HOW TO BUILD A BUSINESS ONLINE

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HOW TO BUILD A BUSINESS ONLINE

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FTSE 100 Struggling to Get Above 6200

maxresdefault market crashAfter a torrid January and February when the FTSE 100 dropped to 5500, it recovered to 6200 but has been sitting under that level for the whole of March. Will this just be a period of hesitation before it continues higher and maybe on to new all-time highs, or is 6200 as good as it gets and be the top before it plummets again? Do you have a strategy in place for both scenarios, especially the resumption of a new Bear Market? If you have a professional who manages your portfolio, do they have a strategy to manage risk? Sooner or later this market will likely plunge back to 2008 lows, potentially a 50% drop. Can your nerves take that? Do you have a strategy to profit from a major downturn? If you don’t, you need new skills.

Budget 2016 – 16 March 2016

This is a very brief summary of Budget announcements of most relevance to entrepreneurs. As always, the Chancellor came up with various headline policies in his speech but there will be a great deal of important detail hidden away in the HMRC press releases and this will emerge over time.

Personal Tax

Tax free allowance from 5 April 2016                       £11,000

Tax free allowance from 5 April 2017                       £11,500

20% Tax band from 5 April 2016 (next)                   £32,000

20% Tax band from 5 April 2017 (next)                   £33,500

These increases in both the personal allowance and increase in the Higher Rate Tax Threshold amount to a welcome tax cut.

Business Taxes

Following a lot of publicity and debate over multinational companies avoiding tax in the UK, there are a number of measures to tackle that, including withholding tax on royalty payments to international subsidiaries. These are being called Starbucks Taxes. However, these measures are aimed at large businesses.

Corporation Tax Rates – the current rate of Corporation Tax is 20% and this will be gradually reduced to 17% over the years to 2020. This encourages businesses to retain profits and invest in the business. It also encourages entrepreneurs to operate through companies rather than be self-employed.

Stamp Duty Land Tax for commercial property will be reformed to result in tax assessed on a sliding scale like residential property instead of a step jump system. This will typically save tax for smaller businesses who buy their offices.

Business rate relief has again been increased for smaller businesses.

Fuel duty has been frozen for all, but this will particularly help small businesses that do a lot of mileage.

For the Self-employed, class 2 National Insurance Contributions will be abolished from April 2018. However, this only represents about £100pa.

Capital Gains Tax

Surprisingly, the Chancellor has decided to reduce the rates of Capital Gains Tax from 28% to 20% for higher rate taxpayers and from 18% to 10% for basic rate taxpayers from 5 April 2016. However, these changes do not apply to residential property not qualifying for private residence relief. Again, Mr Osbourne is having another dig at Buy to Let landlords. Whilst the rates of tax will be reduced, the tax take may well increase as asset holders are encouraged to rotate and dispose of assets without being discouraged by tax. This is good for business and the economy generally.

Take advice from a good accountant if you wish to take advantage of tax changes.

US Fed Interest Rate Decision tomorrow

The Federal Open Market Committee (FOMC) started a 2 day meeting today. They are the body that determines US Interest Rate and Monetary Policy. Their decisions tend to have an impact on financial markets worldwide and they are therefore watched very closely by investors and currency traders alike. They are due to announce their decision on whether to raise interest rates or not, tomorrrow at 6pm GMT followed by a press conference with Janet Yellen, Chair of the FOMC at 6:30pm. Markets are relatively quiet in advance of this announcement but the decision to raise or not, will result in some market volatility and may provide the trigger for stock markets worldwide to rally again or fall. Watch this space!

Check Your Entitlement to State Pension

The rules on State Pension have changed dramatically in recent years. These have included delaying the age at which the pension starts, especially for women, but has also reduced the required number of qualifying years of National Insurance contributions or credited years to make it easier to qualify for a full pension.

It is essential to check well before retirement age (a) when you will be entitled to get your pension, but also (b) how many qualifying years you have accrued. If there has been a mistake and some of your qualifying years have not been included you need to know as soon as possible and do something about it. The first step is knowing where you are and the second step is taking action if need be , or relax because you are on track or have already achieved the required number of qualifying years.

To find out when your State Pension will start go to  https://www.gov.uk/state-pension-age

To obtain a form (BR19) to apply for a pension forecast and summary of qualifying years, go to  https://www.gov.uk/check-state-pension

The links above are not hyperlinks. Copy and paste them into your browser.

Deadline for Topping Up ISA in 2015/16 Soon

I am a big believer in building up an ISA as part of retirement planning, particularly from a Tax perspective. ISAs are free  of Capital Gains Tax and so any gains are sheltered. But perhaps more importantly, any income received by an ISA is Tax Free and what’s more can be withdrawn Tax Free. Thus, if you can build substantial funds over the years in an ISA you can also build up a substantial TAX FREE INCOME to draw upon in retirement. Tax efficiency in retirement is an essential part of the planning.

In the current year each adult can add £15,240 to their ISA (thus a couple can add £30,480 between them). If you do not take advantage of this in the current year, that allowance is gone forever. The deadline for topping up this tax year is 5 April 2016.