What IS an ISA?

Daniel Liddicott
Sept 2023 • 12 min read

What is an ISA?

An Individual Savings Account (ISA) is a tax-efficient account available to residents of the United Kingdom. The main perk of an ISA is that any interest, dividends or capital gains you earn within the account are exempt from income tax and capital gains tax (CGT). This means that the money you make from your investments stays ‘in your pocket’, helping it grow faster over time.

Types of ISAs:

There are several types of ISAs, each designed for specific savings goals and risk tolerances:

Cash ISA: This is similar to a regular savings account, where you deposit cash, and it earns interest over time. It’s a low-risk option ideal for short-term savings goals
Stocks and Shares ISA: If you’re willing to invest with a long term mindset, a Stocks and Shares ISA allows you to invest in stocks, bonds, and other financial instruments. Over the long term, this can offer better returns than a Cash ISA
Lifetime ISA (LISA): Aimed at helping you save for your first home or retirement, the Lifetime ISA provides a government bonus on your contributions. You must be between the ages of 18 and 39 to open a Lifetime ISA. There are some restrictions on withdrawals, so it’s essential to understand the terms
Junior ISA (JISA): If you’re under 18, a Junior ISA is designed for you. Parents or guardians can open one on your behalf, and it can be converted into an adult ISA when you turn 18

A simple breakdown of how ISAs work:

Choose your ISA type: Determine your savings goal and risk tolerance. For short-term goals or risk-averse investors, a Cash ISA might be best. If you’re looking to grow your wealth over the long term, consider talking to us about a Stocks and Shares ISA
Open an ISA account: You can open an ISA account through banks, building societies, investment platforms (if you use a financial adviser), or even online. It’s a straightforward process, requiring some personal information
Contribute: You can make deposits into your ISA account of up to £20,000 each tax year. Keep in mind that Junior ISAs have a lower limit of £9,000 each tax year. These are separate allowances, so depositing £9,000 into your child’s JISA does not count towards your own ISA allowance of £20,000.

You can contribute up to £4,000 per tax year into a Lifetime ISA, which will use up some of your ISA annual allowance. This means that you could contribute a further £16,000 to another adult ISA. The 25% bonus that you receive from the Government on your Lifetime ISA contributions do not use up your ISA annual allowance, meaning that you could have £21,000 added to your ISAs in this way each tax year (£4,000 to your Lifetime ISA + £1,000 Government bonus + £16,000 contribution to other adult ISA).

If you have a child who is 16 or 17 years old, they are entitled to both a Junior ISA and an adult ISA, meaning that they are also entitled to BOTH of the annual allowances that come with them. This means that the amount that can be saved into ISAs on behalf of these teenagers can increase from £9,000 per year to £29,000 per year. Note that the adult ISA during this transition period must be a cash ISA. Once they turn 18 years old, however, their annual allowance will revert back to the standard £20,000 per tax year – so there are only two years in which to take advantage.

Invest: If you opt for a Stocks and Shares ISA, you can start investing your money in a diversified portfolio of assets. Remember, investing carries risks, and it’s crucial to do your research or seek advice
Earn Tax-Efficient Returns: Any interest, dividends, or capital gains you earn within your ISA account remain exempt from CGT and income tax. This is a significant advantage that can help your wealth grow faster. You might easily fall into the trap of thinking that ISAs are tax-free, but that isn’t the case. ISAs are subject to inheritance tax (IHT)
Monitor and Manage: Keep an eye on your ISA’s performance and ensure you stay on track with your savings goals (or use a financial adviser to do this for you). As you get older, your priorities may change. People often shift in their approach towards certain things for a variety of reasons. This could manifest itself as a change in attitude to investment risk, for example; or taking a decision which requires capital such as purchasing a property.

General tips

Start Early: The earlier you start saving or investing, the more time your money has to grow due to the historical long-term nature of markets.

Government Bonuses: If you opt for a Lifetime ISA, you can benefit from government contributions. You can deposit up to a maximum of £4,000 into a LISA each tax year and the government will contribute 25% of what you deposit. You can do this each year until you reach the age of 50. The funds within a Lifetime ISA can only be accessed without penalty for the purchase of a first home (maximum value of £450,000) or once the account holder has passed 60 years of age. Should you wish to dip into this ISA for any other reason, you will be charged 25% on the withdrawal – and you don’t just lose the amount of bonus you receive:

Example:

£4,000 contribution + £1,000 bonus = £5,000

£5,000 withdrawal – £1,250 (25% penalty) = £3,750

Result = a loss of £250 (6.25% loss on the original £4,000 contribution)

Conclusion

Understanding ISAs is an important step towards securing your financial future. Whether you’re saving for a car, a house, or your dream holiday, ISAs offer a tax-efficient way to grow your money over time. Remember to research your options, set clear savings goals, and consider seeking financial advice if you’re unsure about your investment choices. With the right approach and discipline, you can use ISAs to build a solid foundation for a prosperous financial future.

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What IS an ISA?Jemima Thomas2025-01-28T09:55:23+00:00

Updating your spending plan

Trimming the fat

We won’t highlight the scary numbers around the cost of living crisis we now find ourselves in, but we will do our best to ensure that you feel prepared.

In many ways our clients are not as impacted by this as many folk in our wider communities – we don’t have any clients earning minimum wage for example. But we do have clients who are in their retirement and for whom small changes can have repercussions over the longer term. We also have a number of clients who fall into the ‘middle-earners’ bracket (recently identified in the press as a group who will feel the pinch).

This particular group of people are generally logical who therefore know that the answer probably lies in being sensible about budgeting; and cutting costs where it is possible to do so.

There is a lot of ’bumpf’ in social media currently about millennials who are tired of the advice from older generations to cancel their Spotify account and stop buying their skinny lattes at Starbucks in order to save money. This advice given in the context of trying to save up for a deposit on a house is frankly inadequate and I do understand the millennials’ argument about that.

However if we apply the same sort of methodology to the current crisis of ‘my living costs are increasing by £150pm’ – then there is actually some common sense to this approach – take a look …

Spotify £9.99pm

Netflix £10.99pm

Starbucks £40pm (assumes halving a one-coffee-per-workday habit)

Wine £20 (buy two bottles less per month)

Takeaway or meal out £40 (reduce by one per month – amount depends on size of household)

Amazon Prime £7.99

These alone total £128.97

We’re not talking about huge lifestyle-changing cuts here – we’re talking about small changes that soon add up. Shopping around for cheaper options on your existing expenditure is another way to cut costs (sometimes significantly) – mortgage, insurances, TV & broadband package, mobile phone contract.

UPDATING YOUR SPENDING PLAN

Martin Lewis (Money Saving Expert) comes up with new suggestions all the time – frankly I find the layout of his website ‘messy’ but I do rather like his weekly newsletter which is always full of good ideas.

It probably goes without saying but ‘now’ would be a very good time to review and update your spending plan – you can only consider how to cut costs if you know where the biggest savings are to be had – we know this can be a painful exercise so we offer a few ways for you to do this – you can click here for our video and for a pdf or an excel version of our income and expenditure form; OR you can send us (securely via the portal please) the last three months of your bank statements and we’ll do the legwork for you; OR we can work from your own ‘budget’ document – whatever form that takes.

However anxious you may be about impending price rises, there are options; there are changes you can make. If you are ever feeling overwhelmed about all this though, please do get in touch. We will support you however we can.

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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Updating your spending planJemima Thomas2025-01-28T09:55:23+00:00

Why long term investing is crucial

TODAY’S BLOG

I came across this article by David Booth, the founder of Dimensional Fund Advisors in the US and I think it fair to say, one of the giants within the investment community. I think he has found a great way of outlining the problem of uncertainty. Whilst the references are American, this doesn’t detract from the message.

WORRIED ABOUT STOCKS? WHY LONG-TERM INVESTING IS CRUCIAL…

We are living in a time of extreme uncertainty and the anxiety that comes along with it. Against the backdrop of war, humanitarian crisis, and economic hardship, it’s natural to wonder what effect these world events will have on our long-term investment performance.

While these challenges certainly warrant our attention and deep concern, they don’t have to be a reason to panic about markets when you’re focused on long-term investing.

Imagine it’s 25 years ago, 1997:

J.K. Rowling just published the first Harry Potter book.
General Motors is releasing the EV1, an electric car with a range of 60 miles.
The internet is in its infancy, Y2K looms, and everyone is worried about the Russian financial crisis.

A stranger offers to tell you what’s going to happen over the course of the next 25 years. Here’s the big question: Would you invest in the stock market knowing the following events were going to happen? And could you stay invested?

Asian contagion
Russian default
Tech collapse
9/11
Stocks’ “lost decade”
Great Recession
Global pandemic
Second Russian default

With everything I just mentioned, what would you have done? Gotten into the market? Gotten out? Increased your equity holdings? Decreased them?

Well, let’s look at what happened.

From January of 1997 to December of 2021, the US stock market returned, on average, 9.8% a year.

A dollar invested at the beginning of the period would be worth about $10.25 at the end of the period.

These returns are very much in line with what returns have been over the history of the stock market. How can that be? The market is doing its job. It’s science.

Investing in markets is uncertain. The role of markets is to price in that uncertainty. There were a lot of negative surprises over the past 25 years, but there were a lot of positive ones as well. The net result was a stock market return that seems very reasonable, even generous. It’s a tribute to human ingenuity that when negative forces pop up, people and companies respond and mobilize to get things back on track.

Human ingenuity created incredible innovations over the past 25 years. Plenty of things went wrong, but plenty of things went right. There’s always opportunity out there. Think about how different life is from the way it was in 1997: the way we work, the way we communicate, the way we live. For example, the gross domestic product of the US in 1997 was $8.6 trillion and grew to $23 trillion in 2021.

I am an eternal optimist, because I believe in people. I have an unshakable faith in human beings’ ability to deal with tough times. In 1997, few would have forecast a nearly 10% average return for the stock market. But that remarkable return was available to anyone who could open an investment account, buy a broad-market portfolio, and let the market do its job.

Investing in the stock market is always uncertain. Uncertainty never goes away. If it did, there wouldn’t be a stock market. It’s because of uncertainty that we have a positive premium when investing in stocks vs. relatively riskless assets. In my opinion, reaping the benefits of the stock market requires being a long-term investor.

By investing in a market portfolio, you’re not trying to figure out which stocks are going to thrive, and which aren’t going to be able to recover. You’re betting on human ingenuity to solve problems.

The pandemic was a big blow to the economy. But people, companies and markets adapt. That’s my worldview. Whatever the next blow we face, I have faith that we will meet the challenge in ways we can’t forecast.

I would never try to predict what might happen in the next 25 years. But I do believe the best investment strategy going forward is to keep in mind the lesson learned from that stranger back in 1997: Don’t panic. Invest for the long term.

Footnotes

In US dollars. S&P 500 Index annual returns 1997–2021. S&P data © 2022 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved.
Data presented for the growth of $1 are hypothetical and assume reinvestment of income and no transaction costs or taxes. This value is for educational purposes only and is not indicative of any investment.

Dominic Thomas
Solomons IFA

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Why long term investing is crucialJemima Thomas2025-02-10T17:07:21+00:00

Gibson’s organic liqueur

Dominic Thomas
April 2022 • 3 min read

Gibson’s Organic Liqueur

Some of you may recognise the brand Gibsons liqueur as we sent some out in our Solomon’s Christmas gift boxes last year. It’s safe to say it’s a brilliant addition to a number of goodies including ice-cream, gravy, prosecco or gin. The team here at Solomon’s are big fans!

The story began in 2007 when, after 2 years spent volunteering on organic farms around the UK, Miles Gibson returned home and began planting fruit. The fields had previously been used solely for grazing sheep, and Miles built slowly, experimenting with different varieties, husbandry techniques and field positions guided by what he had learnt, and most of all by what his little patch of land taught him.

We asked Miles a few questions about his now booming business, and here’s what he had to say…

WHAT WERE SOME OF THE REASONS THAT RESULTED IN YOU STARTING YOUR BUSINESS?

I’d been working in London as a youth therapist for 10 years, and felt the call to do something a bit less in my head and those of other peoples. I took a year travelling around different organic farms in the UK working as a volunteer and by the end of it I decided I’d like to work my own small bit of land. I’d learnt that if I was going to grow on a small patch I’d need to add value by processing what I grew into something – booze appealed!

WHY WAS BEING AN ORGANIC PRODUCER SO IMPORTANT TO YOU?

While in London I attended a talk by the then chair of the Soil Association and was inspired by the message of farming in harmony with Nature.

WHAT HAVE YOU LEARNED ABOUT BUSINESS THAT YOU HADN’T REALISED BEFORE STARTING?

That starting your own business really is all consuming, particularly in the early years. That you can make as good a product as exists but it won’t sell itself, you’ve got to get your story out there, and try not to get too frustrated by the competition when they are all story and no substance!

WHO WOULD BE YOUR TYPICAL CLIENTS/CUSTOMERS?

AB I guess. I started off mainly selling through farm shops and delis in the Cotswolds and at farmers markets. I now do some food/Christmas fairs, and have expanded into the world of mixology where the provenance and rarity of some of my flavours are appreciated.

WHAT’S THE PLAN TO DEVELOP THE BUSINESS GOING FORWARDS?

I’d like to expand further into bars and hotels and continue to innovate and win awards with the liqueurs I produce.

IN TERMS OF FINANCIAL PLANNING STUFF, WHAT’S YOUR EARLIEST MEMORY OF “MONEY”?

Delighting in making piles of 1s and 2ps inspired by a Ladybird image of a tax collector in biblical times!

WHAT ADVICE ABOUT FINANCES DO YOU WISH YOU HAD RECEIVED AND TAKEN WHEN YOU WERE 20?

When your parents offer to buy you a flat in West London as an early bit of inheritance planning say ‘yes please’, rather than I’m not interested I’m going off to France to be a poet!

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Gibson’s organic liqueurJemima Thomas2025-02-20T11:05:08+00:00

THE KIDS ARE ALRIGHT

TODAY’S BLOG

THE KIDS ARE ALRIGHT…

Believe it or not, the tax year end is not so far away. Tuesday 5^th April looms menacingly on the horizon … how time flies! It seems like only yesterday that we were doing this dance, even though I’m sure that for many of you, the last year has felt like a particularly long and tough one. You can count me among your ranks.

As that time of year approaches, we will be frequently reminding you of the prudence in making the most of your ISA allowances for the current tax year. If you haven’t thought about this yet, please consider this your first call to action!

As a reminder, for the 2021/22 tax year, the allowances are £20,000 (per individual) for subscriptions into ISAs, and £9,000 for subscriptions into Junior ISAs (JISAs).

So that this is less of a pure reminder and somewhat informative, I will let you in on a lesser-known fact about ISAs and JISAs … 16 and 17-year-olds are able to hold both a JISA and an ISA simultaneously.

Not only are they entitled to hold both a JISA and an ISA, they are also entitled to BOTH of the annual allowances that come with them. This means that the amount that can be saved into ISAs on behalf of these teenagers increases from £9,000 per year to £29,000 per year (all tax-free of course).

If you are looking for ways to set more funds aside for your children (or grandchildren), this might be one of the best ways to do it. I know that some of you have utilised this benefit already.

So, whilst we have a little time before April hits us, please make sure that any intended ISA top-ups are made in good time to use up those allowances for the current tax year. We would ask that all tax-year-end-sensitive investments are made by 25^th March 2022.

We are only an email or phone call away if you need any help.

And remember that the kids are alright!

Daniel Liddicott
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on our blog which gets updated every week. If you would like to talk to us about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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The Old Mill Cobham Park Road, COBHAM Surrey, KT11 3NE

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THE KIDS ARE ALRIGHTJemima Thomas2025-01-28T09:55:24+00:00

Self employed V LTD company

Dominic Thomas
Nov 2021 • 4 min read

Self employed v LTD company

Those of you that run a small business or provide a professional service are typically either self-employed or operate a small Limited company. The main legal advantage of a Limited company is that any liability is limited to the company and the Director cannot be harassed for funds owed to creditors should the business fail. The company is a legal entity in it own right.

The Chancellor’s plan to increase the main corporation tax rate from 19% to 25% in April 2023 has once again brought into focus the question of whether it makes sense to incorporate your business if you are currently self-employed. Although tax alone should not be the determinant, it can be a major factor in many instances.

CRUNCHING THE NUMBERS

The first point to note is that the 25% rate will generally only apply for companies with profits of at least £250,000. Up to £50,000 of profits, the current corporation tax rate of 19% will continue, albeit labelled a small companies’ rate. In between those limits, the tax rate will be 19% on the first £50,000 of profits and 26.5% on the excess. This can mean that if you incorporate when your profits are modest, you may regret the move if your business starts to make more money.

How you draw income from your company will determine your overall tax bill. In the examples below, we have assumed:

All of the profits will be drawn. This makes the picture consistent with the self-employed alternative under which all profits are taxed.
You draw a salary of £8,840 a year from your company. At this level neither you nor your company will have any National Insurance Contributions (NICs) to pay.
All your profit, after deducting your salary, is taxed at corporation tax rates and then paid to you as a dividend.
The first £2,000 of your dividend is free of tax thanks to the dividend allowance, but still counts as part of your total income for tax purposes.

So, let’s consider the same scenario, but with larger numbers, double at revenue of £150,000…

The higher profit level highlights the impact of the corporation tax change: at £75,000 the corporation tax bill increases between 2021 and 2023 by 9.6%, but at £150,000 the bill jumps by 25.5%.

MORE IS MORE

If the corporation tax increase goes ahead – and there are voices suggesting it might be tweaked nearer the time – then on tax grounds the case for incorporation will be weakened, particularly at higher profit levels. However, as mentioned above, tax is not the only consideration.

ACTION

The numbers above are for two specific profit levels. Comparative calculations are complicated by the phasing out of the personal allowance, so there is no straight line between the £75,000 and £150,000 results.

The corporation tax move is another step on the slow path to rationalising the taxation of earnings between employees, the self-employed and owner directors. For a review of your personal situation and the tax saving opportunities available now, please talk to us.

For what its worth (nothing) if I were Chancellor, I’d have standard rates of tax irrespective of where the income is derived. This would make tax much more transparent, straight-forward and easier for everyone to understand. The problem lies in the will of Government.

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Self employed V LTD companyDominic2025-02-17T17:00:06+00:00

Don’t you forget about me – A tale of a Simple Mind

Daniel Liddicott
July 2021 • 3 min read

Don’t you forget about me – A tale of a Simple Mind

Reminders on my phone are a necessity. This singular function is one that I use to organise my life, attempt to not forget to do things, and often be in the right places at the right times. I truly believe that I would be lost without this very simple tool. However…

Setting yourself reminders is a very manual process – you create them, set the date on which whatever the task is must be completed. Most crucially, it is all too easy to change the due date on these reminders and push them back over what is, inevitably, a multiple-month stretch. If this process were automatic and unchangeable to prevent procrastination (which over the years I have come to believe is something of an art-form) I am sure that I would achieve more, all within a much more reasonable time span. We are creatures of habit, however, the discipline required in the early stages of forming GOOD habits is crucial in maintaining them for the longer term. This got me thinking about automated finances, which is a concept that I have been hearing and reading about a lot during my studies.

AUTOMATE AS MUCH AS POSSIBLE

Andy Hart, in his excellent podcast ‘Maven Money’ which I would highly recommend, states that automating your finances is one of the most important things that you can do. This means setting up standing orders or direct debits (whichever is more appropriate for the scenario), in order to ensure that your money goes to the places that you want and need it to go. One of the main focuses of this technique is saving, whether this be for a house, other large projects or emergency funds, though the same technique can be used to help yourself in many other ways – desired monthly pension contributions, for example, is another goal that this technique could be used for.

Not only will you never forget to make these savings/contributions ever again, but you are likely to become even better at budgeting for all other aspects of your lifestyle without these funds even coming into consideration – with the comfort of knowing that these funds have contributed towards achieving your financial goals and strengthening your financial plan.

MONTHLY SAVINGS HAS SOME OTHER ADVANTAGES

Some of you may have already seen our short video that explains pound-cost averaging. In a very clear way, this video explains how there can be a great benefit to making contributions to investments on a monthly basis, essentially meaning that you will always end up paying the average price over a particular period of time rather than being at risk of paying over the odds.

It’s ironic how we often forget the things worth remembering but remember the things worth forgetting. I have included our video above about monthly budgeting and setting up your bank accounts, to help make this entire process much easier.

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Don’t you forget about me – A tale of a Simple MindJemima Thomas2025-02-20T11:33:51+00:00

UNCOMFORTABLE HOME TRUTHS

TODAY’S BLOG

DENIAL IS MORE COSTLY THAN THE TRUTH

Lockdown has been hard for many people. Freedom takes many forms and the freedom that most of us have taken for granted is the ability to meet other people and get out of the house for a change of scenery. Many have found the constant presence at home has exposed some difficulties within a relationship. Some have had their thoughts confirmed, for others this may be an acknowledgement of a truth that has so far been successfully avoided or navigated. The divorce inquiries to law firms is reportedly up 42% for the lockdown period when viewed against the same time 12 months earlier.

Tom and Rose – How Not To Get Divorced

As this is therefore rather topical, I think it worth drawing your attention to a real couple from London. I will call them Rose (50) and Tom (53) who had been married for over 20 years and had 3 children (21, 19 and 14) were divorcing. Proceedings began in 2018, sadly their divorce, which concluded in May 2020 (on Zoom) escalated fairly quickly.

Rose was a minor shareholder in her parents two family businesses. One business was a recruitment company providing staff to the care sector, the other was a care home. Rose was essentially a sleeping partner in both businesses, but Tom had become the Managing Director of the Care Home in 2005, this ceased once divorce proceedings began.

Keeping Up Appearances

The couple had a very comfortable lifestyle with an annual spend of over £100,000. They lived in a 5-bedroom house in London. Rose wanted to remain in the family home but could not raise additional finance to provide Tom with his share of the equity (£350,000). The reality is that they lived beyond their means, Tom ran up credit card debts of £122,000 and both had soft loans from family members. The marital home was sold and both had to rent. The Recruitment business began to see a fairly significant drop in income, from £9.5m to £8.1m, but on the face of things a very viable business. However, when coupled with the personalities involved and allegations of misdemeanour in his role as Managing Director, this has the sense of a perfect storm.

Where has all the money gone?

As allegations about Tom were made, this added to the legal knots that they then managed to create. Anger and resentment continued to fan the flames of “he said, she said”. In the end, aside from their pensions (not yet available) and the notional value of shares in the family business, the legal fees left both with liquid assets of £5,000 each. You can see a rather good summary of the case here.

There are lots of lessons here, family businesses are more exposed to the knock on effects of marital problems. Overspending and a lack of communication about it between the couple is rarely good for any marriage. Reliance on funds from family members, parents in particular makes for further uncomfortable relationships. Finally, if you find yourself in a similar position, agree terms fairly and avoid the name calling and point-scoring, it serves nobody well, in fact everyone loses.

The Uncomfortable Truth

When it comes to planning, as I have said many times before, we make lots of assumptions about the future, the biggest assumption we make about a couple is that they remain together (unless they communicate that this is unlikely). One of the problems of thinking about what you want from life is that you become aware of what you don’t want, for many that can be ending an unhappy marriage. That has financial consequences that we can make allowance for, but only if we are able to communicate truthfully. Divorce does not have to leave a huge financial scar, it can be settled well. I am not a marriage counsellor, I have been married for over 25 years, I am however pretty certain that Tom and Rose regularly failed to communicate well with each other, particularly about money. Denial of reality isn’t really my thing, it serves nobody well. A good plan will help you face some uncomfortable truths.

Dominic Thomas
Solomons IFA

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UNCOMFORTABLE HOME TRUTHSDominic2025-02-03T10:36:36+00:00

COMPANY CAR? GEAR UP FOR CHANGE…

TODAY’S BLOG

COMPANY CAR? GEAR UP FOR CHANGE..

Do you drive a company car? do you know your NDEC from your WLTP? You now need to.

Emissions, emissions…

For many years, company car tax scales have been based on CO2 emission levels, with a supplement (currently 4%) for most diesels (although a handful of new diesels now escape this surcharge). The emissions were measured under the New European Driving Cycle (NDEC) test, which produced results increasingly at variance with the real world.

In response, a new testing regime has been developed, the World harmonised Light vehicles Test Procedure (WLTP). Unsurprisingly, this test reveals much higher emission levels than the NDEC – about 15%-20% more, with the greatest increase for cars with the smallest engines.

Company car changes

For company cars registered from 6 April 2020, the WLTP CO2 emission figure will be used in determining company car tax rates. However, for cars registered before that date, the old NDEC measure will continue to apply. As a result, from 2020/21 onwards there will be two sets of company car scales, one WLTP scale for cars registered on or after 6 April 2020 and the other NDEC-based scale for older cars. For any given level of emissions, in 2020/21 the WLTP percentage charge is 2% lower than the NDEC charge, although this difference will be phased out over the following two tax years.

Electric and Hybrid Cars

6 April 2020 will also see a change to the tax treatment of electric and hybrid cars. The charge for all pure electric cars will drop to zero – good news for Tesla – while for hybrid cars with CO2 emissions of 1-50g/km, the scale charge will be based on the vehicle’s electric-only range. For hybrids there will be separate NDEC and WLTP scales, with both offering no discount if the hybrid cannot run at least 30 miles on battery power alone.

Action

The company car tax regime has become much stricter over the years and there is some evidence that more employees are choosing cash rather than car where they have the option. You may want to join them.

If you are due to change your company car soon, make sure you understand the tax consequences of any choice you make. If you are thinking about an electric car and the required charging points at your home or office, the Pod Point website is worth having a look at. They also have a guide that gets fairly regularly updated on different types of electric cars. I haven’t used Pod Point and am not endorsing them (or paid by them) but you may find their information helpful.

Of course if you wish to see the Tesla range….

Dominic Thomas
Solomons IFA

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COMPANY CAR? GEAR UP FOR CHANGE…Dominic2025-01-28T09:55:25+00:00

SORRY WE MISSED YOU

TODAY’S BLOG

SORRY WE MISSED YOU

The new Ken Loach movie “Sorry We Missed You” takes a scathing look at the life of the new gig-economy self-employed who are now a part of the service sector that we all use. Instantly you will sense that this is a political piece and you are probably right. Loach makes yet another bleak, grey but good little movie about the daily struggle to make ends meet. This story may jog your memory about snippets of information that you have picked up over the last couple of years. I can assure you that it will have an impact on your thinking for any online orders you make before Christmas.

Confession – I quite like Ken Loach. I have a great deal of empathy for what he seems to be trying to do. As far as I can gather, this is little more than calling to account a system that is simply not working for lots of very “ordinary people”. This movie is clear that some employers are abusive. I suspect you know this already to be true. Whilst one would argue that “workers rights” are largely the diet of the left-leaning, I haven’t met anyone that believes people should be treated as commodities, perhaps I don’t get out enough though.

Masters of the Universe

Ricky (Kris Hitchen) is fed up with being told what to do, a friend suggests he become a self-employed delivery driver. He can be his own boss. I may have misheard, but I think the deal is £150 a day for deliveries completed to satisfaction. The problem being that Ricky doesn’t have a van, he can rent one from his new sole customer (at £60 a day) or make his own arrangements. Ricky also has a tight schedule (set by others) which means he doesn’t have time for anything more than a 10-minute break in his 12-14 hour day. Worse still, he can only “not work” if he has arranged a driver to cover him or it’s a £100 fine and a “penalty”. The parcel tracking device is provided (it’s a requirement) but if lost must be paid for at £1,000. The parcels, once taken by the driver become a personal liability.

Return to sender

The benefits of self-employment quickly evaporate with a sense that in practice, Ricky is not in control of very much at all, yet has agreed to offer his services at guaranteed rates for guaranteed results. This is really the crux of the story and the resulting pressure. The employer has waived all responsibility and has rented labour at a lower cost than having proper employees.

Technology that liberates?

Amazon and other delivery drivers spring to mind. However Ricky’s wife Abbie (Debbie Honeywood) is a carer that is employed at arm’s length to care for (clean, bathe, feed) infirm people on set 30 minute slots (or less) and invariably this isn’t enough time to do the job properly or with any care, let alone get to the next “client” on time. As you may imagine, the fact that both husband and wife are running around working long hours attempting to keep to someone else’s schedule has a knock-on effect for their family and relationship.

I’m not a fan of “zero hours” contracts or the gig economy. I don’t like “internships” or unpaid labour with the hope/promise of better things. I think its abusive and I have little time for those that use it as their business model. That covers almost the entire media industry.

Sorry but I have a few questions…

I do have some questions for Loach. If Ricky earns £150 a day and is working 6 days a week. That’s £900 a week or £46,800 a year. Abbie also earns and so I wonder what is happening to their income. They missed out on buying a home in 2008 due to loss of his job, but quite what that was is unclear. However the inference is that the failure of Northern Rock and the credit crunch are partly to blame. There may well be some debt, but this is not explained. Teenage son Seb (Rhys Stone) goes from being “top of his class” to a truant, violent, petty thief – what happened there? When he and younger sister Lisa (Katie Proctor) state that they want things to return to “how they were” what does that mean? When?

Required: Thinking

To my mind Ricky and Abbie are taken advantage of. They may or may not be good with money and sums, frankly its impossible to say. They certainly care and seem like “decent people”. Even with the abusive employment, why don’t the drivers have rota for a shared replacement driver, so that they can actually take time off for important things? There is simply not enough to convince me that any of them really understand what “self-employment” is. Perhaps because everything about the work has the feel of employment without the reality.

The problem I have as a financial planner is that I suspect that some of the financial problems that Ricky and Abbie have could probably be easily addressed, but nobody has the time to stop to think, assuming they are able to do so. Perhaps “the job” could work for some but it certainly doesn’t for this family. I was moved by the story but left with questions about the how and why. Whilst Loach has a specific working-class focus, in practice the same stresses of post-modern life and inability to see the bigger picture can negatively impact any of us. Sadly, I suspect that this will be seen as little more than a critique of “big business” and “Government policy” yet the problems are far deeper than that, issues that need facing before any significant change can occur.

Anyway, here is the trailer. The movie is out now.

Dominic Thomas
Solomons IFA

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SORRY WE MISSED YOUDominic2025-01-28T09:55:25+00:00

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