Benefits In Kind, Shares Issued To Employees and Directors & Company Car Advisory Fuel Rates Updates!

Reporting Benefits In Kind and Shares Issued To Employees and Directors

It’s that time of year again when the annual return of benefits in kind and expenses paid on behalf of directors and employees needs to be made to HMRC.

Unless the employer holds a dispensation, this includes expenses such as travel and subsistence that are reimbursed to employees and directors.

Note however that from 2016/17 the employer will no longer need such a dispensation if the expenses are wholly, exclusively and necessarily incurred in the performance of the individuals’ duties.

Remember also that whenever companies issue shares to employees and directors they need to consider whether or not an entry needs to be made on the end of year HMRC Form 42. This form is used to report events relating to shares and securities obtained by reason of employment and needs to be submitted online by 7 July following the end of the tax year. As usual we can assist you on complying with these reporting requirements.

Trivial Benefits In Kind Now Exempt

Employees are no longer taxable on trivial benefits in kind, provided the cost to the employer is less than £50. This must not be cash or vouchers or a reward for past or future services but is intended to cover gifts of flowers on a birthday or a turkey at Christmas.

Company Car Advisory Fuel Rates

These rates are the suggested reimbursement rates for employees’ private mileage in their company cars and are reviewed each quarter on 1 March, 1 June, 1 September and 1 December.  In line with an increase in fuel prices, the rates that apply from 1 June 2016 are shown below:

Engine Size	Petrol	Diesel	LPG
1,400 cc or less	10p		7p
1,600 cc or less		9p (8p)
1,401cc to 2,000cc	13p (12p)		9p (8p)
1,601cc to 2,000cc		10p
over 2,000cc	20p (19p)	12p (11p)	13p

Where there has been a change, the rates that applied prior to 1 June 2016 are shown in brackets.

You can use the previous rates for up to 1 month from the date the new rates apply.

If you reimburse your employees the tax free amount of 45p a mile (25p after 10,000 miles) for using their own car for business purposes, then 20/120ths of the above amounts can be reclaimed as input VAT by your business.

For example, a diesel-engine car emitting over 2,000cc = 12p x 1/6 = 2p input VAT a mile.

Contact us for all your Tax needs!
☎ 020 89310165 | ☏ 07900537459 | ✉ info@apjaccountancy.com 

Incorporating Your Business? 2016 Updates!

Where a sole trader, partnership or LLP has established a significant value for the goodwill of their business, it was possible, up until 3 December 2014, to transfer that goodwill to a limited company and pay just 10% capital gains tax by claiming entrepreneurs’ relief.

The former owner(s) could then draw down on the loan account created with the transferee company over time as future cash was generated by the business. This tax planning strategy became less attractive when entrepreneurs relief was denied where the transferor and transferee were related parties, although the latest Finance Act has relaxed this rule where the former owner receives less than 5% of the acquiring company’s shares.

Now that the top rate of CGT has been reduced to 20% from 6 April 2016 for such transfers, rather than 28%, it may be worth reconsidering this strategy.

For example where an individual’s share of goodwill is worth £500,000 the CGT due would be £100,000 leaving £400,000 net of tax.

Note that for a transfer in June 2016 the CGT would not be due until 31January 2018.

Consider charging interest to the company on the loan account balance as that is now more tax efficient than dividends for higher rate taxpayers.

Note that although the goodwill would generally need to be written off against the company’s profits, there is no longer a tax deduction for the amortisation resulting in higher taxable profits.

Know more about Capital Gains Tax: changes to rules

Contact us if you need help while incorporating your business:

PJ | ☎ 020 89310165 | ☏ 07900537459 | ✉ info@apjaccountancy.com

Tax Diary Of Main Events For July / August 2016

UK Tax Deadlines for July & August 2016!

Date	What’s Due
01 July	Corporation tax for year to 30/9/15
06 July	Forms P11D and P11D(b) for 2015/16 tax year, and where appropriate form P9D
07 July	Form 42 - shares issued to employees and directors
19 July	PAYE & NIC deductions, and CIS return and tax, for month to 5/7/16 (due 22 July if you pay electronically); payment of Class 1A NICs for 2015/16 (22 July if you pay electronically)
31 July	Second 50% payment on account of self-assessment income tax for 2015/16
01 Aug	Corporation tax for year to 31/10/15
19 Aug	PAYE & NIC deductions, and CIS return and tax, for month to 5/8/16 (due 22 August if you pay electronically)

Contact us for all your Tax needs!☎ 020 89310165 | ☏ 07900537459 | ✉ info@apjaccountancy.com 

VAT Flat Rate Scheme for your Small Business!

Should I Use The VAT Flat Rate Scheme For My Small Business?

The VAT Flat Rate Scheme is intended to simplify VAT accounting and reporting for small businesses, and some may even find that they pay less VAT than using normal VAT accounting.

To join the scheme your VAT turnover must be £150,000 or less (excluding VAT), and you must apply to HMRC to use the scheme. You can remain in the scheme until your turnover including VAT exceeds £230,000. 

With the Flat Rate Scheme you pay a fixed rate of VAT to HMRC depending on your business category and you keep the difference between what you charge your customers and pay to HMRC. However, you can’t reclaim the VAT on your purchases, except for certain capital assets over £2,000.

HMRC have recently revised their guidance on different business categories. 

For example not all consultants should use the 14% flat rate applicable to management consultants and should instead use the 12% rate for ‘business services not listed elsewhere’. That would result in them paying over 2% less of their takings to HMRC. On £150,000 a year that would be a £3,000 VAT saving. There is a further 1% reduction in the first year that the business is VAT registered.

To sum it up, with the Flat Rate Scheme:

• you pay a fixed rate of VAT to HMRC
• you keep the difference between what you charge your customers and pay to HMRC
• you can’t reclaim the VAT on your purchases - except for certain capital assets over £2,000
• To join the scheme your VAT turnover must be £150,000 or less (excluding VAT), and you must apply to HMRC.

If you want to know more or advice on whether the Flat Rate Scheme is right for you, contact us.

PJ - APJ Accountancy

☎ 020 89310165

☏ 07900537459

✉ info@apjaccountancy.com

5 tips to build an effective talent management strategy!

A good talent management strategy is all about acquiring, hiring and retaining talented employees. It involves linking various components of the business together to develop those people likely to drive future business growth.

The responsibilities should be spread throughout human resources, training, and selected management sponsors. Talent Management requires a mindset that goes beyond just talk, and moves the focus towards a holistic and integrated approach to leveraging the greatest competitive advantage from your firm’s people. It is about those thoughts and actions that, consistently, over time, become part of your firm’s organisational culture.

Managers should drive talent management

The cultural fit between an employee and manager is critical to the employee's job satisfaction. In a world where up-and-coming generations consider three years with a company a serious commitment, line managers, supported by the expertise of HR professionals, can enhance employee retention by ensuring cultural matches at both firm-wide and workgroup levels.

The best and brightest talent have technical competence, marketing savvy, passion, energy and drive. They also have the "soft" people skills that help motivate others and ensure effective execution of their roles. Line managers understand the particular skills and competencies they need to accomplish their business goals. They should drive the firm’s talent practices, working closely with HR, to recruit talented people, manage performance, provide career guidance and serve as role models. Line managers are also ideally positioned to identify and develop current employees with leadership potential.

Life long learning should become a cultural norm and expectation

When you think about the pace of change around businesses today, many traditional talent management processes are less relevant than they used to be. Some areas of expertise are changing every year, leaving many skilled employees struggling to stay relevant. And while competency management systems, career path planning, and multi-year development cycles made sense in yesterday's work environment, they are no longer enough. Employee development begins with an effective onboarding program. Competent, competitive firms take time to educate every employee about their products, customers, industry, market and competition. Annual talent reviews should be a core business process, as important as annual strategic business and operational reviews. Accelerated leadership development is now a business imperative and the role of succession planning is essential in ensuring a sustainable, competitive business.

Agile talent management strategy

It used to be that entrepreneurial businesses had to be nimble, and they often lost that agility as they grew into larger firms full of processes and bureaucracy. These days, competitive firms of every size need strategic flexibility to react rapidly to change. That means creating an agile talent management strategy that makes a multitude of solutions available in short timeframes.