Christmas is Coming - New Rules for Gifts to Staff!

From 6 April 2016 new rules were introduced to allow employers to provide their directors and employees with certain “trivial” benefits in kind, tax-free.

The new rules are a simplification measure so that certain benefits in kind will not need to be reported to HMRC, as well as being tax free for the employee. There are of course a number of conditions that need to be satisfied to qualify for the exemption.

Conditions for the exemption to apply:
• the cost of providing the benefit does not exceed £50
• the benefit is not cash or a cash voucher
• the employee is not entitled to the benefit as part of any contractual obligation such as a salary sacrifice scheme
• the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services)

So this exemption will generally apply to small gifts to staff at Christmas or on their birthday.
Prior to this change in the rules, the benefit in kind would have had to be reported on the employee’s P11D form at the end of the year, or alternatively the employer would have dealt with the tax and national insurance under a PAYE settlement agreement. Under such an arrangement a £50 Christmas turkey to a higher rate taxpayer could end up costing the employer nearly £95!

Note that where the employer is a “close” company and the benefit is provided to an individual who is a director or other office holder of the company, the exemption is capped at a total cost of £300 in the tax year.

Please feel free to contact us if you are considering taking advantage of this new exemption.

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

3 Tips for Better Talent Management!

The "war on talent" seems to be raging on. Large businesses are competing to recruit the best graduates straight from university and many firms are prepared to pay well for the most experienced candidates. As a result, all businesses need to manage the talent they already have.

Talent management is often considered to be an HR matter but the management team in any business should be involved in managing the firm’s most valuable resource – its people. Start by identifying the high potential people in your firm and work towards developing them and retaining them in the business.

Talent Development

Create a strategy to hire the best people and nurture them throughout their careers. Managers should set the tone and work to develop employee’s skills and knowledge to help them to realise their potential in the firm. Your firm’s talent development programme should include theory and practice as well as coaching and mentoring sessions for your high potential employees. If your team feels like they have an opportunity to develop at their current firm, they are less likely to look for opportunities elsewhere.

Learn from Others 

Consider what talent management looks like at other firms within your industry sector. What do the biggest international firms do well and what could you offer to your team members that would differentiate your firm from the competition? Even if you run a smaller business, you can learn from the market leaders and implement some of their ideas.

Recognition and Reward

Consider the skills, knowledge and performance of employees and identify those who are high performers and/or exhibit leadership potential. Formal performance appraisals should happen at least annually and “top talent” within the business should be sufficiently challenged with objectives which will encourage them to perform, while retaining their commitment to the firm. The appraisal process should be transparent in order to avoid any potential conflict between employees.

Continuous Professional Development

Good businesses tend to promote a culture of life long learning. All members of your team should be offered access to and encouraged to take part in training courses, development opportunities, etc. Investment in continuous professional development should be viewed by the firm as an investment in the future of the business as today’s “top talent” are the business leaders of tomorrow.

4 Advantages of Being a Sustainable Business!

The “green agenda” has moved to the forefront of the modern business world. Society is experiencing an increasing shift in focus to sustainable business and environmental responsibility.

For businesses, embracing sustainability includes encouraging active preservation of the environment and communities, while also promising attractive cost savings. Many firms have made considerable savings through implementing sustainability programs across their value chains.

1. Reducing Operational Costs

Low-cost initiatives can have a profound impact on reducing energy consumption. Legislation in the form of tax incentives is also encouraging businesses to implement sustainable practices. This includes property tax exemptions, income tax credits or easier access to financing and government grants. To qualify for these programmes, businesses must either install certain equipment, implement pollution control mechanisms or utilise environmentally friendly materials, recycled components etc.

2. Strengthening Brands

With the increasing global concern about the environment, businesses can now leverage their sustainability and related achievements, investments, and skills, to strengthen their value and reputation. Conversely, those businesses that fail to resonate with what consumers and stakeholders deem to be important could see a detrimental impact on their brands.

3. Improving Employee Recruitment and Retention

The next generation of professionals (millennials) are more environmentally aware and focused on sustainability. They are attracted to businesses that are socially responsible, and want to work for companies with a positive impact on the world around them. Therefore, building your firm's brand around sustainability will help you to attract the best new generation recruits.

4. Enhancing Innovation

Building a more sustainable business encourages your people to become more innovative. This focus on innovation encourages the development of new products or services and new ways of doing business.  Nike, who used plastic bottles from landfills in Japan to manufacture soccer jerseys, being a great example.

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

Knowledge Management - Importance & Strategy!

Knowledge management in business is all about identifying and developing critical technical and management knowledge and deploying it across the firm in a way that adds value.

Importance of Knowledge Management:

Most businesses will have considered the risk of losing valuable knowledge to the extent that when talent walks out the door, the prime concern is losing the technical know-how which those people possess. Exit interviews are reactive, somewhat ineffective and instead managers should adopt more proactive practices.

Knowledge Management Strategy:

Collaboration Systems

Collaboration systems such as internal forums can be useful in encouraging teams to share know-how across the firm. Some firms even create wiki sites which can be searched by staff who need to access important knowledge or information quickly and easily.

Central Repository

The firm should have a central repository, with policies and procedures as well as relevant know-how documents and guides. The majority of this knowledge will be internal and the focus should be on documenting and sharing know-how around operational efficiency and effectiveness.

Customer Focused

Your knowledge management strategy can also be customer focused. The key here is to create and share know-how that helps to ensure that customer relationships are maintained, service levels are high and sales volumes are increased. The crucial knowledge is centered around the products or services that the business offers, as well as knowledge about the customers themselves, the market, competitors and other firms in the sector. The majority of this knowledge will be internal with some external knowledge (such as market information) being needed to fully understand the client, your competitors and the sector in which you operate.

Innovation Focused

Your knowledge management strategy could also have an innovation focus. This involves the creation and utilisation of new and existing knowledge in order to create new products and services. Much of this knowledge will be external and may include market research, analysing client data, etc.

A successful management strategy must identify the key needs and issues within the firm, and provide a framework for addressing these.

Contact us for your business help requirement:
PJ | ☎ 020 89310165 | ☏ 07900537459 | ✉ info@apjaccountancy.com

UK Tax Changes: October-November 2016!

Changes To Farmers Averaging:

From 2016/17 onwards farmers now have the option to smooth out their profits over two or five tax years as the result of a change in Finance Act 2016.

Farmers’ and market gardeners’ profits often fluctuate wildly from one year to the next and the tax rules for many years have allowed them to average their profits in order to smooth out those fluctuations.

It is expected that there could be even greater fluctuations as the result of changes to subsidies and support payments following Britain’s exit from the EU so 2 or 5-year averaging will need to be carefully considered. We can of course assist you in this decision process.

Paying 20% Instead Of 28% On The Sale Of Property:

The latest Finance Act has retained the 28% CGT rate for sales of residential property, whereas the general rate was reduced to 20% for higher rate taxpayers.

It has been suggested that it is possible to reduce the rate from 28% to 20% by deferring the gain temporarily into qualifying EIS company shares.

The tax planning opportunity arises because reinvesting the property gain in Enterprise Investment Scheme (EIS) company shares defers the gain until the shares are sold when the gain comes back into charge at the general rate of CGT, currently 20% for a higher rate taxpayer.

There is no minimum holding period for EIS deferral relief, however where the investor is seeking income tax relief and CGT exemption on the sale of the shares they need to be an unconnected investor and retain the EIS shares for at least 3 years.

The reinvestment in EIS shares must take place during the period of 12 months before to 36 months after the date of disposal of the property.

Shares in EIS qualifying companies are risky investments and specialist investment advice should be taken. There is also a chance that HMRC may block this tax planning strategy in the future.

Advisory Fuel Rate For Company Cars:

These are the suggested reimbursement rates for employees' private mileage using their company car from 1 September 2016. Where there has been a change the previous rate is shown in brackets.

Engine Size	Petrol	Diesel	LPG
1400cc or less	10p		7p
1600cc or less		9p (8p)
1401cc to 2000cc	13p (12p)		9p (8p)
1601 to 2000cc		10p
Over 2000cc	20p (19p)	12p (11p)	13p

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

VAT Implications of Employee Mileage Claims:

Note that where employers reimburse their employees 45p per mile for using their own cars they are able to reclaim input VAT based on the amounts shown in the table. 

In the case of a 1600cc diesel car that would be 1.5 pence per mile.  (9p x 20/120). Such a claim needs to be supported by a receipt from the filling station.

Contact us if you need business help:
PJ | ☎ 020 89310165 | ☏ 07900537459 | ✉ info@apjaccountancy.com