The following Tax Events are due on 19th April 2018.

The following Tax Events are due on 19th April 2018:

Business Tax Events

PAYE quarterly payments are due for small employers for the pay periods 6th January 2018 to 5th April 2018.

This deadline is relevant to small employers and contractors only. As a small employer with income tax, national insurance and student loan deductions of less than £1,500 a month you are required to make payment to HMRC of the income tax, national insurance and student loan deductions on a quarterly basis.

Postal payments for month/quarter ended 5 April should reach your HMRC Accounts Office by this date.

Where the payment is made electronically the deadline for receipt of cleared payment is Friday 20th April 2018 unless you are able to arrange a ‘Faster Payment’ to clear on or by Sunday 22nd April.

Penalties apply if payment is made late.

PAYE, Student loan and CIS deductions are due for the month to 5th April 2018.

This deadline is relevant to employers who have made PAYE deductions from their employees’ salaries and to contractors who have paid subcontractors under the CIS.

Employers are required to make payment to HMRC of the income tax, national insurance and student loan deductions. Contractors are required to make payment to HMRC of the tax deductions made from subcontractors under the CIS.

Postal payments for month/quarter ended 5 April should reach your HMRC Accounts Office by this date.

Where the payment is made electronically the deadline for receipt of cleared payment is Friday 20th April 2018 unless you are able to arrange a ‘Faster Payment’ to clear on or by Sunday 22nd April.

Penalties apply if payment is made late.

Automatic interest is charged where PAYE tax, Student loan deductions, Class 1 NI or CIS deductions for 2017/18 are not paid by today. Penalties may also apply if any payments have been made late throughout the tax year.

This deadline is relevant to employers who have made PAYE deductions from their employees’ salaries and to contractors who have paid subcontractors under the CIS.

Deadline for employers’ final PAYE return to be submitted online for 2017/18.

This deadline is relevant to employers.

This is the last day by which your final Full Payment Summary (FPS) for the 2017/18 tax year should be sent to HMRC.

You will not be able to file an FPS relating to 2017/18 after 19th April. If you need to make an amendment or correction to the details reported on a 2017/18 FPS you will need to submit an Earlier Year Update (EYU).

Please be aware that if we deal with the payroll on your behalf that we will ensure that this matter is dealt with on a timely basis.

If you would like to discuss this any further then please get in touch 0116 2423400 or info@torrwaterfield.co.uk 

We send monthly reminders about all upcoming tax deadlines and other important business related deadlines. If you would like to receive these email notifications please register here https://www.torrwaterfield.co.uk/registration/register 

 

 

Franchising – Pros & Cons

When starting up a business, you may be considering whether it would be a good idea to begin trading under a franchise name and thus becoming a ‘franchisee’. Below are some pros and cons which will hopefully aid you in your final decision of what route to take.

Pros

Brand Name

You will be trading under a brand name which is well known across the country. These are the names most likely to appear at the top of internet searches and to be recommended by others. They are trusted names and are held at a high standard by most for good reason.

Ongoing Help & Support

Once you start trading as a franchisee, there is continuing help and assistance offered to you by the franchisor. They want to ensure that your business is going to reflect positively on their brand. Support usually consists of training programs and first hand support whilst also assisting with other elements such as stock control.

They also tend to offer financial support with new business start-up costs, which could be for things such as equipment, vehicles and marketing campaigns.

Location

As can be seen on most high streets and in most shopping centres, the larger brand names get the prime locations. This is certainly the case when trading as a franchisee, people recognise the name and the logo and immediately trust that they are going to receive quality service. Customers are also more likely to trust a business which is situated around other successful businesses.

Finance

If your franchisor is reluctant to provide funds in relation to your start-up costs, this is not something to necessarily worry about. Being part of a big brand name is looked upon more favourably by banks when a business is trying to get a loan. The security and reliability of being a franchisee usually means that banks will be more than happy to help you out.

Cons

Fees

These can be high. There is usually an initial lump sum charged by the franchisor and continuing fees are charged in order to keep using the franchise brand name. These costs are generally calculated on business turnover, not the surplus made, which is bad news if you have a tight profit margin. Costs can all depend on how well the company is performing.

Lack of Independency

Once you are a franchisee, you are working under the franchisor’s name, and therefore are expected to do things their way, not your own. In this case you may feel that your entrepreneurial creativity is being restricted which could get frustrating. You are effectively working under someone else’s idea which may diminish the initial idea of being ‘self-employed’.

Other People’s Decisions

Due to the lack of control you have when being a franchisee, it means that although you could be running an extremely profitable business, a bad decision made by the franchisor could end up with you losing it all. Another risk would be that another company could damage the franchisor’s name and bring your profits down as a result of this. 

It is important to understand that these pros and cons can vary depending on which franchisor you have elected to work under, if any!

If you want to know more about the pros and cons of being a franchisee, please feel free to give us a call on 0116 2423400.

Jake Dempsey, Accounts & Tax 

How do you complete a Monthly CIS Return?

What is CIS?

The Construction Industry Scheme is a method of deducting tax from subcontractors in the building sector. Contractors deduct a percentage of the money owed on their payments to subcontractors and pass it over directly to HMRC. The amounts are effectively taxed at source as the sub-contractor does not get the money.  The deducted CIS tax counts as advance payments towards the tax and National Insurance contributions that will be calculated upon completion of the subcontractor’s self-assessment tax return.

What do I need to complete a return?

Monthly CIS returns need to be submitted by the contractor to HMRC to disclose the amount of CIS which has been deducted and is therefore due to be paid over to HMRC.

The contractor needs from the subcontractor an invoice which states the money they are owed.

The invoice should split out the materials and labour with CIS only being deductible on the labour element of the invoice. CIS is deducted at 20% providing the subcontractor has a UTR (unique tax reference) number which should be displayed on the invoice. If there is no UTR number then CIS will be deducted at 30%.

How do I do it?

CIS periods run from the 6th of the month to the 5th of the month following – for example, 6th March – 5th April. The CIS return then needs to be submitted and the liability paid over within two weeks of the period end – 19th April for example in order to avoid facing late filing charges. The return can be manually entered under the contractor’s logon on the HMRC website or it can be submitted via numerous accounting software programmes. The CIS is payable to HMRC upon payment of the invoice and not the date the invoice is issued, so it should only be included on the CIS return at this point. Once the return has been submitted to HMRC, statements should be sent out to all subcontractors for their own records.

If you wish to discuss any of this further then please get in touch 0116 2423400 or info@torrwaterfield.co.uk

Brook Lucas, Accounts & Tax 

With effect from 6 April 2018, all PILONs will be chargeable to Income Tax and Class 1 National Insurance Contributions (NICs)

With effect from 6 April 2018, all PILONs will be chargeable to Income Tax and Class 1 National Insurance Contributions (NICs), whether or not they are contractual payments. Payments or benefits paid in connection with the termination of a person’s employment will be split into two elements. The first element, post-employment notice pay (PENP) received is taxable as general earnings and will be subject to Class 1 NICs from 6 April 2018. The PENP represents the earnings that the employee would have received had they been given and worked their full and proper notice and on which they would ordinarily have paid tax and Class 1 NICs.

PENP is calculated by applying a formula to the total amount of the payment or benefits paid in connection with the termination of an employment. The second element is the remaining balance of the termination payment, or benefit, is not a PENP. This is taxable as specific employment income to the extent that it exceeds £30,000 and is treated in the same way as other payments and benefits taxable under section 403 Income Tax (Earnings and Pensions) Act 2003.

PENP calculations should not be applied to statutory and non-statutory redundancy payments. These payments are always taxable as specific employment income and subject to the £30,000 exemption where appropriate. As an employer, you will be required to apply the PENP formula to the total amount of relevant termination payments, or benefits. You should operate PAYE to deduct income tax and Class 1 NICs from the amount of PENP from 6 April 2018. You should then apply the £30,000 exemption, where applicable, to the second element of the relevant termination payment and deduct income tax (but not NICs) accordingly. Detailed guidance on how and to what payments you should apply the PENP formula to will be published in the Employment Income Manual in due course

Foreign Service relief

Foreign Service relief on termination payments is being removed for UK residents. Employees whose employment is terminated on, or after, 6 April 2018 and who receive a payment or benefit in connection with that termination will not be eligible for tax relief in respect of any period of foreign service undertaken as part of their office or employment if they are UK resident for the tax year in which their employment is terminated. This change is subject to parliamentary approval. Foreign Service relief will be retained for seafarers.

If you would like to discuss any of this further please get in touch 0116 2423400 or info@torrwaterfield.co.uk

Are You Washing Away Your Potential Tax Refund?

If you wear a uniform or protective clothing at work and you have to wash it yourself you may be due a tax refund from HMRC, and if you don’t claim it, you’ll lose it after 4 years.

This typically applies to:

Retail staff

Hospitality & catering

Nurses, doctors, dentists and other healthcare workers

Police officers

Airline staff / cabin crew / pilots

Public transport (London Underground staff, train conductors, bus drivers)

Engineers & mechanics

Builders / plumbers / carpenters

PE teachers

However any item of clothing with a company logo on it can be claimed for!

How much can I claim?

The amount you can claim depends on your job. If claiming for the full 4 years, the standard rebate for most employees is £48. However for certain professions HMRC has agreed higher allowances. There are numerous calculators online that will inform you how much you are entitled to based on your circumstances.

How do I claim?

There are currently three ways to claim your refund:

  • By entering it as a deduction on your Self-Assessment tax return if you already fill one in.

 

 

  • By phone if you’ve had a successful claim in a previous year and your expenses are less than £1,000.

 

If you require any more information please contact the office on 0116 242 3400.

Tom Luckett, Accounts & Tax 

Employer Update March 2018

National Living/Minimum Wage Changes from 1 April 2018

From 1 April 2018 the National Living/Minimum Wage rates will increase as follows:

  • £7.83 an hour for workers aged 25 and over – previously £7.50
  • £7.38 an hour for workers aged 21 to 24 – previously £7.05
  • £5.90 an hour for workers aged 18 to 20 – previously £5.60
  • £4.20 an hour for workers aged 16 to 17 – previously £4.05
  • £3.70 an hour for apprentices under 19 or in their first year – previously £3.50

If you are paying any employees with reference to the National Living/Minimum Wage you will need to amend the hourly rates accordingly.

Auto-enrolment: Minimum contributions increase with effect from 6 April 2018.

Under auto-enrolment all employers have to automatically enrol certain employees into a pension scheme and make minimum contributions into that scheme. From 6 April 2018 these minimum contributions will increase as part of the phasing in, and employers need to take steps now to ensure they comply with this change.

If the qualifying earnings basis is being used, the current minimum contribution until 5 April 2018 is 2% with at least 1% from the employer.

Between 6 April 2018 and 5 April 2019 the minimum contribution is 5% with at least 2% from the employer, so contributions should be reviewed now in readiness for this.

Looking ahead, from 6 April 2019 the minimum contribution will be 8% with at least 3% from the employer.

For more information see The Pensions Regulator contribution levels guidance here.

If you have any questions on the above, please do not hesitate to contact me.

Regards

Rebecca Edwards, Payroll Manager

Our Charity of the year – Coping with Cancer

Each year at Torr Waterfield we choose a charity, local or national, to represent and raise money for. 

This year we have chosen to support Coping with Cancer.  The charity provided much needed emotional and physical support for a very close friend of Denise Burley who is a senior member of our team; hence the link to Coping with Cancer.  The friend has a young family and was determined to make such a difficult time as normal as possible.  She cannot praise the counselling team highly enough for their therapy sessions nor for the complementary therapies which made her feel like a person again instead of a cancer patient.  It is often the smaller charities that get overlooked but they provide practical help on your doorstep and even the smallest of donations can make a big difference.  Denise explained this to the team at Torr Waterfield and they were eager to do as much as they can to help.

Over the course of the next year we will raise money through a variety of activities such as dress down days, staff cake sales and planned events.  In May we will run our annual Torr Waterfield Karting Cup where 12 teams of 4 compete in a two hour endurance race.  September is when we have our ‘Walking challenge’ where our team, friends and family take part in an organised walk.  These aren’t just walks in the park!  We have previously walked 48 miles in two days around the Lyn peninsula in Wales & on another occasion completed the National Three Peaks in just 48 hours.

We look forward to working with Coping with Cancer over the next year and raising as much money as we can for this fantastic charity. To find out more what Coping with Cancer do and upcoming events please visit their website https://www.c-w-c.org.uk/ 

Mike Waterfield, Director 

0116 2423400 info@torrwaterfield.co.uk 

Tax-free childcare roll out

The implementation of Tax-Free Childcare, the new government scheme to help working parents with the cost of childcare, is being rolled out to eligible parents in stages.

The scheme first made its debut in April 2017 and although there have been initial systems problems, HMRC’s aim is to have the scheme open to all eligible parents by 14 February 2018. Application is made online through the Childcare Choices site www.childcarechoices.gov.uk and applications can be made for all eligible children at the same time.

Under Tax-Free Childcare, for every £8 the parent pays, the government provides a £2 top-up, to a maximum of £2,000 per child each year – with a higher limit of £4,000 for disabled children. This gives a total childcare pot of £10,000, or £20,000 for disabled children. To be eligible, parents must generally have minimum weekly earnings of at least £120 each. There is also an upper earnings limit of £100,000.

Compensation may be available in certain circumstances where a parent:

  • is unable to complete an application for Tax-Free Childcare
  • is unable to access their childcare account
  • or doesn’t get a decision about whether they are eligible, without explanation, for more than 20 days.

Those employing a nanny should be able to use the childcare account to pay their PAYE tax and National Insurance. Delays in getting this system working may also give grounds for compensation. Application is made online GOV.UK childcare-service-compensation 

If you would like to discuss any of this further then please get in touch 0116 2423400 or https://www.torrwaterfield.co.uk/contact-us 

A GUIDE TO ACCOUNTING REFERENCE DATES AND PERIODS

I am sometimes asked, “What date should my company accounts be made up to?”. It’s a very important question because there are deadlines connected to the filing of accounts with both Companies House and HM Revenue and Customs.  Automatic penalties are issued to companies where their accounts have been filed late.  Being aware of your accounting period will help you to organise your accounting records in a timely manner and give you a chance to avoid missing these very important deadlines.

How to determine an accounting period

Every company must prepare accounts that report on the performance and activities of the company during the financial year. The financial year starts on the day after the previous financial year ended or, in the case of a new company, on the day of incorporation. Financial years are determined by reference to an Accounting Reference Period (ARP). The financial period ends on the accounting reference date.

For all new companies, the first accounting reference date is set as the last day in the month in which its first anniversary falls.  For example, if a company was incorporated on 7 January 2017 the first accounting reference date would be 31 January 2018.  The subsequent accounting reference dates will automatically be on the same date each year.  It is worth bearing in mind that a company may make its accounts up to 7 days either side of their accounting reference date which will be of interest to companies that organise their accounting records weekly, such as bars and restaurants.

Can the accounting reference date be changed?

The accounting reference date can be changed by using the appropriate form AA01. You can change the current or previous accounting period; periods can be shortened as many times as you like, but you can only extend once in five years (with exception in certain circumstances).  The minimum you can shorten a period by is 1 day and you can lengthen a period to a maximum of 18 months (or longer if your company is in administration).

The form AA01 must be received at Companies House within the delivery time of the accounting period if you wish to change the date and you cannot change it if the accounts are already overdue.

Basic delivery times for filing accounts:

 Deadline for first accounts (if covering a period of 12 months or more)
Private company/Limited Liability Partnership 21 months from the date of incorporation*
Public Limited Company 18 months from the date of incorporation*
 Normal deadline (after your first year)
Private company/Limited Liability Partnership 9 months after the end of the accounting period*
Public Limited Company 6 months after the end of the accounting period*
*or 3 months from the accounting reference date (ARD), whichever is longer.

 

It is important to note that changing the accounting reference date will also change the filing deadline date, unless the first financial year is being lengthened.  This can be particularly noticeable for shortened accounting periods where the deadline may be unexpectedly brought forward because the filing date becomes 9 months after the end of the new accounting period, or 3 months after the date the change was made, whichever comes later.

We always recommend that you send your accounting records to us well before the company accounts delivery date as this enables us to prepare your accounts in time to meet the filing deadline and avoid penalties. 

What should I do if I am unsure?

The above guide is only a summary, so please contact us on 0116 2423400 if you would like any further advice and remember, you can always check your accounting reference.

Beth Judd, Accounts & Tax 

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