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Wellbeing On The Agenda. Part 2.

1024 635 Vita Burton-Davey, Working to be better each day

Wellbeing On The Agenda. Part 2.

Yoga Girl

The recently published ‘Wellbeing in four policy areas, Report by the All-Party Parliamentary Group on Wellbeing Economics, September 2014’ advocates the importance of wellbeing and implementation of wellbeing for the nation, for economic national benefit. Four key policy areas have been the focus of the report: Labour market policy, planning and transport policy, mindfulness in health and education, and arts & culture.

Positive changes in these areas could have a huge impact on national wellbeing but it will in fact see a U-turn in some areas, such as arts & culture, where funding has been slashed. The report argues that ‘wellbeing evidence has real, distinctive, and wide-ranging policy implications: from interventions to build people’s resources and resilience, such as mindfulness, to major structural changes to address the root causes of low wellbeing, such as insecurity, poverty, and social isolation. It also helps capture the value of the intangible things which enrich our lives, such as arts and culture. ‘

Building a high wellbeing economy: labour market policy

Having a job plays a vital role in our wellbeing, not just because of the financial implications around unemployment but because it is directly linked to our sense of worth and ‘as enlightened employers increasingly recognise, prioritising employee wellbeing is good for the economy and good for business’.

We would all agree that the recession and increased unemployment have been bad for national wellbeing and for our economy. That does not, however, mean that high wellbeing is linked to exponential growth. The evidence suggests that ‘the link between money and wellbeing tails off as incomes increase, tackling poverty and inequality matters much more than increasing national income in aggregate.’

This is good news, if not particularly surprising. Neither we nor the planet can sustain unending growth, so as limited growth seems to be the best option for increased wellbeing, it’s a win-win situation. Let us hope that successive governments are able to take this on board and make the right choices as we move forward, not only helping employees and business but meeting and improving our green targets.

The report has recommend that:

  1. Stable and secure employment for all should be the primary objective of economic policy. Steady and sustainable growth should be prioritised over absolute levels of national income as a means to this end, and policy should address work insecurity as a priority.
  2. Government should address the wellbeing consequences of low pay. For example, the Low Pay Commission should be given a mandate to consider wellbeing evidence, including impacts on wellbeing inequalities, when recommending changes to the minimum wage.
  3. Government should address the wellbeing consequences of inequality. For example, firms with more than 500 employees should be required to publish information about the ratio between the highest and lowest paid, and between top and median pay.
  4. Government should actively seek ways to make it easier to work shorter and/or more flexible hours and should develop a public sector employment strategy consistent with this.

The Department for Business, Innovation, and Skills (BIS) should encourage employers in both the public and private sectors to prioritise employee wellbeing, for example by publicising existing employer best practice and by producing guidance based on research into the drivers and outcomes of well-being at work.

Building high wellbeing places: planning and transport policy

A clear and unequivocal message is sent to parliament with this report: The planning system has been noted to have ‘lost its way, becoming reactive and process driven, losing sight of the outcomes it was created to serve’. The report states that the planning system could regain ‘a sense of purpose and ambition’ if raising wellbeing were to be considered the central precept of the planning system.

Our constructed environment affects our happiness and wellbeing and reflects our community spirit. Even with the best intensions, the planning system has consistently failed to improve the wellbeing of the less affluent, particularly urban, populations. Think of the garden cities and how the reality of living in dense urban environments brought its own reality check to that dream. Successive governments have a huge challenge here and the suggestion that ‘an integrated approach focused on building high wellbeing places’ is laudable, but can it be put into practice?

The report recommends that:

  1. The National Planning Policy Framework (NPPF) should be revised to make clear that promoting wellbeing is the over-arching objective of the planning system, not just a peripheral concern, and that the ‘presumption in favour of sustainable development’ is subject to local authorities’ right and responsibility to set high wellbeing standards.
  2. Planning practice guidance should set out how wellbeing can guide Local Plans and specific planning decisions, including by; ensuring that town centres are sociable and inclusive spaces which are accessible for all sections of the community.
  3. Planning for an ageing population.
  4. Making it easier to access jobs and services by cycling and walking.
  5. Prioritising the provision of green space in ways that maximise wellbeing.
  6. Local authorities should be empowered and encouraged to take a proactive, ‘place-shaping’ approach to planning. Spatial planning should be re-integrated with other local authority functions, including transport and housing.
  7. At a national level, transport and planning policy should be integrated into a single department with the shared aim of promoting accessibility rather than just mobility.

Building personal resources: Mindfulness in Health and Education

‘Mindfulness has demonstrable potential to improve wellbeing and save public money – for example, through evidence-based therapies for mental health problems and school-based programmes to nurture children’s wellbeing’. Sounds good so far, but the suggestion to ‘train health and education professionals (doctors, nurses, teachers) in mindfulness’ seems not only unrealistic but also to miss the point about mindfulness.

Mindfulness is not a ‘skill’ to be drilled into health and education professionals, any more than compassion is; it is an holistic practice which may be incorporated into ones life. It is a healthy way to live ones life which has demonstrable benefits for improved mental health and wellbeing and it would be super to incorporate it into our health and education systems. In reality, however, the curriculum is already stuffed to gunnels, with teachers struggling with huge class sizes, and most health professionals would laugh in your face if you suggested that they have time for meditation, when they are barely given the time for the basic care of their patients.

In order to implement the recommendations of this report any further than in training would require a paradigm shift in the administration of both health and education.

The report recommends that:

  1. Mindfulness should be incorporated into the basic training of teachers and medical students.
  2. Subjective wellbeing evidence should be used in the calculation of ‘quality adjusted life years’ (QALYs), to better inform the allocation of scarce resources in the health service.
  3. HWBs should bring together public health professionals, Clinical Commissioning Groups, GPs, and other stakeholders to develop strategies for ‘whole person care’ which effectively integrate mental and physical health.
  4. References to wellbeing in the Ofsted inspection framework should be reinstated and strengthened. Schools should be encouraged to measure and report on child wellbeing.

Valuing what matters: arts and culture

Arts & culture have suffered a great deal from funding cuts during the recession, a decision which is clearly at odds with the new recommendations. ‘Wellbeing analysis provides a way of capturing the value that arts and culture have for human lives’ though the conclusion that ‘It is therefore a particularly useful tool for assessing public subsidy of arts and culture’ is one which I would question.

The ever increasing demand on the visual arts to provide participatory activity as a criteria for funding allocation is surely misguided: Can you imagine the same criteria being applied to opera or theatre? I am not saying that participating in art, acting or singing is not beneficial to mental health and wellbeing, only that arts and culture should not be funded as though they were part of our health system but valued and funded separately. In this area in particular I think the underlying precept for the reports recommendations needs to be re-evaluated.

The report recommends that:

  1. The Department for Culture, Media & Sport (DCMS), and the arts sector more generally, should use wellbeing analysis to help make the case for arts and cultural spending.
  2. Government should use wellbeing analysis to help set strategic priorities for spending on arts and culture. For example, spending should give greater priority to participatory arts.
  3. Arts funding bodies should seek to evaluate the wellbeing impacts of their grants, either individually or by using wellbeing evidence to inform their evaluation frameworks.
  4. In the light of evidence on the links between the arts and health, central government (DCMS, the Department of Health and the Department for Communities and Local Government) should work with relevant agencies, including Arts Council England and PHE, to maximise the beneficial impact on wellbeing of available budgets. Local authorities should consider how cultural commissioning might contribute to priorities identified in their Health and Wellbeing Strategies.
  5. Government should seek to ensure that the benefits of arts spending reach those with the lowest wellbeing, including communities with high deprivation.

The underlying reasoning behind this report is convincing and laudable. The report states that it has ‘only scratched the surface’ but its conclusion that improved wellbeing will not only make people’s lives better but save public money and increase GDP should be enough to at least get Parliament’s attention and with hope, open serious discussion around limited growth and focus on the parts of our lives which are not defined by monetary worth, will ensue.

Malta funds image

Malta: When It Comes To Funds, Why Choose Anywhere Else?

1024 778 Amicorp Fund Services

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Malta’s accession to the European Union in May 2004 has brought with it a growing reputation as a hedge fund domicile of choice. Malta was voted as Europe’s most favoured fund domicile by Hedge Fund Review’s 2013 and 2014 service provider rankings.

Flexible regulation, transparency and good governance are just some of Malta’s advantages, as well as its status as a cost-effective domicile for funds, asset managers, fund administrators and for custodians catering to the thriving fund industry.

Malta hosts around 600 investment funds with a combined net asset value of almost €10 billion, and the sector is growing and attracting sophisticated asset management activities all the time.

EU membership has enabled Malta to introduce rights so that investment services and UCITS schemes may be registered in Malta and passported to any EU country.

Alongside the advantages of EU membership and access to a market of over 500 million people in 28 EU economies, Malta also enjoys excellent relations outside of the EU, specifically with other Mediterranean nations in North Africa and the Middle East, making it an attractive base for European, American or Asian companies wishing to enter markets to the south. In addition, Malta is a signatory to more than 70 double-taxation treaties, covering most of the world’s high-growth markets facilitating international business.

Malta has established a comprehensive regulatory framework for the registration and marketing of funds and investment vehicles. Malta’s financial services framework and tax laws are in line with EU directives and requirements and regulated by the Malta Financial Services Authority (MFSA). The licensing process with the MFSA is quick, efficient and thorough.

That said, the MFSA does not accept just any type of investment funds into Malta, but will readily assist those funds carrying a seal of quality. The MFSA carries out regular due diligence on the fund manager, the board of directors and the members of the investment committee, and regulatory and statutory issues may be discussed with the regulator, even at the earliest stage.

What funds does Malta offer?
Collective investment schemes may come in the form of the SICAV, with its variable capital nature and the possibility of establishing sub-funds. This is the most widely used vehicle, particularly in the non-retail sector, and it can be structured to include master feeder funds and umbrella funds with segregated sub-funds.

Professional Investment Funds (PIFs) are targeted at increasingly experienced investors. PIFs target 3 main types of investor: the experienced investor, the qualifying investor and the extraordinary investor. The regime is designed to fast track regulatory approval with a reduced level of ongoing regulation and supervision, but the type of investor, and therefore the ongoing regulation, is determined by qualifying criteria.

The creation of a new regime for Alternative Investment Funds (AIF) is one of the biggest recent additions to Malta’s fund market after the coming into force of the Alternative Investment Fund Managers Directive (AIFMD) in 2014. Malta was one of the first EU member states to transpose the AIFMD into law and the AIF regulatory regime was specifically set-up to cater for this new fund category.

Malta’s legislation also provides for the setting up of UCITS (Undertakings for Collective Investment in Transferable Securities) and non-UCITS retail funds.

A new vehicle was established in 2012, called the Recognised Incorporated Cell Company (RICC). Directly targeting fund platform providers, this structure allows the RICC to provide, in exchange for payment of a platform fee, certain administrative services to its Incorporated Cells.

What about the Benefits & Costs?
The tax structure in Malta provides a significant incentive. Companies that list securities on the Malta Stock Exchange are not charged with capital gains tax and no stamp duty is due on the transfer of such shares or securities.

Malta’s regulatory and ongoing costs are extremely competitive and, when taken together with the various funds options, regulation and passporting rights, makes it a very attractive proposition.

How can Amicorp Fund Services Malta help?
Amicorp Fund Services Malta Limited forms part of Amicorp Group and is recognised as a fund administrator by the MFSA and offers a complete package of support services. These services allow our clients to focus on their core competencies of investment management and capital-raising. We achieve these goals by focusing on the following factors:

  • Fully automated fund administration services, based on state of the art, globally recognised technology, which integrates NAV calculation, investor administration, general ledger and KYC/AML features
  • Establish automatic feeds of financial data whenever possible, whether it concerns broker information or market data

The reporting package is carefully reviewed by a team of highly experienced fund administrators. As an ISAE-3402 Type II certified fund administrator, our internal control process is accredited by one of the reputable ‘Big 4’ firms. Using our state-of-the-art PFS Paxus software and online web reporting, we provide accurate and timely information to fund operators and investors.

Isle of Man weight

The Isle of Man – A Place To Make Things Happen

1024 768 Ita McArdle

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As a tax neutral domicile the Isle of Man is perfectly situated geographically, fiscally, politically and constitutionally to form part of a structure that wishes to access Europe or indeed any other part of the world.

The Isle of Man is what is termed a Crown Dependency and thus has the Queen of England as its titular head. The basis of law is common law and statute-based and therefore English case law is usually persuasive. With the ever-increasing international influence on domestic legislation, aspects of EU law can be applicable in relevant areas also.

The Isle of Man service providers – lawyers, accountants, trust and corporate service providers (TSPs), Fund Administrators and investment fraternity – pride themselves on having a proactive approach to business wrapped around a pragmatic, value-for-money and professional approach. This ethos is heavily endorsed by both Government through its marketing body, the Department of Economic Development, and the Regulator (Isle of Man Financial Services Authority) and is encapsulated in the Isle of Man marketing approach strap line of “Isle of Man. Where you can”.

Import and Export
The Isle of Man, by virtue of its unique Customs and Excise Agreement with the United Kingdom and European Law, is treated as part of the UK and European Union (EU) for Customs , Excise and Value Added Tax (VAT ) purposes. The benefit of this is that the Isle of Man Customs and Excise can, through its Entry Processing Unit (EPU) housed within the UK’s Customs Handling of Import and Export Freight (CHIEF) Computer system, provide importers and their agents with the Ability to electronically declare goods imported to or exported from the United Kingdom / Isle of Man. Currently the system allows for electronic clearance without the need for the goods to physically travel to the Isle of Man. It is expected that a system of “Centralised Clearance” will be introduced across the EU.

Structures
The Isle of Man has two prime bodies of company law – the Companies Act 1931–2004 and the Companies Act 2006. There is some overlap between the sets of legislation, but essentially a company formed under the 1931 Act is a more traditional style of company with extensive legislative provisions. The 2006 Act company legislation is designed to be more flexible and modern. That being said, 2006 companies are being used for a comprehensive variety of transactions including listing on exchanges throughout the world, owning property, trading and general investment vehicles. Both vehicles can be registered for VAT as mentioned above.

There are no restrictions on who can own the shares in Isle of Man companies and there are no permissions required for the raising of capital. There are applicable provisions in respect of the public distribution and promotion of the shares in Isle of Man companies. The 1931 provisions are more formalised in the traditional prospectus sense whilst the requirements under the 2006 Company in simple terms require the prospectus to contain sufficient information for an investor to make an informed decision.

The Isle of Man also has Limited Partnership legislation, limited liability companies and Protected Cell Legislation which can be very useful for structuring.

As a Common Law jurisdiction Trust law is well established in the Isle of Man and can be part of the structure to hold shares. The Isle of Man also has the concept of Purpose Trusts which works well for structuring joint venture arrangements. Foundations are another vehicle that can be very useful for structuring as an alternative to a trust or company. The foundation is a statute based entity and is a favourable option for certain jurisdictions which are familiar with the concept.

Taxation Generally
The Isle of Man does not tax the income or capital gains of companies domiciled on the Isle of Man if they are owned by non-IOM residents.

Additionally, there is no stamp duty, inheritance tax or withholding tax. Probate fees are minimal.

However, there are various tax considerations regarding remittance of income that are imposed by the UK tax authorities. The advice in respect of any structure would need to be tailored according to the details of the structure.

Multi-Jurisdictional Structuring
There are no prohibitions on an Isle of Man company or other structure either being owned by non-IOM structures or individuals and similarly there are no restrictions on what an Isle of Man structure can own.

Isle of Man structures are involved in many structures and there are some well-established examples involving Canada, Ireland, UK Mauritius, Delaware, Hong Kong and Singapore, as well as European companies to name a few.

The reasoning can be both legal and for fiscal efficiencies as well as simply being pragmatic. For example, an investment may be in a company and it could be more efficient to buy the company rather than the investment directly.

Recent changes in the regulatory approach in the Isle of Man have seen the combining of the former pensions authority and financial services commission into one body known as the Isle of Man Financial Services Authority (FSA). This move is part of a response to the legal and financial services industry support for a commercial and progressive environment to support growth sectors while maintaining and enhancing the Isle of Man’s reputation as a jurisdiction of excellence.

FSA is now responsible for the Captive Insurance Industry which will not be governed by Solvency ɪɪ as well as the Life Industry that will be subject to Solvency ɪɪ. This two tier approach is indicative of the pragmatic and resourceful approach of the Government and the FSA to meet industry needs.

A product which has had strong legal input has been the development of a crowd funding regime and new banking model to support traditional banking partners.

The Isle of Man has a lot to offer: a well-run regime with strong growth and forward-thinking that makes it the place to make things happen.

student

It’s Just A Student Loan, Right?

1024 768 Crowe Clark Whitehill

Student-Loans

In fact, there are two types of undergraduate loan, explains Phaedra Bird of Crowe Clark Whitehill in the Isle of Man. And from 2019, postgraduates may be paying back debts of their own. It’s potentially a recipe for confusion.

Most of us are familiar with the basic idea of student loans. You borrow money at the outset of your degree course and start repaying it when you’re working, once your income exceeds a certain level. The outstanding sum will get written off eventually if it’s not repaid within 30 years.

The system up until now has been relatively straightforward for employers on the administrative side, but there are now some potential complications. It all stems from the launch of a new type of loan back in September 2012.

Loans issued before this date are known as the ‘Plan 1’ type and continue in Scotland and Northern Ireland. Those taken out after this point are referred to as ‘Plan 2’. The first cohort of people with Plan 2 loans graduated last year, so they’re now due to start paying back what they owe.

So what are the differences between Plans 1 and 2? Well, the repayment thresholds are the main issue. With Plan 1, you start to repay at 9% once you’re earning over £17,335, whereas the figure is £21,000 for Plan 2. A decision has been taken, following a consultation process, to freeze this latter figure for all borrowers.

If you’re an employer, you’ll need to know which type of loan the student has. Finding out is fairly straightforward, but you can’t necessarily rely on your employee knowing. To them, it was just a loan. And what if they have both types? The rules say that the Plan 1 loan should be paid off first. But as things stand at the moment, there is no intention to issue a stop notice for it. You will, instead, have to rely on the start notice for the Plan 2 loan.

Of course, many employers will want to think they can handle this, but there is the potential for an administrative error leading to a double deduction being made. Payroll systems should take the two schemes into account and the HMRC PAYE Basic Tools package is being updated too, as you might expect. But is everything going to be watertight?

There’s then a further complication. From August this year, the Government is making postgraduate loans available to anyone under 60, which will become payable from April 2019. Although the threshold matches the Plan 2 at £21,000, the rate of repayment is 6% rather than 9% above this point. Imagine the confusion when these debts are being repaid alongside Plan 1 or Plan 2 loans.

The message here is to be prepared. Although there is nothing intrinsically complex about the arrangements, the room for administrative hiccups is going to get bigger and bigger over time.

Double exposure businessman

Non-Domiciliary Reform: Where Are We Up To And What Action Can Be Taken Now?

1024 682 Abacus

Corporate

HMRC and the UK Government are in the middle of a balancing act: weighing up media and political pressure to ensure everyone pays their “fair share of tax” with the economic benefit of a competitive tax regime.

It is crucial to the UK economy that Britain remains “open for business” and maintaining a competitive tax regime plays an integral part in attracting new business. The potentially favourable tax regime available to non-UK domiciliaries has historically played its part in attracting wealthy individuals and business owners to the UK.

The rules on the tax treatment of non-UK domiciliaries are currently in a state of flux and it would perhaps be understandable to be of the view that any changes are likely to be unfavourable from the taxpayer’s perspective. However, HMRC appear to acknowledge the importance of non-UK domiciliaries to the UK economy. This acknowledgement was evident in the foreword by David Gauke, Financial Secretary to the Treasury, to HMRC’s consultation document setting out the proposed changes which stated:

The government wants to attract talented individuals to live in the UK who will help to contribute to the success of this country by investing here and creating jobs. The long-standing tax rules for individuals who are not domiciled in the UK are an important feature of our internationally competitive tax system, and the government remains committed to that aim.

So what are the changes to the taxation of non-UK domiciliaries and is it all bad news?

HMRC published a consultation document setting out their proposed reforms to the taxation of non-UK domiciliaries back in September 2015. The new regime will be effective from 6 April 2017 and legislation was to be included in Finance Bill 2016. Publishing draft legislation has been pushed back to 2017; however, it would appear that HMRC continue to be committed to a new regime being in place in April of next year.

Numerous articles have been written on the technicalities of the new proposals and how they may impact on taxpayers depending on their current and historic UK residence and domicile position. Explaining the possible changes and potential implications requires an article by itself and once you have ploughed through the possible implications it is easy to miss the fact that these changes potentially present opportunities for certain taxpayers. Whilst we do not have published legislation (and therefore, the position continues to be uncertain), HMRC have confirmed certain matters and this may allow taxpayers to take action now before the new rules are introduced. Such action could present long term tax benefits.

Long term non-UK domiciled individuals

One of the main changes is that, with effect from 6 April 2017, individuals who are non-UK domiciled will be deemed to have a UK domicile for tax purposes if they have been resident in the UK for more than 15 out of the past 20 tax years. Once the individual has become deemed UK domiciled, they will no longer be able to claim the remittance basis and, consequently, will be subject to UK tax on their worldwide income and gains. Furthermore, all of the individual’s worldwide assets would be within scope of UK inheritance tax.

What are the potential benefits?

If you anticipate becoming deemed UK domiciled under the new regime from 6 April 2017, now is the time to act in order to benefit from an offshore trust structure. If you set up an offshore trust now (ie before you become deemed UK-domiciled under the new regime) you should not be taxed on foreign income and/ or chargeable gains which are retained in the trust. Furthermore, the trust should also provide an effective shelter from UK inheritance tax (even if you subsequently become UK deemed domiciled under the new regime in the future). There are, of course, certain asset types that would need to be excluded, UK residential property for example. However, an effective deferral of income and capital gains tax could potentially be achieved with the added benefit of protection from UK inheritance tax.

What action should I be taking now?

Timing is crucial. If you anticipate becoming deemed UK domiciled under the new regime, any steps to establish an offshore trust in order to potentially benefit from tax savings must be taken before the new rules are introduced. We would recommend taxpayers in these circumstances take action now to establish their offshore structure.

If you would like to discuss either the proposed new rules for non-domiciliaries or any practical aspects of establishing an offshore trust structure feel free to contact one of our team.

Kevin Loundes, Senior Tax Manager – kevin.loundes@abacusiom.com

Stewart Fleming, Group Managing Director – stewart.fleming@abacusiom.com

Stephen Colderwood, Business Development Manager – stephen.colderwood@abacusiom.com

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