Attention property landlords…
A new HMRC taskforce will target landlords in Yorkshire….

HMRC has announced it will be creating several new taskforces targeting tax dodgers, one of which will specifically target Landlords in East Anglia, London, Yorkshire and the North East.

The taskforces will be made up of various HMRC compliance and enforcement teams that will visit those operating in these perceived higher risk sectors to review their records. They estimate £23million will be raised in addition to the estimated £50million collected from taskforces started in 2011.

HMRC said ‘ Deliberately evading tax you should be paying can land you with not only a heavy fine but possibly a criminal prosecution as well’.

If you receive rental income from investment property, I am sure you already have your tax affairs in order. Nevertheless I felt that I must just let you know, as they have reason to believe a significant number of landlords in this region are not properly declaring their rental income.

If you are not 100% certain that your affairs are in order, I would urge you to contact your accountant immediately for a review.

Are you adequately protected?…
Apparantly most of you aren’t!!!….

Aviva have recently released their ’2011 Family Finances Report’, and one aspect caused me particular concern and therefore I felt compelled to highlight it.

They say that of the 2000 people surveyed 95% said they didn’t feel they were completely protected, and 49% feel unprotected or completely unprotected, and even the 22% that felt they had some security only feel ‘protected if nothing unexpected happens’….. Seriously?!?!?! Surely the purpose of protection is to protect against the unexpected! That last statement spelt out the gravity of the problem in my opinion!
In light of the fact that I read an article in the press suggesting that the price of term assurance premiums had fallen by approximately 50% over the last decade, I am surprised that so many people are under insured, or even not insured at all!

On a completely separate note, and nothing to do with the Aviva Report, another interesting statistic I read in the press was that as a general rule, employers in the UK were more likely to insure their photocopier than they were their own staff!

I cannot tell you how strongly I feel that protection, or the lack thereof is something that needs to be addressed and quickly! The impact of not being protected can be absolutely catastrophic, and if people think the recession was difficult, I cant imagine what adverse effect the death of a primary breadwinner would have for example! Sorry to be so morbid but I would rather people felt a reaction to this article and do something about it than tread around on eggshells and people not do anything.

If you feel you are one of those that isn’t adequately protected, whether life, critical, mortgage, income protection or key person, or just want a review of your protection arrangements, then please email us or give us a call. We can look at a whole range of protection solutions for clients, and it really doesn’t have to cost the earth!

Attention Company Directors…
ensuring your life protection is tax efficient….

Protection is a massive part of the whole advice process, and whilst it can be a very morbid subject, trust me when I say the implications of NOT discussing it should the worst happen are far, far worse!! However, every now and then something comes along which can make the prospect of discussing and subsequently paying for this type of cover easier to bear.

When we talk to clients about protection it isnt always driven by what level of cover, or type of cover a client SHOULD have, and the reason for this is simple, in most cases we have to consider the clients budget and affordability! so when opportunities arise that can reduce the cost of cover we cant ignore it.

For example, there is currently a way that assuming a number of criteria are met, we can make the premiums payable for basic life cover that much more affordable and tax efficient.

This is aimed more at business owners that are looking for the most tax efficient way to provide family protection, and can in some cases reduce the total cost of cover by almost 50%. It can also help businesses with too few employees for a group death in service scheme.

So if you own your own business, or know someone that does that may well benefit from discussing this in more depth, then please dont hesitate to get in contact.

1 in 3 people in the UK will be diagnosed with a Critical Illness…this was the headline in an article I read recently, and it sent a shiver down my spine.

It is vital that when we select a Critical Illness provider for our client, we not only choose a company that provides good value for money, but we also choose one with a good claims performance and one that takes a human approach to some of the less straightforward claims.

I have been in the unfortunate position this year of having to process a number of critical illness claims for our clients, and whilst it isnt a pleasant experience, it is one made far more tolerable for the client knowing that they are covered and will be receiving a lump sum of money to be able to either take time out of work without worrying about money, modify their home, or repay some / all of their mortgage.

Not everyone has attractive sickness benefits at work, and in fact a good deal of employees in this country have very little over and above basic SSP, and then of course, there is always the self employed!!!

Key statistics:

• 1 in 3 people will be diagnosed with a critical illness between the ages of 40 and 70
• Breast cancer is the most common cancer in the UK
• Prostate cancer is the most common cancer diagnosed in men in the UK
• Every year, around 150,000 people in the UK have a stroke. That’s one person every five minutes.

I have heard many comments over the years from clients worried about insurance companies and whether in the event of a claim they would actually get paid, Well, in my opinion times have changed, and with tight ABI definitions, and thorough underwriting, the situation is far clearer.

Here are some statistics published on IFAOnline in recent months:

• Last year Aviva paid out almost 95% of critical illness claims totalling over £136m and 99.6% of those resulting from death totalling over £272m. Non disclosure accounted for only 1.6% of total claims declined, and 3.7% for not meeting ther conditions.
• Last year Zurich paid out 91% of claims totalling over £60m, with only 1% of claims declined for non-disclosure of facts. Cancer typically accounts for almost 50% of claims, followed by heart attacks (12%), strokes (7% and MS (3%)
• Scottish Widows have paid out over 90% of CI claims in 2010, and have paid out over £1bn in claims since 2000, and the average age of a claimant was on 55 years of age!
• Scottish Provident has paid out over 90% of all the CI claims in 2010 totalling over £88m with Cancer accounting for 63% of toal claims made.

As Independent Financial Advisers, we can give advice and make recommendations on this and many other aspects of your protection arrangements, from simple life cover and mortgage protection, through to income protection and key person / shareholder protection for business.

Please contact me if this is something you would like to discuss in more depth.

Shane Beardsley
Managing Director / Independent Financial Adviser

tel: 01482 658989
email: shane@kirkellainvestments.co.uk
web: www.kirkellainvestments.co.uk

I think it is safe to say that it has been a turbulent year! in fact one of the most turbulent years in modern history! there is hardly an industry that hasn’t been affected in one way or another by the stock market and currency fluctuations, inflation, interest rate changes, credit crunch, recession…. and I certainly don’t believe we have seen the end of it.

All I can say is that although it all seems like bad news, (and I cant even remember the last “good news story” I read in the papers, or heard on the evening news), I can assure you that THERE ARE good things still happening.

In fact, can I ask that people email me on shane@kirkellainvestments.co.uk with “good news” stories, or “success stories” from the past year, in particular business related. Any particularly good ones received will be published in the New Year! Let’s spread some good cheer!

Personally I am looking forward to the New Year; there are several exciting opportunities for me and my colleagues, as well as the various companies I am involved in. For example the New Year sees a new member of staff starting at Kirk Ella Investments, her role is to assist me in particular to enable me to spend more time with businesses and business owners, looking at the complicated area of Pensions, Key Person and Shareholder Protection.

So before I finish I would like to wish everyone a Merry Christmas, and a PROSPEROUS New Year…… see you next year!

Shane
Managing Director / Independent Financial Adviser

One question I keep getting asked is “What actually is Key Person Insurance?” otherwise incorrectly (not politically correct of course) referred to as Key Man Insurance.

Key person insurance is a life insurance policy that is taken out by a company on one of their employees, usually one of significant importance, where the death or incapacity of said individual can put the company at financial risk.

Key person insurance in the UK is relatively new, well, not new, it has just become more widespread in recent years. I recently heard that less than 5% of companies in the UK actually have any, but it is more like 25% in the USA.

In its simplest terms a “Life insurance” is contract by which a pre-agreed amount of money is paid to a selected beneficiary in the event that the life assured, or person covered, dies.

The “Key Person” in question depends on the type of company and what exactly they do, for example, in a sales based company, where the top sales person accounts for 50% of the total sales, could be deemed to be KEY to the success of the company. For some businesses, the entire sales team may be considered difficult to replace, especially if it is a specialist product. It may even relate to the contacts and connections associated with a particular employee.

Most lenders, especially in the current economic climate will require a business to effect Key Person cover on people they deem to be important in the decision as to whether they actually loan the company the money, and if that persons death would risk the repayment of that loan.

The proceeds of a “Key Person” Insurance may be used for a multitude of different reasons, they may be used:

i. To buy back shares in the company from a deceased partner / Directors beneficiaries.
ii. Pay back a business loan.
iii. Pay to train and source a replacement.
iv. To cover lost cashflow.

There are many reasons why a company would need or want Key Person / Key Man Insurance, and it is important that they understand the reasons and what their needs are.

If you think your business would benefit from a review, then please do not hesitate to contact us on 01482 658989 for a review on this or any other area.

Shane Beardsley
Managing Director / Independent Financial Adviser

I will be posting quite a lot on this subject over the coming weeks; as a business we have seen recent examples where the lack of this type of cover has brought companies to the brink of failure, and all due to events completely out of their control.

As business people, we often spend hours and hours in meetings discussing strategies and business progression, but one aspect often overlooked by company directors isnt the insurance on their cars, or public liability, but on the people themselves.

I read an article recently that suggested that less than 5% of companies in this country have any form of Key Person Insurance (previously referred to as Key Man Insurance) versus 25% in the USA.

If this causes you concern, or you think a review of your companies position would be beneficial, then please contact us on 01482 658989.

Shane Beardsley
Managing Director / Independent Financial Adviser