Tax-free gifts to employees

Some employers may wish to give a small gift to their employees. As long as the employer meets the relevant conditions, no tax charge will arise on the employee.

A tax exemption is available which should help employers ensure that the benefits provided are exempt and do not result in a reportable employee benefit in kind. In order for the benefit to be exempt it must satisfy the following conditions:

  • the cost of providing the benefit does not exceed £50 per employee (or on average when gifts made to multiple employees)
  • the benefit is not cash or a cash voucher
  • the employee is not entitled to the benefit  as part of a contractual arrangement (including salary sacrifice)
  • the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties
  • where the employer is a ‘close’ company and the benefit is provided to an individual who is a director, an office holder or a member of their household or their family, then the exemption is capped at a total cost of £300 in a tax year.

If any of these conditions are not met then the benefit will be taxed in the normal way subject to any other exemptions or allowable deductions.

No more than £50

One of the main conditions is that the cost of the benefit does not exceed £50. If the cost is above £50 the full amount is taxable, not just the excess over £50.The cost of providing the benefit to each employee and not the overall cost to the employer determines whether the benefit can be treated as a trivial benefit. So, a benefit costing up to £50 per employee whether provided to one or more employees can be treated as trivial. Where the individual cost for each employee cannot be established, an average could be used. Some HMRC examples consider gifts of turkeys, a bottle of wine or alternatively a gift voucher.

Further details on how the exemption will work, including family member situations, are contained in the HMRC manual.

However if you are unsure please do get in touch before assuming the gift you are about to provide is covered by the exemption.

HMRC countdown: file your tax return

With less than 70 days until the self assessment tax return deadline of 31 January 2019, HMRC is urging taxpayers to complete their tax returns early, in order to avoid the last minute rush.

The deadline for submitting 2017/18 self assessment tax returns online is 31 January 2019. An automatic penalty of £100 applies if the return is late.

HMRC advise that last year, more than 11 million taxpayers completed a 2016/17 Self Assessment tax return, with 10.7 million completing on time. There were 4,852,744 taxpayers who filed in January 2018 (44.8% of the total), and 758,707 on 31 January, the deadline day.

HMRC is advising taxpayers not to leave the completion of their 2017/18 Self Assessment tax until the last minute.

Angela MacDonald, HMRC’s Director General for Customer Services, said:

‘The deadline for completing Self Assessment tax returns may be 100 days away, yet many of us wait until January to start the process. Time flies once the festive period is underway, yet the ‘niggle’ to file your tax return remains.’

‘We want to help people get their tax returns right – starting the process early and giving yourself time to gather all the information you need will help avoid the last minute, stressful rush to complete it on time. Let’s beat that niggle.’

Contact us for help with your self assessment tax return.

What a week!

Games Night

It’s been a fantastic week for Kilby Fox.  Tuesday, we hosted our annual Games Night at Barratts Snooker Club.  Teams were made up of four people and there were ten teams in total.  The Games consisted of, Darts, Killer Pool, Shuffleboard, Table Tennis and Table Football.  The competition is always fierce and it’s great how everyone gets stuck in.  Shuffleboard was certainly the talk of the evening as it hadn’t featured at Games Night before this year. It was very close this year between Yorkshire Bank and DFW Law, however, DFA pipped them at the post and were this year’s Champions.  It’s a favourite event of ours and seems to grow each year.  It also raised some money for Cynthia Spencer Hospice.  Thank you all that attended and made it such fun.

Mastermind Group

Wednesday, Kilby Fox hosted our first Mastermind Group with Brian Wrigley.  The session was a huge success and everyone took away plenty to think about and work on.  It’s amazing how a brainstorming session with like-minded individuals can make you see things differently.  The Mastermind Groups will be held on the 3rd Wednesday of the month at our office.  How can a Mastermind Group help you?  In 5 key points:

  • A support network, which will not only help you brainstorm challenges and business growth strategies, they can make new business introductions.
  • You will be held accountable to doing the things you commit to doing?
  • A highly experienced coach who will be there to help you when you need it. Sometimes talking you though the problem, other times telling you to get over yourself and get on with it.
  • Everything from an education viewpoint that you need to build a highly profitable business.
  • A regular place to brainstorm, mastermind and discuss everything to do with your business and more.

Contact Debbie or Martin to secure your place at the next event which will be held on 19th December.

Cynthia Spencer Dodgeball fundraiser

Thursday, Kilby Fox entered a team for the Cynthia Spencer Dodgeball fundraiser.  Martin Crooke, Frances Tebbutt, Debbie Alford, Gerry Thompson, David Deacon, Angela Johnson, Dani Rowley and Dom Baker sported their active wear for the evening.  Who knew trampolining whilst having balls thrown at you could be such fun?!  The team won two games and lost two games so weren’t successful in claiming a medal, however had a great time showing their support to Kilby Fox’s Corporate Charity Partner.  The team were also very relieved to come away without any injuries!

Bring on the Christmas festivities!

Making Tax Digital for VAT public pilot opens and deferral for some businesses

HMRC has opened the Making Tax Digital for VAT (MTDfV) public pilot. However certain VAT-registered businesses (around 3.5% according to HMRC) with more complex requirements will be deferred from being subject to MTD for six months.

Essentially, the public pilot is now open to sole traders and companies using standard VAT accounting. This applies whether returns are done monthly or quarterly provided they are up to date. Those signing up for the pilot will be required to keep their VAT records digitally from the first day of the period covered by their next VAT Return and submit their return using the appropriate software.

Further piloting plans

HMRC intends to roll out further pilots for partnerships, those that trade with the EU and users of the Flat Rate scheme as set out in the timetable.

Date         Activity
Late 2018 Private testing begins with partnerships, those customers that trade with the EU, and users of the Flat Rate Scheme.
Late 2018 / early 2019 Open to other sole traders and companies who are not up to date with their VAT and businesses newly registered for VAT that have not previously submitted a VAT return.
Early 2019 Open to partnerships and those taxpayers that trade with the EU.

Six months’ deferral

Making Tax Digital for VAT is to be introduced from 1 April 2019. However, HMRC has announced that the mandated implementation has been deferred until 1 October 2019 for certain taxpayers:

  • trusts
  • ‘not for profit’ organisations that are not set up as a company
  • VAT divisions
  • VAT groups
  • public sector entities required to provide additional information on their VAT return (Government departments, NHS Trusts)
  • local authorities
  • public corporations
  • traders based overseas
  • those required to make payments on account (very large traders)
  • Annual Accounting Scheme users.

GOV.UK MTD overview MTD timeline

Pilot testing for these groups is expected to open in Spring 2019. For help with MTD please contact us.

The Great Kilby Fox Bake Off

Nine weeks ago, Ian Finlay, our Accounts and Audit Manager suggested a great fund raising idea for our charity partner, Cynthia Spencer Hospice.  In line with the much loved Great British Bake Off, members of staff would compete each week in a baking challenge.  The challenges were inspired by the week’s previous show and ranged from baking biscuits to eclairs to Danish pastries.

 

The members of staff that took place were:

Martin Crooke, Frances Tebbutt and Clive Adkins – Partners

David Deacon – Tax Manager

Gerry Thompson – Payroll Manager

Ian Finlay – Accounts and Audit Manager,

Debbie Alford – Business Development Manager,

Angela Johnson – Bookkeeper,

Penny Mace – Accounts and Audit Assistant

Jane O’Regan –  Receptionist

Dani Rowley – Administration Assistant.

 

The Bake off consisted of two rounds which saw two bakers go head to head weekly and then those winners faced each other in the semi-finals.  It was up to the staff in the office each week (and on occasions, clients that were here) to score the bakes on five different categories. appearance, taste, texture, imaginative and overall satisfaction.  This was not before making a donation to our Charity Partner, Cynthia Spencer Hospice.

We saw some brilliant bakes from everyone there was only one week that wasn’t particularly successful, vegan week… However, everyone went to great lengths to show case their skills and there was a lot of light hearted banter in the office.

The final consisted of a Garden themed cake.  Ian and David both went to town baking their showstopper.  It was very close but the people of Kilby Fox crowned Ian our Bake Off winner 2018.

The Great Kilby Fox Bake Off managed to raise £217.33 for Cynthia Spencer Hospice.  Head over to their website and see what an amazing support and service they provide to our local community https://www.cynthiaspencer.org.uk/

MAKING TAX DIGITAL – YOU NEED TO ACT NOW!

When will you be affected?

You should be aware by now that HM Revenue & Customs’ initiative to Making Tax Digital comes into effect from April 2019. To be more specific, the first affected businesses are those that are VAT Registered and it come into effect for VAT periods beginning on or after 1 April 2019. So, for businesses preparing quarterly VAT Returns, the first one under the new scheme will be the quarter ended 30 June 2019.

How will it affect you?

For VAT periods beginning on or after 1 April 2019, HM Revenue & Customs are removing the facility to file VAT Returns through the Government Gateway, which will force businesses to maintain their accounting records using software which is compatible with HM Revenue & Customs.

Even if your business is one that currently maintains accounting records using software, we are aware that some software packages, and some older versions of accounting software, are not capable of submitting information directly to HM Revenue & Customs and action needs to be taken in these instances.  You may want to contact your software provider.

Even if you are happy that your current software is ‘Making Tax Digital ready’, we recommend you continue reading to see how moving to the cloud could benefit your business.

Having reviewed a range of online accounting platforms, Kilby Fox has chosen to partner with Xero, the UK’s leading online accounting software.

This migration to an online platform will not only allow the team at Kilby Fox to provide a better service to you and the rest of our client base, it also gives you a better view of your business’s finances in real time, on any device.

Why Xero? 

Xero is simple to use and it gives you real-time view of your business finances anywhere, on any device. Connected directly to your business bank account, you can reconcile regularly, manage your expenses, send online invoices and get paid easily. As you can have unlimited users on your Xero subscription, both you and our team can have a real-time view of your accounts helping us to give you the best advice when you need it. In addition, it’s just as safe as your online banking.

What are your options?

We recognise and appreciate that each business is different and so we have identified several different options.

 

  1. Take out a Xero subscription and maintain your accounting records yourself, following a half day training session from one of our Xero Certified bookkeepers. We will also provide ongoing ad-hoc support to assist you with the transition.

 

  1. Take out a Xero subscription and maintain your accounting records yourself, following a half day training session from one of our Xero Certified bookkeepers. We will reconcile your Xero accounts each quarter to give you peace of mind, knowing that your data is accurate prior to the VAT Return submission.

 

  1. Take out a Xero subscription and maintain your accounting records yourself, following a half day training session from one of our Xero Certified bookkeepers. We will reconcile your Xero accounts each month to give you peace of mind, knowing that your data is accurate no a more regular basis, enabling you to make improved financial decisions.

 

  1. Take out a Xero subscription and send your purchase and sales invoices to us, on a monthly basis, for processing into Xero by one of our Xero Certified bookkeepers. We will connect your Xero account to your bank account which will allow us to reconcile your bank on a regular basis. Following the monthly reconciliation process, we will provide you with management accounts to give you an overview of your business which will enable you to make improved financial decisions. This option will also provide you with more free time to focus on running your business, or to just remove the burden of carrying out the more administrative tasks.

 

Of course, we will be more than happy to find a solution for your business if your requirements do not match those specifically listed above.

When do you need to convert?

Although the changes does not come into effect until 1 April 2019, an issues may arise where the change comes in part way through your financial year, meaning your accounting records may be prepared partly using one system, and partly using another. This is very likely to cause complications, not only for yourself, but also when it comes to preparing the year end accounts.

Therefore, we recommend transitioning following the end of your next financial year end, with the first transitions being those with a year end of 30 June.

Please do get in touch with Martin Crooke as soon as possible to discuss the next step by phoning the office on 01604 662670 or emailing martincrooke@kilbyfox.co.uk.

‘No deal’ Brexit guidance and small business survey

Following the issue of some ‘no deal’ Brexit technical notices, in August, the government has issued further notices with the aim of helping both businesses and individuals to prepare in the event of a UK-EU agreement not being realised.

The second and third batches of notices cover topics such as passports, driving licences together with data protection and mobile phone roaming charges amongst other topics. The full list and access to the collection of technical notices can be viewed by visiting the link at the end of this article. The government has confirmed they plan to issue further technical notices.

Although reaching a deal remains the ‘overriding priority’ unless a Withdrawal Agreement is ratified by the UK and European Parliaments, the possibility of the UK leaving the EU without a deal on 29 March 2019 remains.

Meanwhile, a survey by the Federation of Small Businesses (FSB) has revealed that:

  • Only 14% of small businesses have started planning for a no deal Brexit.
  • A further 41% believe that a no deal Brexit will have an impact on their business but have not yet started planning for the possibility.
  • 10% believe that a no deal Brexit will have a positive impact on their ability to do business whilst 48% believe that a no deal Brexit will have a negative effect on their ability to do business. This figure rises sharply to 66% for those small firms that trade with the EU and to 61% for those that employ a staff member from the EU.

FSB National Chairman, Mike Cherry, said:

‘Looking at this research it is obvious that our small firms are not prepared or ready for a chaotic no deal Brexit and the impact that it will have on their businesses. If you sell your products to the EU, buy goods from the EU or if your business relies on staff from the EU, you now see this outcome as a clear and present threat to your business.’

We will keep you informed of developments.

Internet links: GOV.UK no deal brexit collection FSB press release

HMRC identify £15.6 million minimum wage underpayments

HMRC has announced that they achieved record enforcement results this year, identifying £15.6million of minimum wage underpayments.

The number of workers identified as underpaid was double that in 2016/17 and the highest number since the National Minimum Wage came into force.

The figures reveal:

  • a record £15.6 million of underpayment identified for more than 200,000 workers
  • employers fined £14 million for not meeting legal obligations
  • more than 600 employers named in 2017/18 as part of ‘naming’ rounds.

Business Minister Kelly Tolhurst, said:

‘We are dedicated to stopping underpayment of the minimum wage. Employers must recognise their responsibilities and pay their workers the money they are entitled to.’

‘The UK’s lowest paid workers have had the fastest wage growth in 20 years thanks to the National Living Wage and today’s figures serve as a reminder to all employers to check they are getting their workers’ pay right.’

HMRC has prioritised the social care, retail, commercial warehousing and gig economy sectors for enforcement of the minimum wage. This is alongside employment agencies, apprentices and migrant workers. These are the sectors where HMRC believes non-compliance with National Minimum Wage is more widespread.

For advice on payroll please contact us.

Help to Save

Hardworking people on low incomes are set to benefit from a new government savings account that offers a 50% bonus.  The launch of the new account follows an 8-month trial, with over 45,000 customers who deposited over £3 million.

Help to Save will reward savers with an extra 50p for every £1 saved, meaning over 4 years a maximum saving of £2,400 would result in an overall bonus of £1,200.

Help to Save is easy to use, flexible and secure, will help those on low incomes build up a ‘rainy day’ fund, and encourages savings behaviours and habits.

How much is saved and when is up to the account holder, and they don’t need to pay in every month to get a bonus.

Account holders can save between £1 and £50 every calendar month and accounts last for 4 years from the date the account is opened.

After 2 years, savers get a 50% tax-free bonus on savings. If saving continues, there is another 50% tax-free bonus after 4 years.

On maximum savings of £2,400 over 4 years, the overall bonus would be £1,200.

Savers can apply online or use the HMRC app.

Help to Save

  • the scheme, administered by HM Revenue and Customs, will be open to UK residents who are entitled to Working Tax Credit and receiving Working Tax Credit or Child Tax Credit payments.
  • people living overseas who meet either of these eligibility conditions can apply for an account if they are: a Crown servant (or their spouse or civil partner); a member of the British armed forces (or their spouse or civil partner).
  • Help to Save is an example of digital transformation designed to make it quicker and easier for citizens to interact with government online and on-demand. The #SmarterGov campaign has been launched to drive innovation, savings, and public service improvement across the public sector.

 

 

HMRC Warning: time to declare offshore assets

HMRC is warning that taxpayers could face penalties if they fail to declare their income on foreign assets before new ‘Requirement to Correct’ legislation comes into force.

HMRC is urging UK taxpayers to come forward and declare any foreign income or profits on offshore assets before 30 September to avoid higher tax penalties.

New legislation called ‘Requirement to Correct’ requires UK taxpayers to notify HMRC about any offshore tax liabilities relating to UK income tax, capital gains tax, or inheritance tax. The most common reasons for declaring offshore tax are in relation to foreign property, investment income and moving money into the UK from abroad. HMRC has stated that over 17,000 people have already been in contact to notify they have tax due from sources of foreign income, such as their holiday homes and overseas properties.

Common Reporting Standard (CRS)

From 1 October more than 100 countries, including the UK, will be able to exchange data on financial accounts under the CRS. It is expected that the CRS data will significantly enhance HMRC’s ability to detect offshore non-compliance and it is in taxpayers’ interests to correct any non-compliance before that data is received.

Taxpayers can correct their tax liabilities by:

  • Using HMRC’s digital disclosure service as part of the Worldwide Disclosure Facility or any other service provided by HMRC as a means of correcting tax non-compliance.
  • Telling an officer of HMRC in the course of an enquiry into your affairs.
  • Or any other method agreed with HMRC.

Once a taxpayer has notified HMRC of their intention to make a declaration, by the deadline of 30 September, they will then have 90 days to make the full disclosure and pay any tax owed. To ensure there is an incentive for taxpayers to correct any offshore tax non-compliance on or before 30 September 2018 there are increased penalties for any failures to correct by that date.

If taxpayers are confident that their tax affairs are in order, then they do not need to worry. However if you are unsure, please contact us.

If you have any further questions, or would like to book a free
one-hour consultation with one of our partners, please get in touch.
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