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National Minimum Wage

The National Minimum Wage rates

The National Minimum Wage (NMW) is a minimum amount per hour that most workers in the UK are entitled to be paid. Find out what the current rates are and where to get help if you think you are being paid below the minimum wage rate.

New NMW rates from 1 October 2014

The following rates will apply from 1 October 2014:

  • £6.50 – the main rate for workers aged 21 and over
  • £5.13 – the 18-20 rate
  • £3.79 – the 16-17 rate for workers above school leaving age but under 18
  • £2.73 – the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship

Current NMW rates

There are different levels of NMW, depending on your age and whether you are an apprentice. The current rates are:

  • £6.31 – the main rate for workers aged 21 and over
  • £5.03 – the 18-20 rate
  • £3.72 – the 16-17 rate for workers above school leaving age but under 18
  • £2.68 – the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship

Claiming costs on a rental property

For periods before 6 April 2013 HMRC permitted a deduction for the cost of renewing carpets, curtains and white goods in all let residential properties on a concessionary basis. That concession was withdrawn with effect from 6 April 2013. The new rules now state that a wear and tear allowance (10% of the net rents) that covers furnishings and similar items, can only be claimed for fully furnished properties.

Your clients properties don’t count as fully furnished, even though they contain some white goods and carpets. HMRC will not accept claims for the cost of free-standing white goods in unfurnished residential properties. It will allow a deduction for the cost of replacing fixtures such as baths, toilets, integrated fitted ovens and hobs, as those costs can be classified as repairs. If your client replaces part of the fitted carpet they could claim that as a repair, but not the cost of putting new carpet down in the entire property.

Claiming travel costs

The first rule is that the cost of ordinary commuting cannot be claimed. This is defined as travel to a permanent workplace, which is somewhere attended regularly to perform the duties of the employment. Travel costs to a temporary workplace can be claimed, but the conditions that make a workplace ‘temporary’ must be met.

A place is not a temporary workplace if the employee attends for a continuous period of more than 24 months, or the attendance is expected to last more than 24 months. If your PSC takes on a contract that is expected to last say 36 months at one location, you can’t claim travel costs to that location, as your workplace is not a temporary workplace from the start of the contract.

Another definition of ‘temporary workplace’ is one which the worker attends to perform a task of limited duration or for some other temporary purpose. HMRC has a rule of thumb that if the worker is attending a place for 40% or more of his working time, that is a permanent workplace and travel costs to the location can’t be claimed.

If you work at your client’s office for say 15 hours per week out of a 40 hour normal working week, your client’s office is a temporary location even if the contract exceeds 24 months. Please discuss the matter of travel expenses with us before you take on a long contract, as the deductibility of the travel costs may tip the balance on whether the contract is worthwhile.

9 out of 10 Accountants See Benefits of Online Software

The Chartered Institute of Management Accountants (CIMA) recently conducted some research in the first half of July 2014 to try to determine what accountant practice attitudes were towards cloud-based accountancy software.

These findings will help to inform the agenda for a scheduled panel debate set to take place in October. 260 people took part in the survey which was conducted online.

With around 40 per cent of accountancy practices already using either Sage One or a cloud-based solution, there is a real awareness of the opportunities and benefits it brings. Out of the remaining two thirds of practitioners who have not yet made the transition to cloud, 8 out of 10 were aware of how online software would benefit their role.

Overall, a majority of 90 per cent believed that adopting a more ‘mobile working’ approach and utilising real time data would offer real advantages. The benefits cited are listed as:

  • Having improved data security
  • Option to move to subscription licensing and scalability
  • Automation
  • Lower costs for both hardware and software
  • Better working relationships with clients
  • Greater IT infrastructure control
  • Improved efficiency
  • The ability to work with ‘live’ real time data
  • The opportunity to work form various different locations

Just under half of respondents identified several different areas where they thought they could gain from expert guidance. These included:

  • Saving costs with cloud best practices
  • Managing security
  • Driving efficiency through the cloud
  • Driving profitability through business growth
  • Marketing to clients and potential clients
  • Migrating clients over to online solutions
  • Managing mobility

There are still quite a significant number (68 per cent) holding back with regard to switching over to a more online way of working, as they want to see some of the following options to be either improved or made available. These are:

  1. Management information solutions such as expert guidance on compliance and legislative issue
  2. Complex reporting solutions
  3. Final accounts solutions

Lastly, for all the recent touting of how more modern methods of communication are the way forward such as web chat and video calling, the perennially popular email is still the most preferred method of communication, favoured by 39 per cent. This is followed by the telephone at 22 per cent. It looks as if these more traditional ways of keeping in touch with clients are here to stay for a good while yet!

These findings make it clear that although there is a lot of interest in cloud-based software, and that most accountants are aware of the advantages it can offer, accountants still need to be assured that significant efficiencies can be gained and that their data is safe and secure

Invest into Clearbooks

Screen Shot 2014-08-07 at 05.11.51

 

Clear Books plc, provider of cloud accounting and payroll software to 7000 small businesses in the UK, has launched Cloud Funding II to raise £3.3m growth capital. The round has received advance assurance from HMRC for EIS tax relief. You can purchase shares priced at £12 each.

Existing shareholders have already invested £0.5m, which follows on from £0.8m raised in 2013 in an oversubscribed round.

To find out more please visit www.clearbooks.co.uk/cloudfunding2

Recent company highlights include 74% annual revenue growth to March 2014, a partnership with Santander and monthly sales now at £100k.

 

Global cloud market will be worth $121bn by next year, report finds

recent report from market research firm Markets and Markets reveals that the cloud market is expected to grow to $121 billion dollars by 2015: a 26% compound annual growth rate from the $37 billion value in 2010.

A large proportion of the growth of the cloud services sector is being driven by rapid adoption of Software-as-a-service platforms, which are saving businesses on the cost of licensing, management, and deployment of software and hardware for productivity and collaboration.

Infrastructure-as-a-service is also expected to grow rapidly as a platform on which businesses will host their own SaaS solutions and for other business critical infrastructure deployments.

Much of the growth is being driven by larger companies that have previously been reluctant to invest in cloud infrastructure because of concerns of vendor lock-in, lax security, and the difficulty of developing cloud solutions that are tailored to their specific requirements.

As the cloud sector has matured and begun to react to these concerns, solutions have been put in place that reassure IT influencers that the obvious benefits of cloud deployment don’t carry a sting in the tail.

One aspect of that reassurance is the development of open cloud APIs and standards that allow for the portability and control of data and cloud-deployed applications, providing business with the necessary flexibility to tailor solutions to their short and long-term goals.

Open APIs and standards help to create an open market and foster innovation and differentiation within the cloud space. The ability of companies to assess individual vendors on merits like availability and performance gives them the flexibility they need to be confident of cloud investment.

The opening of the cloud also enables the development of federated cloud environments. Companies can select from the available vendors to build interoperable multi-cloud environments, choosing the components that best fit their particular needs.

Cloud marketplaces that empower businesses to orchestrate tailored conglomerations of cloud compute, storage, and networking infrastructure strengthen the position of cloud vendors when companies are balancing the benefits of cloud deployments and traditional colocation or in-house infrastructure provisioning.

Cloud marketplaces augment the existing benefits of the cloud: on-demand pricing that lowers capital expenditure, fast deployments that allow businesses to remain agile, reactive scaling both up and down, and flexible APIs that allow for the automation of infrastructure orchestration. The cloud marketplace layer enhances the value of the cloud by providing centralized control for an increasingly differentiated set of vendors.

The substantial year-on-year increases in cloud uptake can be attributed to an erosion of cloud skepticism in the enterprise and the willingness of cloud vendors to hear what companies are saying and work towards providing platforms and marketplaces to meet their needs.

 

SAGE ONE APP

Invoicing from anywhere
Your clients can now download our Sage One mobile app, making working on the move that much easier.

We’re excited to tell you about our latest release – Sage One is now available as a free mobile app to accompany your clients Sage One Accounts or Sage One Accounts Extra subscription and we’re giving them the chance to be one of the first to get it.

The app is brand new, and has been designed to give greater flexibility to help manage accounts on the move.

  • Raise sales invoices and send them directly by email.
  • Take payments immediately (if they’re integrated with Sage Pay).
  • View contacts’ details and get directions to their location through your phones navigation. Read more

The app is available to download from the App Store on Apple mobile devices (there’s an Android version on the way too). Forward this email so your clients can go straight to the app store and download it now.

Real Time Information (RTI) Penalty Notices

As an employer you may have received an RTI penalty warning letter accusing you of not submitting all of the RTI returns required for 2013/14. However, that letter may be incorrect.

HMRC has admitted that its computer has churned out inappropriate penalty warning letters to employers who have submitted employer payment summaries (EPS) during 2013/14. If you have submitted all the required RTI returns for the tax year you can ignore the warning letter, as a penalty will not be charged.

This “cry wolf” by HMRC sets a dangerous precedent, as you may be inclined to ignore further RTI penalty warning letters that could be issued later this year.

From October 2014 new penalties come into effect where the monthly full payment submission (FPS) is submitted late, or an EPS is not submitted where a FPS is not required as no payments are made. If or when those new penalties arrive you will be able to appeal against the penalty online. Note this online appeal system is not up and running yet.

From October 2014 the FPS will contain a new box that allows you to tell HMRC why the FPS is apparently late, perhaps because you are taking advantage of the concession for payrolls with nine or fewer employees.

The EPS will also be changed in October so it will relate to a particular tax month. This will avoid the need to file the EPS in the window of 20th of the current month to 19th of the following month to ensure it is applied by HMRC to the appropriate tax month.

VAT on Digital Services

Do you sell digital services such as: music or software downloads, e-books or online videos? If so, do you know where your customers are, and whether they are businesses or individuals?

From 1st January 2015, when you sell digital services across international borders you will have to collect information about your customers to determine if they are businesses or not, and where they are based. Where your international sale is to a non-business customer, from 2015 you will have to charge that customer VAT of the country where he or she is located (if that’s in the EU). You will also have to register for VAT in your customer’s country. This is because the VAT threshold for traders selling into other EU countries is zero.

Many music and software creators are suspicious of the large online stores such as iTunes, and want to sell their tunes or games directly to their customers. If you sell through a large online store, that store sorts out the VAT so you don’t have to worry about it. However, if you sell your digital product directly to non-business customers who are located in other EU countries from 1st January 2015, you must deal with the VAT consequences.

The easiest way to do this will be through the HMRC website under a system called VAT-MOSS. This system goes live from October 2014, and it will allow you to account for VAT in all the EU countries you sell services to.

However, in order to use VAT-MOSS you must first be registered for VAT in the UK. If you are not already VAT registered, perhaps because your turnover does not exceed the UK VAT threshold of £81,000, you need to pick one of these options:

1. register for VAT in the UK;
2. stop selling digital services to non-business customers outside the UK; or
3. sell only through online stores or other businesses.

Free Companies House Data

Companies House has announced it will make all of its digital data available free of charge. This will make the UK the first country to establish a truly open register of business information.