The governments work on self-employed pensions faces delay

The governments work on self-employed pensions faces delay

Trials that would solve the pensions crisis for the self- employed have been delayed.

Guy Opperman, minister for pensions and financial inclusion, said: “the government would provide more information about the trial areas later this year, following its feasibility work in this area” He also admitted that there was “no straightforward way to bring self-employed people into workplace pension savings”

In the Department for Work and Pensions auto-enrolment review that was conducted in December 2017, they announced that they would: “work on improving pensions participation and retirement outcome among self-employed people by testing a number of different approaches from 2018.”

This review found that pension participation rates decreased from the self-employed from 23% in 2009-2010 to 17% in 2015-2016. This is more concerning considering that pension participation rates have risen for employed workers since the introduction of auto-enrolment.

However, the Association of Independent Professionals and the Self-Employed (IPSE) do not advocate auto-enrolment to be a solution that would work for the self-employed. They instead consider a sidecar scheme, which would allow the self-employed to save for their retirement and also a separate ‘rainy day’ fund for emergencies to be more beneficial.

Paul Stocks, financial services’ director at Dobson & Hodge agreed with IPSE that auto-enrolment was not a good solution for the self-employed. He said: “Many of my self-employed clients only begin to tackle pension funding once they are towards the end of their career- when they are perhaps winding down the business.”

For more advice on pensions, get in touch with our wealth management team by clicking here for your free initial meeting.


Making Tax Digital Update

Making Tax Digital Update

Making Tax Digital – September Update

We have been producing regular updates to highlight that HMRC will begin phasing in its Making Tax Digital (MTD) regime from April 2019.

Initially this will only be for VAT purposes, with the wider roll out of MTD having been delayed.

However, with time between now and April 2019 passing quickly, it is important to ready your business for these changes now.

Key points – A reminder

From 1 April 2019, all VAT registered businesses with a turnover above the VAT threshold (currently £85,000) will be required to:

  • keep digital records for VAT purposes, and
  • provide their VAT return information to HMRC using MTD ‘functional compatible software’.

The recording of supplies made and received must be digital.  HMRC will not be offering software to do this and you will instead be required to use third-party commercial software.

The use of spreadsheets will be allowed, but they will need to be combined with third-party bridging software to convert this information into a format that is compatible with HMRC’s API (“Application Programme Interfaces”) platform.  This bridging software is not yet available.

You should review how you currently collect the information to prepare your VAT Returns.  If all or part of your records are kept on paper you will need to consider how best to digitise your records.  You may wish to consider doing this from the start of the next accounting period to avoid changing systems part way through an accounting year.

What’s new this month?

Under the new MTD rules, businesses will have to use ‘functional compatible software’ to provide their VAT return information.  This is third party software which can connect to HMRC systems via API – effectively a door to the HMRC system through which third-party software can push data.

On 13 July HMRC released the latest list of compatible third-party software products which included popular applications such as Sage, Quickbooks, and Xero.

This list will be updated further as time progresses.

You should speak to your current software provider to check that the software you use will be MTD compatible in time for April 2019.

HMRC has also issued a VAT Notice (700/22) which gives a lot of helpful information on the subject. In particular, there is guidance on what comprises “Digital Records” and “Functional Compatible Software”. There are also some examples and visual aids on how your current bookkeeping system may be able to link with the HMRC platform.

Hawsons MTD Workshops

In order to help you with the transition to Making Tax Digital, we are running regular Workshops in the run-up to April.

To book your place on these workshops visit

Further Help

There is a time of great change ahead and, as always, we are on hand to help with the challenges.

We can assist you with your choice of software, help you to set this up, and offer training for you and your staff.  Alternatively, we can deal with the VAT submissions on your behalf using MTD compatible software.

You may wish to consider utilising cloud-based accounting software.  At Hawsons we are experienced in the use of these packages and would be happy to give you a demonstration of how cloud accounting software can help your business.

We would be happy to help you with any issues arising from MTD for VAT.  For further advice and information on how your business can prepare for the changes, please get in touch with your usual Hawsons contact.

Changes on the horizon for PI cover

Changes on the horizon for PI cover

Changes on the horizon for PI cover

In March this year, the SRA published a consultation paper on its proposal to make some changes to compulsory professional indemnity insurance (PII) cover for solicitors. This is not the first time that changes to cover have been proposed by the SRA. In November 2014, the SRA’s proposal to reduce the level of compulsory cover to £500,000 was rejected by the Legal Services Board on the basis that there was not enough evidence the changes would reduce the premium for PI cover along with an increased risk to clients.

The proposed changes would see the removal of the current ‘one-size-fits-all’ rules on PII. This means firms could have the flexibility to choose the right level of insurance to suit their business and client base while ensuring an appropriate level of cover to protect their firm and the reputation of law firms nationally.

The proposals released in March included the following changes:

  • A minimum level of compulsory cover required for claims will be set at £500,000 except those that arise from conveyancing services where the minimum level of cover will be £1 million. This is reduced from the previous requirement of £3 million.
  • Keeping the need for a six-year run off period of insurances after a firm closes but capping the overall level of cover at £3 million for firms that have done conveyancing work and £1.5 million for all other firms.
  • Removing the need for compulsory insurance to include cover for clients with a turnover that is greater than £2 million.
  • Allow greater flexibility in arrangements for defence costs. This would allow caps on defence costs or excess arrangements that include defence costs.

The SRA believe these changes will achieve premium savings that could be passed onto consumers. They have also said that lower premiums could remove barriers to entry to the legal profession and encourage new firms. This would increase competition and the opportunity for people to access more affordable legal services.

Paul Phillip, SRA Chief Executive, said: “Ten years of data shows our current one size fits all arrangements are too rigid. Our proposals will help firms – particularly small ones – make sure they are not paying more than they need to protect themselves and their clients. The public would still have an appropriate level of protection, while potentially benefiting from lower costs and more choice”

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Millennials seek more pension support

Millennials seek more pension support

In a survey conducted by Prudential, more than half of people under the age of 35 (millennials) want their employer to do more to explain pensions and benefits.

The survey was completed by 1,178 millennials and showed that 24% of these people do not have a pension fund, with a further 27% not considering pensions to be relevant to their generation.

Vince Smith-Hughes, Prudential pensions expert, says: “Millennials are as responsible as other generations when it comes to pensions and the talk about Generation Snowflake feeling entitled to an easy life is not true. They are often under a lot of pressure to get on the housing ladder and pay off their student loans at the same time as trying to prioritise pension savings.”

He adds: “Rules can be confusing, especially when you are early into your career which is why we advise most savers to seek financial advice when possible. Employers can help to ensure they provide information and support around their workplace scheme.”

The survey also outlined that 37% of millennials believe that they are saving as much as they can afford to but even then, they do not think it will be enough for a comfortable retirement. However, more surprisingly, 16% believe that they will never be able to afford to retire.

Kim Lerche- Thomsen, founder and CEO of Primetime Retirement, said: “Supporting millennials and ensuring they are engaged with pensions at an early age is key to ensuring future generations enjoy a comfortable retirement. With more and more people going into retirement with insufficient savings and Prudential’s research suggesting that some people may only have the state pension to rely on, we are facing a looming pensions crisis in the UK. This is why it is vital that we work together as an industry now to tackle to issues head on and raise awareness of the importance of planning for retirement from an early age.”

How can Hawsons help?

For advice on pensions please click here for your free initial consultation.

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