Should You Be a Registered Charity?

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There are thousands of charities around the UK and, although we often only hear of the few high profile charities that appear in media coverage, there are also many very small charities whose main purpose is to help local causes.

Some charities are ‘excepted’ from charity registration providing their annual income is below £100,000, an example being Scout and Guide groups. There are also some organisations that have their own regulatory body and are therefore ‘exempt’ from charity registration. A full list of ‘excepted’ and ‘exempt’ charities can be found on the Charity Commission website.

If a charity is not one of the few listed as ‘excepted’ or ‘exempt’, and has an income over £5,000 per year, it is a legal requirement for it to register with the Charity Commission.

There are concerns that many charities start off with small ambitions or single projects, but soon progress with fundraising and setting new goals for future years, and often exceed the £5,000 limit without realising.

If you have any questions on whether you should be registered with the Charity Commission please contact us.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Tax and Your Company Car

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There are many factors which will influence your choice of company car. These can include the distance you travel, terrain covered, the price, your lifestyle and perhaps even your clients. However, is tax ever a consideration?

The start of the tax year saw an increase in the company car rates and indeed the rates are increasing quite significantly year on year. Assuming however that you have some degree of choice over the car make and model, you can influence the tax that you pay.

The two factors which determine the tax charge attached to a company car are the list price of the vehicle and its CO2 emissions.

The table below shows the benefit in kind charge for cars with various, hypothetical,  list prices and CO2 emissions.  The rates applicable to the current tax year (2017/18) have been used.

List price CO2 emissions Fuel type Benefit in kind value
£17,000 102g/km Petrol £3,230
£25,000 99g/km Petrol £4,500
£25,000 117g/km Diesel £6,250
£35,000 0g/km Electric £3,150
£50,000 41g/km Electric/Petrol £4,500
£50,000 155g/km Diesel £16,500

In addition to the company car benefit there is also a fuel benefit if the employer provides fuel for private use; the value of the fuel benefit is affected by the CO2 emissions but not by the list price.

Although tax will not be the only issue affecting your choice of company car, perhaps it ‘auto’ be a consideration?

If you’d like any more information please contact Green & Co Accountants.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Insight into Foresight

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Budgeting is an essential tool used to monitor a business. It allows business owners to monitor what the business is actually doing, compared to what it wants to do. This seems a rather straight forward concept to understand, but it can often be met with scepticism when it comes to setting a budget. The “trying to predict the future” concept is inevitably an impossible task and is probably why most business owners feel it is a wasted exercise. This is a common misconception, as budgets need not be exact, but merely indicative.

The idea behind setting budgets is to help carve out a path to follow in the coming year. It allows you to think about where you want to take the business and how you are going to achieve it. Once these questions are answered, the budget simply shows you what the expected financial results would look like. Over the year, you can identify whether the business is following that predetermined path you carved out, or whether it is straying off and needing to be reined in.

Thinking about your business in this way is immensely productive. It will often identify opportunities and threats currently present and force you to think proactively to try and capitalise on the opportunities and manage the dangers.

In today’s economic climate, uncertainty is increasing, which makes the budgeting process more complex. However, here at Green & Co we pride ourselves in helping clients achieve their goals. With our insight into budgeting techniques, we can help you carve out that path for your business.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Don’t Be a Lottery Loser – Protect Your Syndicate Winnings

 

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If you and your employees club together to take a chance on the Lottery by operating a workplace syndicate, but you do not have a formal agreement in place, a large win could cause tax issues in the future.

If ever you are fortunate enough to win the jackpot, the winnings will undoubtedly be collected and distributed by a nominated individual, normally the same person who buys the tickets.  However, if by some stroke of misfortune, that person dies within 7 years of the win, HMRC could argue the distributions were technically gifts, particularly if no written agreement exists.  In that event the gifts would be treated as failed Potentially Exempt Transfers (PETs) and therefore subject to Inheritance Tax.

Admittedly this is not an everyday occurrence, but it can happen, and HMRC are likely to chase all those who shared in the winnings for any resulting liability.

Verbal agreements can of course be valid, but they are much more difficult to prove, so if you are a part of a syndicate, it is wiser to draw up a document, showing all members, the amount of the stake each pays and how any winnings are to be shared.  It should always be updated when new members join to ensure they don’t get caught out by the IHT trap.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

HMRC Cash Crackdown

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HMRC has shopkeepers in its sights at the start of a new crackdown on cash payments.

Returns submitted to HMRC by shops and restaurants, whom it believes may not be declaring all of the cash payments they take, are to be crosschecked against the number of card payments taken.

HMRC estimate around 30% of transactions in these business are paid for in cash, and it is thought that investigations will centre on businesses recording more than 90% of their transactions are paid by card.

There are concerns, however, that the new plans could lead to lengthy and unnecessary investigations which could be financially damaging for small businesses.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Introduction to Xero Seminar – 8 June 2017

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Does your business currently use Xero or are you considering moving your accounting to a cloud based system?

We would like to invite you to the Parkway Hotel and Spa in Cwmbran, on 8 June 2017, between 9am and 11am, to teach you how to utilise Xero to its full potential and how Xero can benefit your business.

Xero account manager, Ian Phillips, will be coming along to provide you with the following:

  1. A brief summary of Making Tax Digital
  2. An overview of what Xero is and how it can benefit your business.
  3. How to use Xero to streamline your businesses reconciliation process
  4. How to save time and money using Xero.
  5. Tips & Tricks to help you get the most from your accounting system
  6. Running reports to understand your business.
  7. Questions and Answer session to help answer any questions or problems you may be facing.

Eventbrite - Introduction to Xero: Seminar from Green & Co Accountants

For any enquiries about this event, please contact Katie Williams at Green & Co on 01633 871122, Email: katie@greenandco.com.

Some Employee Perks Are Being Lost and It Could Be Costly

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Green & Co feature in the South Wales Argus discussing the tax changes for employee perks.

The new tax year has seen a raft of changes, with more legislative reform scheduled to come into effect over the next few years.

From changes in dividends, stamp duty, and national insurance (with a U-turn thrown in for good measure) the way that people are taxed is an ever-evolving landscape. However, it’s not just directors, landlords and the self-employed who have been targeted with new legislation.

Barrie Kenyon, partner at Green & Co Accountants and Tax Advisors said: “From 6th April, the tax and employer national insurance advantages of a salary sacrifice or salary exchange scheme was removed. This means that any employees who have swapped their salary for benefits, which typically include additional holiday days, will now pay the same tax as if they were buying them out of their post-tax income. The Chancellor, Philip Hammond, announced the changes in the autumn statement believing the previous schemes were unfair. From earlier this month, they have started to come into effect.

“However, these changes do not affect those employees who have reduced their salary for pension contributions, childcare purposes such as vouchers, workplace nurseries or directly contracted childcare, the cycle to work scheme and ultra-low emission company cars with co2 emissions of or less than 75g/km.

“The schemes were seen as attractive to both employees and employers, with reduced tax liabilities benefiting both parties.”

Mr Kenyon stressed that there were some caveats that accompany the changes: “If any arrangements which were in place before April 2017 relate to cars with co2 emissions over 75g/km, accommodation or school fees: these arrangements will be protected until April 2021. Also, other arrangements agreed prior to April 2017 that do not fall into the aforementioned categories will be protected until the end of the current tax year in April 2018.”

It is estimated that millions of workers from across the UK will pay more tax due to these changes, with the Treasury believing that these schemes are costing too much in lost tax receipts and national insurance contributions. It is estimated that the reform will cost employers in the UK around £85M this tax year, whilst increasing another £260M by April 2021 when the full changes will come into effect.

If you are worried about any of these forthcoming changes, please contact us at Green & Co for further help and guidance.

Green & Co Accountants and Tax Advisors specialise in business growth and tax minimisation for businesses across Wales and the South West of England.

For proactive advice, contact Green & Co Accountants and Tax Advisors on 01633 871 122, follow @Green_and_Co on Twitter or email barrie@greenandco.com.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

VAT Fuel Scale Charge

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To make accounting for private use of fuel simpler, you can choose to apply the VAT fuel scale charge. This scale charge adds back a fixed sum each VAT period to account for the private use of fuel, making redundant any need to split the mileage between business and private use.

The scale charge for any given vehicle is based upon its CO2 emissions. HMRC update the scale charge table every May, and this years can be found here.

Scale charges only apply to those cars where there is allowed private usage, and when you start using the scale charge, you must use it on all your company’s cars for which there is private use.

Those using the scale charges, should be sure to keep a record of:

  • Number of cars which it is applied to
  • CO2 band of each car (or cylinder capacity if the car is too old for an emissions figure)
  • Details of when cars have been bought and/or sold.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

 

Business Planning: Plan to Succeed!

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Writing a business plan may sound like a long and tedious process that will lead to very few benefits for your business, but in reality the benefits that can be achieved from business planning are huge.

  • Attracting investors – Business plans give investors a look at what a business expects to achieve in the future by using statistics, facts, figures and detailed plans. This gives businesses a better chance of attracting investors to provide capital.
  • Growth – A business plan can be used as a tool to help plan growth and associated costs and capital requirements.
  • Stick to the strategy – During the day to day running of a business it is easy to lose sight of what the main goal is. A business plan can be used to define what the business is or what it intends to be in the future. Clarifying the purpose and direction of your enterprise allows you to understand what needs to be done to meet your objectives.
  • Managing cash flow – Careful management of cash flow is necessary for all businesses. Using a cash flow plan is a brilliant way to link together educated guesses on sales, costs, expenses, assets you need to buy and debts you have to pay.
  • Milestones – A business plan can be used to set milestones that you can work towards. These are key goals that you want to achieve. Having all dates and deadlines visible in one place can make achieving these milestones so much easier.
  • Management – A business plan should include an organisational structure of your business, including titles of directors or officers and their individual duties. It is an ideal place to clarify who is responsible for what. Every important task should have someone in charge of its execution.

A business plan can help to identify potential threats and opportunities your business could face, avoid penalties or other legal problems, helping you to adapt quickly and efficiently to changes.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.