Changes to the planned increase in State Pension age


Changes to State Pension age

Under current legislation, State Pension age is planned to increase to:

  • 66 between November 2018 and October 2020
  • 67 between 2034 and 2036
  • 68 between 2044 and 2046

The government has announced that the increase to 67 will now take place between 2026 and 2028.  This change to the timetable is not yet law and will require the approval of Parliament.

Who is affected by the announcement?

This will mean that people born after 5 April 1961 but before 6 April 1969 will have a State Pension age of 67.

People born after 5 April 1960 but before 6 April 1961 will reach State Pension age between 66 and 67.  Under the Pensions Act 2007, people born after 5 April 1969 but before 6 April 1977 already have a State Pension age of 67.  For people born after 5 April 1968 but before 6 April 1969, their State Pension age would have been between 66 and 67.  Under the announcement these people will now have a State Pension age of 67.

Changes to State Pension age beyond 67

State Pension age is planned to start to increase to 68 from 2044 and this would affect anyone born after 5 April 1977.  The government is considering how the State Pension age could better reflect changes in life expectancy in the future.  This is likely to mean that the existing timetable to increase State Pension age to 68 will be revised.

Top Financial Mistakes made by Start Ups

1. Not preparing a cashflow budget

Cash is King. This is especially true for businesses operating in today’s economic climate. It is therefore imperative to accurately keep track of your cashflow. The best way to do this is by preparing a monthly cashflow statement showing payments and receipts. This will allow you to predict periods where additional cash may be required. Knowing when you are likely to need cash means you can explore different funding options in good times.

2. Debtor Collection

Ensuring debtors pay on time is crucial to businesses. The outstanding debtors list should be reviewed regularly and reminders sent to any balances overdue. Debt collection is a part of business that most people do not enjoy but time must be dedicated to this to ensure your survival.

3. Monthly Purchases

For businesses that sell goods, efficient buying of the goods is vital. Clearly, it
is important that you avoid over and under stocking goods as both can be costly
to the business. It is also important to ensure you avail of any rebates on
offer for bulk purchasing of stock and that you avoid the possibility of
surcharges on late orders.

If stock purchasing is a major expense, monthly or quarterly management accounts should be prepared to monitor the stock levels and the average number of days it takes to sell the stock once it is purchased. Calculating your gross profit margin will also give an indication if stock is being purchased efficiently.

4. Not registering for VAT in time

Where a start up business plans to incur significant start up costs (rent, computers, machinery etc) it is important for the business to register for VAT as soon as possible. Registering early will enable you to reclaim any VAT incurred on purchases which can provide significant cashflow savings.
Backdating a claim for VAT can only be done in some circumstances and generally
requires approval from the Inland Revenue.

5. Not keeping purchase invoices

Businesses that are VAT registered can reclaim VAT incurred on expenses incurred in the business. However, VAT can only be reclaimed where the business has kept a purchase invoice from the supplier. Failure to keep all purchase invoices can lead to business overpaying VAT.

6. Ignoring taxes

It is important to ensure the business is in compliance with all taxes to avoid Revenue interest and penalties. A business has certain tax obligations from the first day of trading not just when it becomes profitable. A sole trader must also budget for payment of income tax. Tax payments should be included in the cashflow budget to ensure sufficient cash is available to meet the liability.

7. Not including own expenses

Another common error made in the preparation of business plans is forgetting to include provision for your own expenses. For a business to survive it must generate enough profits for the owner to live off.

Business Savings – top tips!

As much as we dislike it the reality is that ongoing cost monitoring is something you ignore at your peril. Here we take a look at some ways to lower small business costs.
Paying pre-recession prices for stock is still way too common. Dig out your suppliers price lists and compare them to 2009/2010 prices. Are you paying the same price but selling for less? If so, start looking around requesting quotes from at least 2 other outlets.

Discounts may be available for bulk purchasing or for paying invoices within a certain number of days.

Energy costs

For most of us, energy costs are unavoidable but that doesn’t mean that you have no control. This sector has opened up to more competition – again, shop around.

Energy saving equipment should be another consideration. Buy energy efficient lighting or power management systems for example and you can claim the full costs as a tax deduction in the year of expenditure rather than the normal
write off over 8 years for other equipment.

Telephone costs

We are constantly amazed when we see how much clients spend every year on phone bills. Consider your costs here and whether switching from your fixed line to a VOIP service would be suitable.

Small businesses are often slow or reluctant in putting staff members on company phone plans preferring to reimburse any costs on personal mobiles. This can be counterproductive as group schemes will allow you to avail of cheaper rates. Phone operators court businesses and are only too happy to arrange specialised phone packages.