Redundancy Rules
AIDAN BAILEY reveals what to be aware of when faced with redundancy.
We all hope we’ll never have to experience redundancy. But in reality, particularly as a result of the current economic situation, it does occur. And when it happens, it usually comes as a terrible shock – regardless of the blessing it may later seem. To be prepared, here’s a complete step-by-step guide of what you should do and think about when faced with the reality of losing your job.
First of all…
- You have rights to question the decision being made. You may not be able to change anything, but at least you won’t be left to wonder what went wrong.
- Make notes of any meetings with your boss or Human Resources department. It’s always better to rely on written notes rather than memory when you’re feeling shell-shocked.
- Don’t sign anything immediately. A reasonable employer will give you the chance to calm down.
- Understand your residency rights in Singapore. For example, if you’re holding an employment pass you are granted just one month to settle all your affairs and leave Singapore. You might want to consider applying for a Personal Employment Pass (PEP), which allows you to remain in Singapore for up to six months between jobs, giving you more time to evaluate new employment opportunities. A PEP is not tied to any employer, is only issued once and is non-renewable. For more information, visit www.mom.gov.sg.
And then…
- Ensure you receive a written summary of your redundancy package. This should include a statement showing how your benefits have been calculated, clear information on your pension rights and details of any paid leave or holiday entitlement.
- Make sure you retrieve all relevant contact details – ideally your line manager and the individual in the Human Resources department you’ve liaised with most often.
- While finalising all details of your redundancy package, your employer should let you know which of these three situations will apply to you:
- Requirement to work out your notice period.
- Advised to go on “gardening leave” where you’re required to serve out a period of notice at home.
- Receive pay in lieu of notice.
For further guidance on coping with redundancy, contact us for more information.
Aidan Bailey BA (Hons) CertPFS AWPCM
General Manager Singapore, International Division
Rent & taxes
AIDAN BAILEY explains the tax implications of owning an investment property in the UK.
You may have invested in UK property, but are you aware of all your tax obligations?
Income tax UK rental income is taxable – your non-residency status provides no immunity. To verify whether you’re liable to pay tax, determine your rental income, any deductions and whether you’ve made a profit. There are number of allowances which can be deducted from your rental income – such as, agent and accountancy fees, water rates, repairs, maintenance, insurance expenses, wear and tear expenses, plus amounts borrowed for the property’s purchase or improvement. If the deductions exceed your profit you won’t pay any tax. Remember, profits derived from jointly-owned properties are split equally between you and your partner. And while some individuals can apply to the HM Revenue and Customs (HMRC) for full tax allowances, the onus is on you to prove you’re eligible.
Self Assessment UK tax is usually due on January 31 or July 31 and includes tax due from the previous tax year and payments against the following year’s liability. Remember, it is your responsibility to notify HMRC of your rental income. Failure to declare your rental income will lead to automatic penalty and interest charges and more onerous obligations.
Agent’s obligationIf you use an agent, the Non-Resident Landlord Scheme requires the agent to deduct tax from your rent. You can apply to HMRC to receive your rental income without the tax deducted. To be eligible, all your tax affairs must be up-to-date.
Capital Gains Tax (CGT) You’re only ever liable for CGT if you sell your property and realise a capital gain. And while a CGT liability depends on number of factors, the golden milestone in UK tax terms is five tax years. If you’re absent from the UK for less than five years, you need to start planning your homecoming now, as any UK assets held at the time of departure which have realised a gain in the time you’ve been away, will be taxable upon your return.
If you’ve been away from the UK for more than five tax years there is much lesser impact. However, until that milestone is reached, there ispotential tax to pay.
When it comes to UK property, income tax and CGT liabilities can be confusing! To increase your understanding and avoid penalties, request one of our easy-to-follow guides and flowcharts.
Aidan Bailey BA (Hons) CertPFS AWPCM
General Manager Singapore, International Division
The entrepreneurial investor
AIDAN BAILEY analyses today’s unpredictable market and shares his insights, moving forward.
The world’s financial experts have almost given up trying to predict what’s going to happen next. But here’s my rundown of a few situations I never thought I’d see – and where I think the future lies.
Base rates at 1% The Bank of England has cut rates to one percent – the lowest level in its 314-year history. Currently, unemployment is rising, interest rates are falling so people are holding onto savings, banks are unwilling to lend due to bad debts and potential property investors are waiting for house prices to drop – with the UK residential market indicated to potentially fall a further 15 to 20 percent.
But think ahead. The general consensus is the economy will return to normality in 2010. So now is the time to take advantage of low mortgage rates as low as just three and-a-half percent, rental yields of six percent and attractive dividend yields on shares, compared to interest rates on savings.
10% dividend yields Banks aside, there are plenty of shares trading at ridiculously low valuations, yet currently returning high dividends. Aviva is paying a dividend of 13 percent, but has capital concerns and general exposure to a falling stock market. BT’s dividend yield is almost 10 percent – although profits are falling due to a growing pension deficit. Shell is paying a dividend of almost eight percent, but is at the mercy of lowering oil prices.At face value, these yields are appealing, but the future of dividend income and share prices is unknown. Warren Buffett once said, “A simple rule dictates my buying: be fearful when others are greedy and be greedy when others are fearful." The market is definitely fearful. But don’t worry, greed will return. Once the fear subsides, greed will reassert itself and the prices of assets across the board will rise substantially.
Oil below US$40 It wasn’t long ago oil traded at US$147 a barrel. In 2008 it was thought the world was running out of oil. Today, oil is trading around US$40 a barrel. It has regained its momentum, but could oil fall further? Given “black gold” is a depleting asset, a barrel of oil should return to around US$75 to US$80 a barrel, in a rational market. Although it may take some time, the consequence of higher commodity prices is higher inflation. Given global authorities have embarked upon a deliberate policy of monetary inflation the next challenge will be protecting your portfolio from the effects of inflation. Consider investing in “real” assets, such as property, commodities and equities.
It may be strange times indeed, but there are always opportunities for investors – as Warren Buffet well knows.
Aidan Bailey BA (Hons) CertPFS AWPCM
General Manager Singapore, International Division
