative
Office Client

£180,000 MORTGAGE ADVANCE RECEIVED
In the 2011 handbook, rule 29.10 was a
concessionary rule which said that, when acting for
both lender and borrower on a mortgage advance,
separate client ledger accounts for both clients need
not be opened, provided that the funds belonging to
each client are clearly identifiable; and the lender is
an institutional lender which provides mortgages on
standard terms in the normal course of its activities.
So, essentially, when a mortgage advance was
received from a bank or building society, this could be
recorded on the purchaser’s ledger instead of a client
matter being opened in the name of the bank or
building society.
This technically no longer exists, but….
Implications
……. it is our understanding that the
SRA doesn’t have a problem with firms
continuing this concessionary treatment.
However, it’ll now be even more
important that the narrative on the ledger
is sufficiently clear to identify the fact that
it is a mortgage advance specifically, and
who the money actually belongs to i.e.
which bank or building society.

Matter ref: T0423/2
05/12/2019 Search fees 285.00 285.00 300.00
29/01/2020 Mortgage advance from Barclays - 180,000.00 202,440.00
- 202,440.00
- 202,440.00
- 202,440.00
- 202,440.00
- 202,440.00
- 202,440.00
- 202,440.00
- 202,440.00
- 202,440.00
Date Narrative
Office Client

£200,000 COMPLETION FUNDS SENT TO OTHER
SIDE’S SOLICITORS
Rule 5 says that you only withdraw client money from
a client account:
a) For the purposes for which it’s being held
b) Following receipt of instructions from the client or
third party
c) On the SRA’s prior written authorisation or in
prescribed circumstances
The withdrawals have to be appropriately authorised
and supervised, and can only be made if sufficient
funds are held on behalf of that specific client or third
party to make the payment.
Implications
 The individual scenarios of when a
withdrawal can be made are no longer
listed, but no change to underlying
requirement.
 “Appropriately authorised” is to be
read in context of the rules, the firm’s
controls, the current environment, etc.
 What does supervise mean?

Matter ref: T0423/2
05/12/2019 Search fees 285.00 285.00 300.00
31/01/2020 Completion funds to Manor Solicitors - 200,000.00 2,440.00
- 2,440.00
- 2,440.00
- 2,440.00
- 2,440.00
- 2,440.00
- 2,440.00
- 2,440.00
- 2,440.00
Date Narrative
Office Client

Matter ref: T0423/2
05/12/2019 Search fees 285.00 285.00 300.00
31/01/2020 Stamp duty - 1,500.00 940.00
- 940.00
- 940.00
- 940.00
- 940.00
- 940.00
- 940.00
- 940.00
Date Narrative
Office Client

Matter ref: T0423/2
05/12/2019 Search fees 285.00 285.00 300.00
31/01/2020 Stamp duty - 1,500.00 940.00
31/01/2020 Bill 750.00 750.00 940.00
750.00 940.00
750.00 940.00
750.00 940.00
750.00 940.00
750.00 940.00
750.00 940.00
Date Narrative
Office Client

Matter ref: T0423/2
05/12/2019 Search fees 285.00 285.00 300.00
31/01/2020 Stamp duty - 1,500.00 940.00
31/01/2020 Bill 750.00 750.00 940.00
- 190.00
- 190.00
- 190.00
- 190.00
- 190.00
Date Narrative
Office Client

Matter ref: T0423/2
05/12/2019 Search fees 285.00 285.00 300.00
31/01/2020 Stamp duty - 1,500.00 940.00
31/01/2020 Bill 750.00 750.00 940.00
17/02/2020 LR registration fees 190.00 190.00 190.00
190.00 190.00
190.00 190.00
190.00 190.00
190.00 190.00
Date Narrative
Office Client

Matter ref: T0423/2
05/12/2019 Search fees 285.00 285.00 300.00
31/01/2020 Stamp duty - 1,500.00 940.00
31/01/2020 Bill 750.00 750.00 940.00
17/02/2020 Client to office transfer 190.00 - 190.00 -
- -
- -
- -
Date Narrative
Office Client

Matter ref: T0423/2
05/12/2019 Search fees 285.00 285.00 300.00
31/01/2020 Stamp duty - 1,500.00 940.00
31/01/2020 Bill 750.00 750.00 940.00
25/02/2020 Refund from LR 95.00 95.00- -
95.00- -
95.00- -
Date Narrative
Office Client

£95 LAND REGISTRY REFUND RECEIVED
Rule 4.1 concerns the requirement to keep client
money separate from money belonging to the
authorised body.
Three key underlying principles throughout:
1. Separation (of client money and business money)
2. Only use client money for its intended purpose
3. Account to clients (any funds due to them)
Implications
 No change

Matter ref: T0423/2
05/12/2019 Search fees 285.00 285.00 300.00
31/01/2020 Stamp duty - 1,500.00 940.00
31/01/2020 Bill 750.00 750.00 940.00
25/02/2020 Refund from LR 95.00 95.00- -
25/02/2020 Office to client transfer 95.00 - 95.00 95.00
- 95.00
Date Narrative
Office Client

£95 RESIDUAL CLIENT BALANCE
Rule 2.5 covers the requirement of ensuring
that client money is returned promptly to the client (or
third party) as soon as there is no longer any proper
reason to hold those funds.
Implications
 Onus is on the firm to ensure that any
client money held is there for a “proper
reason”
 No specific rule about the ongoing
notification to clients, but this is in the
guidance.
 The principle is key, you’ll need to find out
what your firm’s procedures are for
dealing with residual balances, and it
needs to be taken seriously
 No direct rule about payments to charity if
unable to pay to the client, however this
forms part of the “prescribed
circumstances” referred to in rule 5.1(c).

Matter ref: T0423/2
05/12/2019 Search fees 285.00 285.00 300.00
31/01/2020 Stamp duty - 1,500.00 940.00
31/01/2020 Bill 750.00 750.00 940.00
25/02/2020 Refund from LR 95.00 95.00- -
26/02/2020 Balance returned to client - 95.00 -
Date Narrative
Office Client

WHAT IF UNABLE TO RETURN THE £95?
The prescribed circumstances in which you can withdraw client money from client account to
pay to a charity of your choice
 Essentially unchanged from old rule 20.2 for now
 Mandatory (not just guidance)
 For balances less than £500 on any one client matter:
 Funds actually have to be paid to a charity
 Reasonable steps have been taken to return the money to the rightful owner
 The steps taken are recorded and all related documentation is retained for 6 years
 A central register of donations is maintained
 Any receipts of indemnities from the charity are kept
 Costs incurred in tracing the owner cannot be deducted
 For balances over £500, SRA authorisation is required
 The SRA have indicated that if it feels firms aren’t complying, they will reduce the £500 limit

Matter ref: T0423/2
05/12/2019 Search fees 285.00 285.00 300.00
31/01/2020 Stamp duty - 1,500.00 940.00
31/01/2020 Bill 750.00 750.00 940.00
25/02/2020 Refund from LR 95.00 95.00- -
01/06/2020 Balance paid to charity - 95.00 -
Office Client
NarrativeDate

WHAT IF THE PURCHASE ABORTED BEFORE
COMPLETION, AND THE CLIENT ASKS YOU TO SEND
THE FUNDS ON ACCOUNT ELSEWHERE?
Rule 3.3 specifies that you must not use a client
account to provide banking facilities to clients or third
parties. Payments into, and transfers or withdrawals
from a client account must be in respect of the
delivery by you of regulated services.
"Regulated services" means: the legal and other
professional services that you provide that are
regulated by the SRA .
Implications
 Worded slightly differently to existing rule, but
understanding is unchanged
 Warning notice including case studies issued
on the SRA website
https://www.sra.org.uk/solicitors/guidance/warni
ng-notices/improper-use-of-client-account-as-a-
banking-facility--warning-notice/
 Expecting updated guidance from the SRA to
go alongside this rule
“You should always ask why you are being asked to make a
payment or why the client cannot make or receive the payment
directly themselves. The client's convenience is not a legitimate
reason, nor is not having access to a bank account in the UK.
Risk factors could involve the payment of substantial sums to
others, including family members, or to corporate entities,
particularly overseas, if there is no reason why the client could
not receive the money into their own account and transfer it from
there.”

Matter ref: T0423/2
05/12/2019 Search fees 285.00 285.00 300.00
31/01/2020 Paid to client's son S Tregolls?? - 22,440.00 -
- -
- -
- -
- -
- -
- -
- -
- -
- -
Date Narrative
Office Client

Matter ref: T0423/2
05/12/2019 Search fees 285.00 285.00 300.00
31/01/2020 Balance returned to client - 22,440.00 -
- -
- -
- -
- -
- -
- -
- -
- -
- -
Date Narrative
Office Client

IN SUMMARY
Relevant changes include:
 The notification requirement when transferring funds from the client
account to cover disbursements paid from the business account.
 The definition of “promptly” in the context of transferring money from the
client account to cover billed costs.
 The definition of “promptly” in the context of banking receipts into the
client account.
KEY POINT: Consult your firm’s office procedures manual, as the content
will have changed with the new Standards and Regulations, and it’s
important to be aware of the processes relevant to your role.

VAT UPDATE
Julie Towers
Partner
Julie.towers@pkf-francisclark.co.uk
01872 276477

VAT
 Latest on disbursements following Brabners
 Pitfalls relating to VAT and property

VAT AND DISBURSEMENTS
 you acted as the agent of your client when you paid the third party
 your client actually received and used the goods or services
provided by the third party
 your client was responsible for paying the third party
 your client authorised you to make the payment on their behalf
 your client knew that the goods or services you paid for would be
provided by a third party
 your outlay will be separately itemised when you invoice your
client
 you recover only the exact amount which you paid to the third
party
 the goods or services, which you paid for, are clearly additional to
the supplies which you make to your client on your own account

VAT AND DISBURSEMENTS
BRABNERS
 What is the issue?
 Relates to the recharge of electronic search fees
 Disbursement or not?
 Held
 as the searches were used by law firms as part of their
advice they could not be treated as disbursements
 Therefore VAT should have been charged by Brabners

EXEMPT TRANSACTIONS
 “Grant of any interest in or right over land or of any licence to occupy
land, or in relation to Scotland any personal right to call for or be granted
any such interest or right”
 No recovery of VAT on expenditure

STANDARD RATED TRANSACTIONS
COMMERCIAL BUILDINGS
Grant of freehold interest in new* or
incomplete commercial building
automatically standard rated
* Less than 3 years old
Anything less than freehold in new
building or any grant in respect of “old”
commercial building is exempt
999 year lease is exempt

OPTION TO TAX
 Used to be known as “election to waive exemption”
 Allows vendors or landlords to convert exempt property transactions into
standard rated transactions
 Allows recovery of input VAT
 Personal to the taxpayer not property

OPTION TO TAX
Applies to whole building and land within the curtilage
Can consider on a property by property basis
Does not apply to dwellings
Can only be exercised from current date
Must be notified to HM Revenue & Customs
Option basically irrevocable with exceptions within 6
months or after 20 years
Anti-avoidance legislation

TRANSFER OF A GOING CONCERN
Advantage of TOGC is no VAT charge.
Common obstacles:
 Immediately consecutive transfers
 Significant break in trade
 Purchaser not registered for VAT
 Is a business being transferred or just assets?
 Will the purchaser use the assets to carry on same kind of
business?

Further issues arise where property is involved:
 Has the vendor opted to tax?
 Are any of the commercial properties new?
 If yes to the above questions, purchaser will need to make
and notify his option to tax prior to the sale taking place
 Declaration by purchaser
 Could vendor revoke his option to tax?
 Could purchaser disapply vendor’s option to tax
 VAT incorrectly charged

Further issues arise where property is involved:
 Historically no TOGC when a new lease granted even if 999
years
 Robinson Family case changed this view
 Grant of a 999 year lease can be part of a TOGC if all criteria met as
long as the value of the reversionary interest in the freehold after the
grant of the lease is no more than 1% of the value of the property
immediately before the grant of the lease
 RCB 20/2012 and 27/2014
 Is there a property rental business?

VAT – KEY UPDATE
CONSTRUCTION SERVICES

A TOPICAL UPDATE ON THE
IMMINENT CHANGES TO
CAPITAL GAINS TAX FOR
RESIDENTIAL PROPERTY
AND A REMINDER OF SOME
KEY SDLT RELIEFS AND
PITFALLS
Steve York
Tax Director
steve.york@pkf-francisclark.co.uk
01872 246597

TOPICS
 6 APRIL 2020 – CHANGES TO CAPITAL GAINS TAX
 STAMP DUTY LAND TAX – UPDATE

CHANGES TO CAPITAL GAINS TAX – 6 APRIL
2020
• Not just sales – gifts, divorce transfers and so on
• 10% CGT rate (entrepreneurs’ relief)
• 11 March Budget - possible abolition or major restriction (from 6
April?)
• Take pre-emptive action? - usual rate on residential property – 28%
• Quicker payment of CGT
• From 6 April - 30 days instead of up to 22 months
• Restriction of CGT main residence relief from 6 April
• Final 18 months reduced to 9 months
• Let property relief restricted (max £40k for each owner)
• Busy period for solicitors coming up?

Dave and Mavis own Pink Cottage. The bought it in April 2010 for £200,000,
lived in it as their home for three and a half years and have let it ever since.
They are looking to gift it to their son. It is now worth £300,000. They use their
annual allowances each year on their share portfolio and are both higher rate
taxpayers.
Gift on 5 April 2020 – declare and pay tax by 31 January 2021. Tax liability
£Nil (£50,000 PPR relief, £25,000 let property relief each)
Gift on 6 April 2020 – declare and pay tax by 5 May 2020*. Tax liability
£57,500 x 28% = £16,100 (£42,500 PPR relief, £0 let property relief each)
*also report on 2020/21 tax return by 31 January 2022
CAPITAL GAINS TAX EXAMPLE

1. Residential, commercial or mixed use?
2. Higher rates – subsidiary dwellings relief?
3. Multiple dwellings relief
4. First time buyers relief
5. Reliefs & common mistakes
6. OK, make it 6 – Non-resident surcharge
proposal (from 11/3/2020?)
STAMP DUTY LAND TAX – TOP 5

WHAT SDLT IS PAYABLE ON THIS PURCHASE?
Purchase consideration: £525,000

WHAT SDLT IS PAYABLE ON THIS PURCHASE?
Purchase consideration: £525,000
Purchase by
company –
15% rate?
3%
surcharge
rates?
Multiple
Dwellings
Relief
(MDR)?
Residential
or mixed
use?
First time
buyers’
relief?
Purchase by
trust
£16,250 / £15,750 £32,000
£6,250 (2 dwellings)
£78,750
Not available!
£16,250 / £32,000

Residential
Mixed
Commercial
1. IS THE PROPERTY RESIDENTIAL, COMMERCIAL
OR MIXED?
Residential property is defined as:
• a building used or suitable for
use as a dwelling, or is in the
process of being constructed or
adapted for use as a dwelling
• the garden or grounds of such a
building, including structures on
the garden or grounds
• an interest or right in or over
land that benefits a dwelling, for
example a right of way to
access the dwelling.
Residential property is defined at
FA03/S116, which also provides
that anything that is not residential
property is non-residential
property

 Additional 3% on residential rates
 Applies to individuals when all conditions met:
a) Consideration ≥ £40k
b) Not subject to a reversionary lease
c) Interest in another dwelling (≥ £40k)
d) Not replacement of main residence
 Applies to companies when (a) and (b) above are
met.
2. WHEN DO THE HIGHER RATES APPLY?

E.g. residential property bought for £300,000
Situation SDLT
No other property or replacement of main
residence
£5,000
First time buyers NIL
Buy to let property (additional property) £14,000
IMPACT OF HIGHER RATES

 Transactions with at least two dwellings
 SDLT on average consideration
 Minimum SDLT of 1%
 Are there six or more dwellings?
 Are non-residential rates or MDR more beneficial?
3. MULTIPLE DWELLINGS RELIEF

Main House + Annexe = 2 dwellings
 Total amount of tax originally paid at the
residential surcharge rates (as individual
owned another dwelling) was £119,250.
 SDLT return amendment made to include a
claim for MDR.
 £31,250 SDLT refunded.
MDR – CASE STUDY
Referral from another firm of accountants
“A prominent and attractive Grade II listed village house with an adjacent
annexe and paddock” - purchased for £1,350,000

“Small country estate”
• 7 bedroom farm house
• 3 bedroom detached cottage
• 3 bedroom barn conversion
• 2 stone barns newly converted used for holiday lets
• Modern farm buildings
• Landscaped gardens, grounds and ponds
• Commercial high bird shoot
• 450 acres (182 hectares)
 Mixed use claim
• Purchase of home by individual for £5m.
• Total non-residential SDLT paid was £239,500 on
advice of solicitor.
• SDLT amendment made to include a claim for MDR
as well as mixed use treatment.
£44,960 SDLT refunded
MIXED USE AND MDR – CASE STUDY

 No SDLT on first £300k (5% over excess)
 Wholly residential
 Individuals only
 Each purchaser must meet all the conditions
 Consideration £500,000 or less
 Watch out for joint purchasers, linked transactions,
multiple dwellings
4. FIRST TIME BUYERS RELIEF – WHEN TO
CLAIM

 Assumption of mortgage = deemed consideration
 Subsidiary dwelling (‘granny annexe’) exemption can
easily be missed
 Spouses need to be treated as one unit re 3% surcharge
 Linked transactions (same buyer and seller & part of an
arrangement/series of transactions)
 SDLT on VAT-inclusive consideration (any option to
tax?)
 Have all exemptions been claimed?
 Group relief clawed back if purchaser ceases to be in
same group as vendor (3 years)
 Sub-sale relief conditions not met or not applied for
 Charity claims charities relief and stops using building
for charitable purposes
 Reconstruction reliefs need to be applied for (specified
information, format and certifications)
 Foreign surcharge; not the same tests as for income tax
and CGT?
COMMON MISTAKES & RELIEFS

FRANCIS CLARK
FINANCIAL PLANNING
ANDREW NEWCOMBE FPFS
Chartered Financial Planner
Andrew.Newcombe@pkf-francisclark.co.uk

END OF TAX YEAR PLANNING
TAX EFFICIENT
ALLOWANCES
IHT SOLUTIONS

PENSIONS ANNUAL ALLOWANCE
 Normally £40,000
 Once the annual allowance is maximised in current tax year, can go back
3 years and use unused allowance
 Note - will only receive tax relief up to your net relevant earnings, e.g.
salary or trading profit in the tax year the contribution is paid.
 The budget may change the rules. There is talk of doing away with higher
rate tax relief and having a flat rate between 20-30% for everyone.

ANNUAL ALLOWANCE (BEAR TRAP)
 If your earnings exceed £150,000 for every £2 over you lose £1 of your
allowance.
 So, if your taxable earnings from all sources are £170,000, you would lose
£10,000 of your allowance, leaving £30,000.
 If you earn more than £290,000 then your allowance will be £10,000
unless you are drawing income on a flexi-access basis then it will be
£4,000 with no c/fwd allowance.

MAKING SAVINGS
 We all need to save to make sure we have a better future.
 Lifetime Allowance £1.55m
 State Pension = Currently £168.60 pw (£8,767.20 pa)
Increasing to £175.20 pw (£9,110.40) in April 2020
 Consider maximizing pension contributions and ISA savings in order to
improve your position
 Other income helps e.g. property rental
 Income from all sources helps to provide income in retirement

USING THE ISA ALLOWANCE
 Are you using ISA allowance (£20,000 per person per annum) to save for
the future?
 Creating a tax free portfolio would be very beneficial
 If you invest in a Cash ISA you can transfer to an investment ISA later and
vice versa
 It’s important to ‘bank’ your allowance each year if you can afford it
 Other higher risk investments can also provide tax relief - Enterprise
Investment Schemes and Venture Capital Trusts

IHT SOLUTIONS
 Insure the liability – Male 65 Female 63 non smokers
 Sum Assured £200,000 (IHT Liability)
 Joint Life second death
 In trust – Premium £40.27 per month
 Dependent on affordability and reliefs
 Sum assured £500,000 (IHT Liability) – Premium £88.86 pm

IHT SOLUTIONS
 Discounted Gift Trust – Immediate discount
 Wealth Preservation –
https://www.youtube.com/channel/UCTaP9gf_DnNzQ26lJFPbPWg
 IHT BPR Schemes – Outside the estate after 2 years
 AIM Investment (ISA) – Outside the estate after 2 years
 Investments in Trusts

THE BUDGET ?
It could all change

DISCLAIMER & COPYRIGHT
 No responsibility can be accepted for any action taken as a result of information
contained in this presentation. We therefore strongly recommend that no action
should be taken before obtaining detailed professional advice.
 Past performance is not a guide to future returns and the value of investments and
income from them may go down as well as up and an investor may not get back the
amount invested.
 PKF Francis Clark Financial planning and wealth management is a trading name of
Francis Clark Financial Planning Ltd which is authorised and regulated by the
Financial Conduct Authority. Registered Office: Sigma House, Oak View Close,
Edginswell Park, Torquay TQ2 7FF. Registered in England No. 05413603.
 Francis Clark Financial Planning Ltd is a member firm of the PKF International
Limited network of legally independent firms and does not accept responsibility or
liability for the actions or inactions on the part of any other individual member firm or
firms.
 Bristol l Exeter | Plymouth | Poole | Salisbury | Taunton | Torquay | Truro

© copyright PKF Francis Clark, 2020
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The Registered Office is Sigma House, Oak View Close, Edginswell Park, Torquay TQ2 7FF where a list of members is available for inspection and at www.pkf-francisclark.co.uk.
The term ‘Partner’ is used to refer to a member of Francis Clark LLP or to an employee. Registered to carry on audit work in the UK, regulated for a range of investment business
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legally independent firms and does not accept responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

Francis Clark LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the
actions or inactions on the part of any other individual member firm or firms.
01392 667000
Exeter
01722 337661
Salisbury
01823 275925
Taunton
01803 320100
Torquay
01872 276477
Truro
01752 301010
Plymouth
01202 663600
Poole
Bristol
0117 403 9800

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