Info & News
Recession - It's Official!
It is said that "A recession is when other people lose their jobs. A depression is when you lose your job."
With us now being officially in recession, the average consumer may be worrying how a recession might affect them and what they can do to insure against the negative effects of recession. These are some of the effects of recessions and how to deal with them.
More difficult To Borrow.
In a recession banks are less willing to lend. This is particularly a problem at the moment, because of the concurrent credit crises which is reducing the availability of loans.
Solution: Avoid taking on any unnecessary debts. The debts you have try to reduce and consolidate into a lower interest rates bearing account.
On the positive side, in a recession interest rates are likely to be lower, meaning lower interest payments for mortgage holders.
Unemployment.
This is the main concern over a recession. If output does fall, there is likely to be a fall in demand for labour. This problem is often concentrated in those sectors most affected by the recession. For example, in the current climate, jobs related to finance and the building trade are more at risk than say the manufacturing sector.
Solution: If you fear unemployment, start thinking what you might do as an alternative. Is it viable to consider working on a second income, such as online business.
Do you have unemployment insurance to cover mortgage payments. If not, it would be worth taking insurance out now.
Don't panic. Firstly, the unemployment may not occur; there is nothing to be gained by worrying over what we have no control other.
If are made unemployed, the best solution is to be flexible in looking for work. Consider new avenues and skills that you could learn. Also recessions will be short lived; a period of temporary unemployment does not have to become permanent.
Falling profitability of Business.
If you are a small business owner the effects of a recession can be keenly felt. Lower profits could even threaten the survival of the business.
Solution: Look for ways to minimize costs without compromising the business. There are always ways to cut costs and increase inefficiency. Some economists even go so far as to say that recessions are a good thing because they force the economy to become more efficient.
If your business is particularly affected by the downturn, look to see whether you can diversify to reflect the changing economic environment. For example, if you specialise in selling luxury goods with a high margin try including some new product lines which appeal to people's desire for frugality.
A fall in profits is likely to be cyclical. Therefore try to plan a financial plan to borrow before you need the cash in readiness for the difficult times.
If you are suffering, give Duffy a call and let’s see what we can do to plan and help you get through this difficult time.
Falling Stock Market
In a recession, stock markets are likely to fall as lower profits reduce dividend payments. Try to diversify your investment portfolio. In a recession, commodities such as gold often do well. Even in a recession, there can be good investment opportunities.
Also bear in mind that stock markets can often be forward looking. For example, stock markets have fallen sharply since the start of the year in anticipation of a recession. When a recession comes, stock markets often don't fall any more.
Consumer Confidence
Often the worst aspect of a recession is the affect on consumer confidence and people's fear about the future. Bear in mind, the media often exaggerate the extent of a downturn in the economy. The media like to highlight sensationalist stories. However, it is often not as bad as it is made out to be. Keep a calm and detached attitude and just make the best of the current situation.
Any Benefits of a recession?
Lower interest rates. Good for borrowers
Lower inflation rates. Good for savers
Sometimes difficult times can force us to reevaluate our financial situation. It can make us look for new business avenues and new ways to cut costs and spending. Although it may be temporarily unpleasant, the important thing is not to panic but try to make the best of any situation we find ourselves in.
Valentines Tips for Tax Savings
Yes, you can enjoy a benefit from romance!
Valentines Day…a time for couples to show each other how much they care. And if it can be done in a tax-efficient manner, then so much the better! Here are ten top 'tax tips for a twosome'.
A romantic dinner for two
Remember that this is supposed to be pleasure, not business, so don't try to claim the cost of your dinner or hotel stay as a business expense!
On the other hand, staff entertaining can be claimed, so if your loved one is your only employee, why not have a Valentine's Day party? Bear in mind the £150 per head limit for benefit-in-kind purposes, to avoid any unexpected tax bills. This exemption only applies to annual events – but you might want to keep that to yourself, so as not to spoil next year's surprise..!
Tax relief for your Valentines Day gift?
Looking for that special gift idea? Not excited by flowers or chocolates? Spoil your loved one with a gift of something (other than food, drink, tobacco or a gift voucher) bearing a conspicuous advertisement for your business.
A tax deduction may be claimed, but don't get too carried away - the cost of the gift must be no more than £50.
What's mine is yours
Consider transferring assets to your spouse (or civil partner). Gifts between spouses living together are normally made on a 'no gain, no loss' basis for capital gains tax purposes, and are completely exempt from inheritance tax between United Kingdom domiciled spouses. Such gifts can assist in utilising unused capital gains tax losses and annual exemptions, and to allow for lifetime planning for inheritance tax purposes, such as using the nil rate bands of both spouses every seven years.
Outright gifts of income producing assets can also take advantage of income tax allowances and rates. However, don't get caught by the 'settlements' anti-avoidance rules.
Be generous…but don't get carried away!
Before you get too misty-eyed and make any inter-spouse transfers of business assets, aside from the settlements anti-avoidance rules mentioned above consider the implications for capital gains tax entrepreneurs' relief purposes. Would your gift be a qualifying business asset in the hands of your loved one?
Planning a rosy future together
Consider giving a romantic stakeholder pension to your partner. Even if your beloved has no earnings it may be possible to contribute up to £3,600 per annum into a stakeholder pension. And don't forget a stakeholder pension for the kids!
Keep it in the family
Why not employ your loved one?
Make sure the salary is a commercially justifiable reward for the work, is recorded in the books and records, and is physically paid.
Beware the national minimum wage rules (unless your spouse works in the family business and shares the matrimonial home, or is a director of the family company and does not have an employment contract), especially if you don't end up walking hand in hand into the sunset!
Wedding bells
Getting married? Does your beloved have wealthy parents?
What about dropping a subtle hint about the £5,000 inheritance tax exemption for gifts in consideration of marriage (or registration of a civil partnership) by each parent?
Diamonds are forever
Are you still waiting to receive that diamond ring? Remember that there is no capital gains tax charge on the disposal of certain 'wasting' chattels, i.e. assets with a predictable useful life of 50 years or less. As 'a diamond is forever' trying to classify it as a wasting asset is likely to be problematic. However, if its value is less than £6,000 the gift will in any event be subject to exemption from capital gains tax.
Share and share alike
Wishing to make an extravagant gesture? Why not gift your spouse between £500 and £500,000? They could use this money to invest in the shares of an enterprise investment scheme company, and potentially obtain income tax relief on 20% of the investment. Husband and wife (or civil partners) may each subscribe up to £500,000 and claim the relief. Alternatively, a transfer of enterprise investment scheme shares to your spouse partner should not result in any withdrawal of relief, if you are both living together.
An investment in a venture capital trust of up to £200,000 each could also be considered. The rate of income tax relief available on such investments is 30%.
Are you lonesome tonight?
Have you been working abroad for 60 days or more? Missing your loved one?
Why not arrange for your spouse (or civil partner) to visit you? A deduction from taxable earnings may be claimed for certain travelling expenses of the spouse, which are paid or reimbursed by your employer. This includes up to two outward and two return journeys in the same tax year.
Happy Valentines Day!
One final thought. If the big day does not go according to plan and your Valentine's Day tax planning activities are not well received, don't worry. The inter-spouse (or civil partner) exemption for capital gains tax purposes applies throughout the tax year of separation!
Fancy Winning an Award?
Getting your business recognised is often one of the biggest challenges a start-up business faces. By entering these awards you can change that. As a short-listed finalist or even better, a winner, you and your business will receive unrivalled benefits.
Click on the banner above for more info - Good Luck!
Contact us
If you have any problems finding what you need to know or want to talk to us about your requirements please contact us today.
Call us now on
0845 257 6914
Or send an email to
To sign up for our new newsletter please send an email now to
We look forward to hearing from you.
