Making changes for the better

The coronavirus pandemic has robbed us of a sense of normality but has also given an opportunity to fundamentally change the way we think, making changes for the better and in some cases, transforming our businesses. Terri Halstead, explains.  

If it ain't broke...

It’s easy to keep on doing what we’ve always done out of habit. It gives us a sense of comfort. If it ain’t broke, why fix it? For many, making changes in the way they live gives an unsettled feeling; a sense of upsetting the applecart. This year, of course, has changed that. I’ll give you a sartorial example. Normally, at this time of year, I‘d be looking to buy my winter wardrobe, but, having looked at what I’ve already got, I realise I don’t need anything. I’ve got perfectly good suits and there really is no need to get anything different, even though I’ve traditionally always done it. This pandemic, disruptive and destructive as it has been, has not only fundamentally changed the way we live - but also the way we think. A lot of people have used lockdown as a reason to have a good clearout and were doubtless surprised at the amount of stuff they’ve got rid of. People have realised that they don’t need as much as they thought. And alongside this, with matters of life and death bombarding us across all media for months now, there is also a feeling that it would be wrong to be seen to be ostentatious in times like these. And this isn’t just from a personal perspective either. There will be businesses that have made money out of Covid but no one wants to be seen to be gloating.  

Realising the opportunities

I mention this because along with the realisation of different values, is an opportunity to change the way we live for the better. Many people will also have used this time to make other big life decisions, some of which they may be able to realise thanks to measures that the government has brought in. When we were all stuck at home for those first three months, some will have decided that it is not the home they want to be in - others, who were perhaps renting, may have decided that they want a place of their own. To get the housing market moving again, the government introduced the stamp duty holiday, meaning there is no stamp duty payable on the first £500,000 of a house price until 31st March 2021. This presents a huge opportunity to first time buyers who previously would have taken a considerable hit of tens of thousands of pounds.  

Transforming businesses

The desire to make important changes is also relevant for businesses. Home working is a great example. For the majority of companies it has worked very well. Technology has, of course, played a large part in that, but the fact that many businesses have continued to operate with a remote staff has made both business owners and employees realise that there is more to life than being chained to a desk in the office. They have realised that flexibility is a necessity rather than a luxury. Many of the business owners I speak to have a rekindled desire to make the most out of the business by maximising tax reliefs and using a Patent Box, designed to encourage companies to keep and commercialise intellectual property in the UK. It allows companies to apply a lower rate of Corporation Tax to profits earned from its patented inventions. By using these reliefs, business owners are in essence making the business work harder - while at the same time realising they don’t have to kill themselves to do it. I mentioned life and death earlier and Covid-19 has shown that mortality is not linked to age and it can happen to anyone. I’ve been talking to a lot of my clients about succession and will planning, not least because the IHT consultation report in January talked about overhauling it completely. The government is spending huge sums at the moment and they will have to claw it back somehow, over many, many years to come. With many not spending as much as before, it’s critical to decide what to do with any surplus income. By gifting out of income rather than capital, it’s not even taken into consideration for IHT and a lot of my clients are doing that on an annual basis. You don’t want to give away everything, but, as the saying goes, you don’t want to be the richest in the graveyard, but you don’t want to be the pauper. I am in no way making light of the devastating impact this virus has had on us, but in amongst the tragedy there are some glimmers of light and the chance to have a happier, less stressful future.  

If you're making changes personally or in your business, talk to our tax advisors about how tax planning can help.