COVERING RECRUITMENT

Alan Sugar may have no difficulties in finding potential recruits for his businesses, but outside the world of such television programmes as ‘The Apprentice’, life is rather different. You may have experienced this yourself, if you have tried to hire any senior staff recently. Finding the right people is never easy, even at the best of times. Imagine how much more arduous it would be if the person you were trying to replace had given no warning of their departure, and could therefore not bring their successor up to speed during a probationary handover period. This is what could happen if one of your key people were to suffer a serious illness – perhaps a sudden heart attack – or die. The probability of this happening to any single individual is small, but the more key people you employ, the greater the overall chance that such an unwelcome event could occur over the years. Surprisingly, Alan Sugar provides a clue to one means of solving such a problem – money. If there is enough cash in the business, you can probably ride out the time it takes to recruit the right new employee and bring them up to full productivity. That may initially mean employing an ‘interim executive’ to cover the time lost to the search and selection process – along with a possible notice period for the chosen candidate. The funds needed to finance the interim executive, the recruitment process for the new employee and the likely hit to profits could be significant. The simplest way to make sure that the funds are available when it matters is to set up appropriate life and critical illness insurance cover on your key employees. The cost may be surprisingly low, as the protection market remains fiercely competitive.

Are You Contracted Out?

If you use a personal pension to contract out of the state second pension (S2P), you should review your position. Contracting out may no longer be the right choice for you. The national insurance rebates paid to your plan have changed for 2007/08. Some rebate levels have risen, but others have fallen by nearly 30%.


ISA Contributions

Don’t wait until next March to invest in your ISA! To maximise the tax benefits, you may wish to consider investing for as long as possible by contributing now, not in nine months’ time. The current ISA rules will continue until at least April 2011, but tax rules generally change. Non-cash ISAs can fluctuate in value and you may not get back your original investment.


Taper Tops

6 April 2007 was a capital gains tax (CGT) landmark. Any CGT liability on ordinary investments you owned before 17 March 1998 is now subject to the maximum possible taper relief of 40% of the gain. So if you have a gain of £15,000 on an investment, the relief will bring the taxable gain down to £9,000 (£15,000 x [100% – 40%]). In most cases, that would be covered by this year’s annual CGT exemption of £9,200. Tax rules change and the FSA does not regulate tax advice.