Would your business benefit from monthly or quarterly management accounts?

Having quality management accounts can be beneficial to your business as they can help you to grow by making it more efficient and hopefully more profitable.

Management accounts are a set of detailed accounts prepared to illustrate the company’s   performance. The goals of the accounts are to provide key financial information which will help with short term financial decisions and in planning for long term development. 

The main advantage of having management accounts is being able to control the business. If you want to make projections, cash flows or be able to be accepted for finance, management accounts are an essential starting point. They will provide you with the up to date information throughout the year to give you accurate feedback of performance. If you find that your business is growing rapidly and want to be able to plan for the future, we recommend that you put in the controls and ways of reporting now to help guide the growth.

Typically, the accounts are prepared on a quarterly basis; it is not uncommon however to have monthly reports supplied to the business.

If you feel that additional guidance is needed as your business starts to grow, then please get in contact with us so we can help you make the right the decisions. Please visit our website for a complete list of our support services Click Here. 

Or contact us on 0116 2423400 or info@torrwaterfield.co.uk 

Eoghan Macilwraith, Accounts & Tax 

 

Self-employed Class 2 National Insurance will not be scrapped

The government has decided not to proceed with plans to abolish Class 2 National Insurance Contributions (NICs) from April 2019.

Class 2 NICs are currently paid at a rate of £2.95 per week by self-employed individuals with profits of £6,205 or more per year. The government had planned to scrap the Class 2 contribution and had been investigating ways in which self-employed individuals with low profits, could maintain their State Pension entitlement if this inexpensive contribution had been abolished.

In a written statement to MPs, Robert Jenrick, Exchequer Secretary to the Treasury, stated that:

‘This change was originally intended to simplify the tax system for the self-employed. We delayed the implementation of this policy in November to consider concerns relating to the impact on self-employed individuals with low profits. We have since engaged with interested parties to explore the issue and further options for addressing any unintended consequences.’

‘A significant number of self-employed individuals on the lowest profits would have seen the voluntary payment they make to maintain access to the State Pension rise substantially. Having listened to those likely to be affected by this change we have concluded that it would not be right to proceed during this parliament, given the negative impacts it could have on some of the lowest earning in our society.’

If you want to discuss any of this further please get on touch, 0116 2423400 or info@torrwaterfield.co.uk 

Tax refund scams warning from HMRC

HMRC has issued a warning to taxpayers regarding the latest tax refund scams. These scams are targeting individuals via email and SMS messages.

HMRC is currently processing genuine tax refunds for the 2017/18 tax year and the fraudsters are sending scam messages which claim that taxpayers are entitled to a rebate. These messages go on to request that they provide their personal and account details in order to make their claim.

HMRC is keen to stress that it will only ever inform individuals of a tax refund by post or through their employer, and never via email, text messaging or voicemail.

Commenting on the issue, Treasury Minister Mel Stride said

We know that criminals will try and use events like the end of the financial year, the self assessment deadline, and the issuing of tax refunds to target the public and attempt to get them to reveal their personal data’.

HMRC is advising taxpayers not to click on any links, download any attachments or provide any personal information, and to forward any suspect messages to HMRC.

Please get in touch if you wish to discuss any of this further.

Torrwaterfield – 0116 2423400 info@torrwaterfield.co.uk

P11Ds – Return of Expenses and Benefits

It is that time of year again when your organisation’s P11D forms will need to be prepared and submitted to the Inland Revenue. The most common entries being the car or van benefit, with or without fuel for private use.

In addition to the above, directors/employees are sometimes provided with private health insurance.  The best way of dealing with this is to ensure that the contract is between the employer and the insurance company and therefore the amount is treated as a benefit in kind and reported on a P11D 

However, sometimes the employer will offer to pay the employee’s personal medical insurance directly.  In this case the contract for the health insurance will be between the insurance company and the director/employee and the payment is treated very differently to the above.  If the company pays the bill on behalf of the employee the amount is entered onto the P11D for tax purposes but is dealt with through the payroll for National Insurance.  This, as you can imagine, gets very messy.

This does not just apply to medical insurance but also any contract in the director/employee’s name that the employer settles on behalf of the director/employee.  Another common one that springs to mind is a mobile phone bill. 

The moral of the above is to set up medical insurance/mobile phone contracts between the employer and the supplier directly which simplifies the treatment of dealing with the whole reporting process.

The above is just a small part of the P11D system so please get in touch if you require any help. 0116 24243400 or info@torrwaterfield.co.uk

Julia Harrison , Tax Manager 

National Minimum Wage – where are we now?

Falling foul of the National Minimum Wage rules can be expensive – as well as having serious implications for employer reputation. Many firms have been named and shamed for getting it wrong – are you compliant?

Employer errors

The National Minimum Wage (NMW) keeps appearing in the headlines. Recently the Department for Business, Energy and Industrial Strategy (BEIS) announced that some 230 employers had been named and shamed for failing to pay NMW and National Living Wage (NLW). The retail, hairdressing and hospitality sectors were among the most non-compliant. Because of BEIS intervention, more than 13,000 low-paid employees were due to receive £2 million in back pay.

But the final price tag for employers who hadn’t kept the rules was much higher. Between them, they were also fined a record £1.9 million. Business Minister Margot James said there was a clear message to employers. ‘The government will come down hard on those who break the law.’

BEIS report that common employer errors include deducting money from employees to pay for uniforms, not accounting for overtime and wrongly paying apprentice rates to workers. So, what is the latest on NMW and how do employers keep on the right side of the law?

NMW and NLW – the basics

NMW is the least pay per hour most workers are entitled to by law. The rate is based on a worker’s age and whether they are an apprentice. NLW applies to working people aged 25 and over. From 1 April 2017, the rate ranges from £7.50 per hour for those aged 25 and over, to £3.50 per hour for apprentices under 19, or for those aged 19 or over who are in the first year of an apprenticeship. Changes to NLW rates are in the pipeline from April 2018, so employers may need to plan for these now.

NMW/NLW rates are reviewed by the Low Pay Commission, but it is HMRC who police the system. Employers can be faced with court action if they don’t pay NMW/NLW. Penalties for non-compliance stand at 200% of the back pay due to workers. The maximum penalty per worker is £20,000. There is a provision to reduce a penalty by half if unpaid wages and penalty are both paid within 14 days.

Not everyone qualifies for the NMW/NLW. These include people who are self-employed: volunteers: company directors: family members, or people who live with an employer and carry out household tasks eg au pairs.

But most other workers are entitled to NMW/NLW, including pieceworkers, home workers, agency workers, commission workers, part-time workers and casual workers. There are also rules regarding agricultural and horticultural workers, with slightly different small print for England, Scotland and Wales.

In calculating pay for minimum wage purposes, the starting point is total pay in a pay reference period – before deducting income tax and National Insurance. Some payments are not included, such as loans and pension payments.

To add to the complexity, there is also something called the Living Wage, which is an hourly pay rate, set independently by the Living Wage Foundation. This isn’t anything to do with the government, and any employer who pays this does so entirely voluntarily.

Latest guidance: social care workers

HMRC have updated their guidance to clarify how NMW applies in the social care sector for workers carrying out ‘sleepover shifts’, following confusion over whether such shifts qualified for NMW. BEIS had suggested sleepover shifts carried out before 26 July 2017 qualified for a flat rate allowance, not NMW. But the decision is that NMW does apply, and applies retrospectively.

This could have left employers with bills of up to six years in back pay and penalties. But from 26 July, enforcement activity for sleepover shift pay is suspended until November, with retrospective penalties for sleepover shifts before 26 July 2017 waived. The actual back pay is still due, unless employers can show they can’t pay. Although it is envisaged that underpayments will be pursued from this date, the government says it is committed to minimising the impact of future minimum wage enforcement in the social care sector.

If you would like to discuss any of this further then please get in touch 0116 2423400

Running a payroll can be time consuming and complicated and divert resources from the core activities of your business. We can address this by installing payroll software and training your staff. Outsourcing this activity also helps relieve the pressure and we can offer cost-effective solutions. We are able to provide the complete service, what ever the size or complexity of your business, or simply provide support when needed. If you would like a quote then please call 0116 2423400 or email info@torrwaterfield.co.uk

14 Days left to submit your 2016/17 self assessment return

The following Tax Events are due on 31st January 2018:

Personal Tax Events

Deadline for submitting your 2016/17 self assessment return (£100 automatic penalty if your return is late) and the balance of your 2016/17 liability together with the first payment on account for 2017/18 are also due.

This deadline is relevant to individuals who need to complete a self assessment tax return and make direct payments to HMRC in respect of their income tax, Classes 2 and 4 NI, capital gains tax and High Income Child Benefit Charge liabilities. 

There is a penalty of £100 if your return is not submitted on time, even if there is no tax due or your return shows that you are due a tax refund.

The balance of any outstanding income tax, Classes 2 and 4 NI, capital gains tax and High Income Child Benefit Charge for the year ended 5th April 2017 is due for payment by 31st January 2018.  Where the payment is made late interest will be charged.

The first payment on account for 2017/18 in respect of income tax and any Class 4 NI or High Income Child Benefit Charge is also due for payment by 31st January 2018.

If we have already dealt with your self assessment return on your behalf you need take no action.

If you haven’t completed your self assessment return yet please contact us, we can help. 0116 2423400 or send us an email info@torrwaterfield.co.uk

When is a van not a van?

It’s not important whether the vehicle is a van. What’s important is that it’s not a car.

For VAT purposes it will be a car if:

It is of a kind normally used on public roads, has three or more wheels and either:

  • is constructed or adapted for carrying passengers; or
  • has roofed and windowed accommodation behind the driver.

Excluding:

  • Vehicles capable of accommodating only one person;
  • Vehicles with a gross weight of at least three tonnes;
  • Vehicles with a payload of at least one tonne;
  • Minibuses (for 12 or more people);
  • Caravans;
  • Ambulances, prison vans and other special purpose vehicles.

For P11D/capital allowances purposes it will be a car if:

It is a mechanically propelled road vehicle, which is not:

  • a goods vehicle (of a construction primarily suited to the conveyance of goods or burden of any description);
  • a motorcycle (fewer than four wheels and an unladen weight of no more than 425Kg);
  • an invalid carriage (specifically designed for disabled use and an unladen weight of no more than 254Kg); or
  • a vehicle of a type not commonly used as a private vehicle and unsuitable for such use.

People (at least living ones) aren’t goods or a ‘burden of any description’, so anything with seats in the back (other than a double cab pick-up type vehicle with a one tonne+ payload) is likely to be regarded as a car for direct tax purposes.

Anything with seats in the back and/or roofed and windowed accommodation behind the driver (other than a double cab pickup with a one tonne+ payload) is likely to also be a car for VAT purposes.

For clarification use the link below.

http://www.hmrc.gov.uk/manuals/eimanual/eim23110.html  

If you would like to discuss any of this further then please contact us 0116 2423400

Linda Plumb, Credit Control