One of the most time-consuming admin tasks associated with the running a small business can be dealing with the payroll.Generally speaking, you can:Run your own in-house payroll, or Hire your accountant to do the work for you.If you operate your own payroll, there are a multitude of tasks that must be completed each tax month. Tax months run from the 6th of one month to the 5th of the next.This includes: Using payroll software to record employees pay, deductions and National Insurance Contributions on or before each payday. You also need to consider other deductions such as pension contributions and student loan payments.Producing payslips for employees. This may require different software. Calculating any statutory pay such as maternity or sick pay. Updating the system for new employees. Reporting employees pay and deductions to HMRC by making a Full Payment Submission (FPS).Calculating and paying HMRC all amounts due, by the 22nd (or the 19th if paying by post) of the month following the employees’ payday. There are penalties for late reporting and you must also comply with relevant legislation such as ensuring you are paying at least the minimum wage and keeping relevant records.Planning noteIf you are about to employ someone for the first-time or would like to consider what other options are available to manage your existing payroll, we would be happy to discuss how we can help. Alternatively, if you want to continue managing your payroll in-house, we can also advise on the best software packages to get the job done.
Employees that are pregnant are eligible to take up to 26 weeks of maternity leave (known as ordinary maternity leave) plus an additional 26 weeks (known as additional maternity leave). This means that an employee can take up to a full year of maternity leave once they give their employers the correct notice. All women employees are entitled to both classes of maternity leave from day one of their employment.SMP is a weekly payment from your employer made over a 39-week period. The SMP is payable at:90% of the employee’s average weekly earnings (AWE) for the first 6 weeks with no upper limit;£140.98 (for 2017-18) or 90% of their AWE (whichever is lower) for the remaining 33 weeks.Employees need to be on the payroll in the ‘qualifying week’ – the 15th week before the expected week of childbirth. The SMP is available to employees if they have provided:The correct notice period to their employer. Proof they are pregnant. Confirmation that they have been working continuously for the same employer for at least 26 weeks up to any day in the qualifying week.Confirmation that they earned at least £113 a week (gross) in the ‘relevant period’. The relevant period is usually the 8-week period preceding the 15th week before the baby is due, known as the qualifying week.Your employer may also offer further additional benefits which include higher maternity payments, however this is at their discretion and not legally required.
From 13 January 2018, it will become illegal for any business to charge a fee in addition to the advertised price of a transaction to consumers (widely known as surcharging). For example, a travel company charging more to use a credit card rather than a debit card or cash. This change is being brought about by the introduction of the EU Second Payment Services Directive (PSDII) which the UK government is required to implement into UK law in order to meet its legal obligations and avoid infraction proceedings.The reforms also include other changes to the way payments by debit and credit cards, direct debit, credit transfers, standing orders and other digital payments are transacted and is intended to promote competition in the financial services industry and provide more security for online transactions. Unfortunately, it looks like these changes may not signal an end to booking fees and other similar charges. The PSDII legislation does not stop businesses charging a separate booking fee but the fee can only be charged if it is applied across all available payment methods. It also remains possible to levy a surcharge for payments by other methods such as cash or cheque but the amount must reflect the actual cost of dealing with this type of payment.It has been widely reported in the press that many businesses including a leading online food delivery company has removed its credit card fee and introduced a new ‘service charge’ that applies to all payment methods. It will be interesting to see how the Government and Trading Standards will react if these new charges become commonplace.Commercial transactions are not covered by the ban, but are subject to a prohibition on charging fees, this means the fee charged cannot exceed the actual cost of accepting the specified payment method. Some businesses may decide to stop accepting credit card payments altogether. Indeed, HMRC already confirmed some time ago that personal credit cards can no longer be used to settle a tax bill from 13 January 2018.
The Furnished Holiday Let (FHL) rules allow holiday lettings of properties that meet certain conditions to be treated as a trade and therefore qualify for additional tax benefits.In order to qualify as a FHL, the following criteria need to be met:The property must be let on a commercial basis with a view to the realisation of profits. Second homes or properties that are only let occasionally or to family and friends do not qualify.The property must be located in the UK, or in a country within the EEA. The property must be available for commercial letting at commercial rates for at least 30 weeks (210 days) per year.The property must be let for at least 15 weeks (105 days) per year and home owners should be able to demonstrate the income from these lettings. The property must not be used for more than 155 days for longer term occupation (i.e. a continuous period of more than 31 days).Where there are a number of furnished holiday lettings properties in a business, it is possible to average the days of lettings for the purposes of qualifying for the 15 weeks threshold. This is called an averaging election.There is a special period of grace election which allows homeowners to treat a year as a qualifying year for the purposes of the FHL rules where they genuinely intended to meet the occupancy threshold but were unable to do so subject to a number of qualifying conditions. In any other cases, where the qualifying conditions are not met the normal property income rules apply. Trading losses from a furnished holiday lettings business can only be set off against qualifying future FHL profits.Planning noteAs we approach the end of the tax year now is an opportune time to review your occupancy statistics for the current tax year, 2017-18. This should be done to ensure that you will meet the minimum qualifying requirements to qualify as an FHL. If these requirements are unlikely to be met there is still time to consider you options. If you need help in checking these numbers, or discussing your tax options regarding your lettings activity, please call.
The self-employed are often concerned if an expense is allowable or not for tax purposes. In this article, we will briefly look at the rules for claiming marketing, entertainment and subscription costs.Most marketing expenses are treated as allowable business expenses. This includes advertising in newspapers or directories, bulk mail advertising (mail shots), providing free samples and website costs.The cost of entertaining clients, suppliers and customers or event hospitality in relation to the business is not treated as an allowable business expense.Costs associated with ‘entertaining’ staff may be allowable if they relate to the welfare of your staff or for qualifying events such as a Christmas party. You cannot claim for carers or domestic help nor for subcontractors or others who are not employees.Most subscriptions such as trade or professional journals or membership of trade or professional organisations are allowable once they relate to your business. However, payments to political parties and gym membership fees are excluded.Planning noteCharitable donations are not an allowable business expense as they are not directly related to the running of your business. However, you may be able to claim for sponsorship payments if your business receives something related to the business in return.
The Apprenticeships (Miscellaneous Provisions) Regulations 2017, which only apply in relation to England, will come into force on 15 January 2018. The new Regulations:make it a requirement that off-the-job training be provided during the course of an approved English apprenticeship entered into under the Apprenticeships, Skills, Children and Learning Act 2009 stipulate that the approved English apprenticeship agreement must specify the amount of off-the-job training that the apprentice is to receive during the period of the agreementrequire that the approved English apprenticeship agreement must also now set out the period for which the apprentice is expected to work and receive training, and this must be at least 12 months (unless an exception applies for certain apprentices who were made redundant).
In October 2017, Paul Uppal (a former Conservative MP and entrepreneur) was appointed to the newly-established post of Small Business Commissioner (SBC) based in Birmingham. At the time, it was estimated that the office of the SBC would be operational by the end of 2017. The SBC is an independent public body and covers the whole of the UK – England, Wales, Scotland and Northern Ireland.On 20 December 2017, the government launched the complaint handling service of the SBC to ensure fair payment practices for small businesses. This means that the Commissioner and his team can now handle complaints from small businesses about unfair payment practices. For example, to help solve payment disputes between small and large companies especially in relation to late payment concerns.The Commissioner’s website is also live, providing guidance to small businesses on payment issues including how to take action if a payment is overdue. The SBC and his team will be expected to help drive a culture change in payment practices.There are many systematic issues in the supply chain between small and large businesses and this new initiative is designed to help small businesses settle their problems with larger corporations quickly and inexpensively while at the same time maintaining their business relationships. Let’s see if it works!
The pre-owned assets (POA) income tax charge was introduced in the Finance Act 2004 and the first year in which a POA charge could arise was back in 2005-6. The POA charge is effectively a tax on individuals who have given certain types of assets away but who continue to enjoy either full or partial benefits from the assets. The charge was introduced to help combat the problem of inheritance tax schemes that sought to remove large chunks of an estate from the inheritance tax net. The POA charge can apply to arrangements that were in place as far back as March 1986.The most common example that creates a POA charge is when a property is given away during a person’s lifetime, but the person continues to live in the home rent free. Such gifts are known as ‘gifts with a reservation of benefit’. Since the charge has been introduced the majority of cases relate to property, however, the charge also encompasses other assets including land, chattels and intangible property or cash, stocks and shares and insurance products.Where the POA charge applies, there are provisions which set out how the taxable benefit is to be calculated. There are different provisions depending on the asset class, but for property, the charge will be based on the open market rent value of the property in question. Planning noteThe POA is levied as an annual income tax charge, although in some circumstances the liability to the POA charge is not discovered until the taxpayer has died. If you think you might be affected by this rule, please let us know so that we can determine liability, if any arises.
The Government has announced that the business rates anomaly known as the ‘staircase tax’ is to be axed. The ‘staircase tax’ affects businesses that operate in adjoining units or rooms, but are accessed from a communal lift, corridor or staircase. For example, a business that has offices on two floors of a building that are accessed via a communal staircase. Such businesses are unfairly treated as they presently pay rates as if occupying two totally separate properties.The ‘staircase tax’ was not introduced by the Government but arose following a Supreme Court ruling in 2015 which brought about a change to the practice of the Valuation Office Agency (VOA) in assessing rateable values for businesses. This ruling overturned an established and widely understood practice where businesses occupying two adjoining floors or two rooms separated by a wall only received a single bill. This ruling appears to have disproportionately affected small businesses.Communities Secretary Sajid Javid said:’The ‘staircase tax’ is an unfair rates hike for businesses. For years these businesses in adjoining units or rooms received one rates bill, but this ruling meant they now faced multiple bills for operating in an office linked by a communal lift or stairs.I am ending this by giving those businesses affected the option of getting their rates bills recalculated and any savings due backdated.’Planning noteOnce the necessary legislation is in place, businesses will be able to choose to have their rates recalculated under the old single bill system and claim backdated refunds. Businesses will also be able to continue to benefit from any small business rate relief they had lost by virtue of the ‘staircase tax’ rules.
The transfer of a business as a going concern (TOGC) rules concern the possible VAT liability resulting from the sale of a business. Normally the sale of the assets of a VAT registered or VAT registerable business will be subject to VAT at the appropriate rate. However, where the sale of a business includes specific assets and meets certain conditions the sale will be categorised as a TOGC. A TOGC is defined as ‘neither a supply of goods nor a supply of services’ and is therefore outside the scope of VAT and no VAT is chargeable. Planning noteHMRC lists the following conditions necessary for a TOGC to apply:The assets must be sold as part of a ‘business’ as a ‘going concern’. In essence, the business must be operating as such and not just an ‘inert aggregation of assets’.The purchaser intends to use the assets to carry on the same kind of business as the seller.Where the seller is a taxable person, the purchaser must be a taxable person already or become one as the result of the transfer.Where only part of a business is sold it must be capable of separate operation.There must not be a series of immediately consecutive transfers. There are further conditions in relation to transactions involving land. Please call for advice if you are contemplating the transfer or sale of your business. The VAT at risk can be considerable and liability needs to be assessed before you dispose of the relevant assets.