If you provide your employees with anything other than pay, it may count as an expense or benefit. If so, you may have to report it to HM Revenue & Customs (HMRC) and pay tax and National Insurance contributions (NICs) on it.

What counts as an expense or benefit?

The basic rule is that if you provide an employee with anything other than pay it may count as an expense or benefit, and you will need to check whether you need to report it to HMRC and pay any tax or NICs on it to HMRC.

Common examples of expenses and benefits include company cars, health insurance, travel and entertainment expenses and childcare. 

Expenses and benefits tax, NICs and reporting at a glance

Your tax, NICs and reporting obligations differ depending on the specific expenses and benefits you provide to your employees. In general, one of the following five requirements will apply in each instance:

·    At the end of the tax year you report the item on the employee’s form P9D or P11D and – where a P11D is completed – pay Class 1A NICs on it.

·    You treat the expense or benefit as if it were normal earnings, adding its value to your employee’s other earnings when working out PAYE tax and Class 1 NICs using your usual payroll procedures.

·    You add the item’s value to your employee’s earnings for Class 1 NICs purposes only (not for PAYE tax) through your payroll. Then at the end of the tax year you report it on the employee’s form P9D or P11D.

·    You have no tax or NICs to pay, but at the end of the tax year you report the item on your employee’s form P9D or P11D.

·    You have no reporting requirements and no tax or NICs to pay.

To find out which of these requirements applies to a specific expense or benefit, you can follow HMRC’s A to Z link at the end of this section.

The effect of how you provide an expense or benefit

The type of expense or benefit you provide isn’t the only thing that affects your tax, NICs and reporting requirements. The way you provide a benefit can do so as well. For example:

·    If you arrange and pay for medical insurance for an employee, you’ll have to report it on form P11D and pay Class 1A NICs at the end of the tax year.

·    If the employee arranges the medical insurance but you pay the insurer directly for it, then Class 1 NICs will be due (through your payroll) and you’ll have to report on P9D or P11D.

·    If the employee arranges and pays for their medical insurance but you reimburse them, then it counts as additional earnings and you’ll have to deduct and pay both PAYE tax and Class 1 NICs using your usual payroll procedures.

Where different scenarios like these apply to an expense or benefit, details are provided in the relevant A to Z entry – follow the link below.

HMRC’s Expenses and Benefits A – Z

If you have any further queries relating to expenses and benefits, please contact our office.

In April 2013 HM Revenue & Customs (HMRC) is introducing a new way of reporting PAYE: Real Time Information, or RTI.

Using RTI, employers and additionally pension providers will tell HMRC about PAYE payments as they are made as part of their payroll process. Payroll software will gather the necessary information and submit it to HMRC online.

So you will submit information on PAYE payments throughout the year as part of your payroll process, rather than at the end of the 12 months as you do now (P35 year end returns).

RTI only impacts on the submission of PAYE information – payment arrangements will remain unchanged.

Most employers will be legally required to use RTI from April 2013 with all employers submitting RTI by October 2013.  HMRC will tell you when your business is required to make this move over to RTI.

We will guide you through this change-over as and when your business is required to do so.  In the meantime, for more information on RTI and the impact it is likely to have on your business please visit the HMRC website on http://www.hmrc.gov.uk/rti/index.htm

VAT is a tax that’s charged on most goods and services that VAT-registered businesses provide in the UK.  It’s also charged on goods and some services that are imported from countries outside the European Union (EU), and brought into the UK from other EU countries.
VAT is charged when a VAT-registered business sells to either another business or to a non-business customer.  When VAT-registered businesses buy goods or services they can generally reclaim the VAT they’ve paid.

There are three rates of VAT, depending on the goods or services the business provides. The rates are:

Standard – 20 per cent
Reduced – 5 per cent
Zero – 0 per cent

There are also some goods and services that are:
- exempt from VAT
- outside the UK VAT system altogether

VAT registration threshold

You must register for VAT if your business’ VAT taxable turnover for the previous 12 months is more than £77,000.  This figure is known as the VAT registration threshold.  The threshold changes – usually once a year announced in the Budget – so you should regularly check your turnover against the current threshold.

You must also register for VAT if either of the following applies:

- You think your VAT taxable turnover may go over the threshold in the  next 30 days alone
- You take over a VAT-registered business as a going concern
VAT Deregistration threshold

The deregistration threshold is £75,000.  If your VAT taxable turnover for the year is less than or equal to £75,000, or if you expect it to fall to £75,000 or less in the next 12 months, you can either:

- Stay registered for VAT or
- Ask for your VAT registration to be cancelled

For more information on VAT please contact our office or visit the HM Revenue & Customs website http://hmrc.gov.uk/vat/index.htm

1. From the 2010-11 tax year the Personal Allowance reduces where the income is above £100, 000 – by £1 for every £2 of income above the £100,000 limit. This reduction applies irrespective of age.
2. 2. These allowances reduce where the income is above the income limit for age-related allowances by £1 for every £2 of income above the limit. For the 2010-11 tax year the Personal Allowance for people aged 65 to 74 and 75 and over can be reduced below the basic Personal Allowance where the income is above £100,000.
3. Tax relief for the Married Couple’s Allowance is given at the rate of 10 per cent.

Income Tax rates and taxable bands

* The 10 per cent starting rate applies to savings income only. If, after deducting your Personal Allowance from your total income liable to Income Tax, your non-savings income is above this limit then the 10 per cent starting rate for savings will not apply. Non-savings income includes income from employment, profits from self-employment, pensions, income from property and taxable benefits.

The rates available for dividends are the 10 per cent ordinary rate, the 32.5 per cent dividend upper rate and the dividend additional rate of 42.5 per cent.

Companies are really being urged to file their annual return (P35 as well as P14s) by 19 May or risk incurring a penalty.

HMRC has issued an urgent reminder ahead of the impending deadline, alongside advice for you to avoid making typical errors.

Every employer must now file their P35, P38A and additionally P14 returns electronically, with a few very brief exceptions i.e. those with spiritual objections.

Under HMRC’s penalty system, employers who submit their return after 19 May will be charged a penalty of £100 per 50 staff members for every month or part month that the return is outstanding.

Computers are an integral part of modern business life.  We at Jones & Graham have years of experience in installing and using Sage software and would highly recommend them to our clients.  We are able to supply our clients with all Sage software at discounted prices as well assist with the implementation of the software.

Sage are the leading suppliers of accounts packages for small businesses and as club members we can supply the following Sage software:

• Sage Instant Accounts
• Sage 50 Accounts
• Sage 50 Payroll
• Sage 50 Job Costing
• Sage 50 Forecasting
• Sage 50 HR
• Any other Sage software required

We will discuss your requirements with you in order to ensure that you choose the most appropriate software for your business.  We can install the software for you, assist with the initial set up and provide one to one training to ensure you get the maximum benefit from your software.

To find out more about the individual software options, please click on the icons below:-

                             
Sage Instant Accounts                   Sage 50 Accounts                    Sage 50 Payroll                   Sage 50 Job Costing

          
Sage 50 Forecasting                       Sage 50 HR

We specialise in providing bookkeeping services to clients at affordable rates. It is designed around you and your business and suits your requirements and deadlines. Many business owners find that their time is wasted in trying to produce accurate records when, this valuable time should be spent in running the business. Bookkeeping is our business. All you need to do is supply the team with your records and in return you receive professional, accurate bookkeeping of which we can supply the following;

Profit and Loss Statement
Balance Sheet
Debtors List
Creditors List
VAT Analysis
Prior Year Comparison

The main reasons for keeping accurate and well maintained records of your income and expenditure are:

·         To discharge your statutory obligations to the Inland Revenue and Customs & Excise.

·         To control your finances and help you manage your business.

·         To enable us to produce your annual accounts more efficiently resulting in an overall saving in our fees – remember, we sell time and the longer it takes us to sort your books out, the higher our bill is likely to be.

If bookkeeping is not your forte, we can provide an accurate and comprehensive service tailored to suit your business and relieve you of this unwanted chore.

Corporation tax
Tax represents a substantial cost to any profitable business, not only in terms of the tax itself but also in compliance with reporting obligations, investigations with tax authorities and penalties for non-compliance.
We can relieve you of any administrative burden of complying with tax legislation. We will deal with all company tax matters, including preparing corporation tax computations and preparing and submitting your corporation tax self-assessment return.

We will liaise fully with the Inland Revenue on your behalf and ensure you have the most tax efficient structure for you and your business.

Business tax
By preparing your accounts and tax return as soon as possible we make sure that you can budget for your coming tax payments well in advance – and we have time to look for ways to reduce them.

Personal tax
We will prepare and submit your self-assessment returns with the minimum of fuss. By dealing with all of your personal & business affairs we can ensure that we look at the whole picture maximising potential savings.

Inheritance Tax
Inheritance tax is sometimes called a ‘voluntary tax’ by accountants simply because there is so much you can do to reduce its effect. Although it’s something most of us don’t want to think about it, it involves the two most certain things in the world ~ death and taxes. You can’t do anything about the first, but prudent planning can reduce the pain of the second.

Our simple and flexible approach provides you with a highly cost effective and professional solution to the payroll function.

Ensuring you pay your staff accurately and on time each pay period is an essential part of running your business. Payroll legislation is becoming a minefield and HM Revenue & Customs expect you to correctly interpret it or suffer the consequences. Why not relieve yourself of this added burden and see what we can offer your business. Our rates are extremely competitive and our service tailored to your needs.

Preparation of your weekly or monthly payroll calculations
Advising PAYE and National Insurance liabilities
Payment of payroll by direct credit into employees bank accounts
Preparation of P60s, P11Ds, P45s and the Annual Return, form P35
Class 1A Calculations
Working Families Tax Credit
Stakeholder Pensions