It’s about that time of the year when your clients start planning their annual Christmas parties! The great news is that the cost of a staff party or other annual entertainment may be allowed as a deduction for tax purposes.

As an employer you can pay for an annual event, and there are no personal tax implications if the total does not exceed £150 per head.  This doesn’t need to be one Christmas event either, just ‘annual’.  So you  could have a Christmas party and a Summer party, and both would be allowable for tax purposes provided the total of both does not exceed the £150 per head limit.  If you spend just £1 over the £150 limit, then the whole amount becomes a benefit in kind.  Here are the rules:

• the event must be open to all employees
• the cost is only tax deductible for employees and directors of a limited company, but not for sole traders
• an annual event offered to staff is not taxable on those attending provided that the cost per head does not exceed £150
• all costs must be taken into account including VAT, costs of travel to and from the event and accommodation provided.  If the limit is exceeded then individuals will be taxed on the full cost per head.  And there will be no taxable deduction for the company.

You can also provide a small gift to the employees as an employer, they are allowed to provide each team members with a gift, such as a bottle of wine or box of chocolates.  These gifts are considered to be trivial and as such are not taxable.

To read the HMRC guidance please use the link below:

http://www.hmrc.gov.uk/manuals/eimanual/eim21690.htm

The Chancellor announced the creation of a NICs Employment Allowance in the 2013 Budget. This is planned to start on 6 April 2014 and moved a step closer to becoming law with the First Reading of the Bill on 14 October 2013.

Businesses, Charities and Community Amateur Sports Clubs will be able to reduce their Employer Class 1 NICs bill by up to £2,000 per year. The Employment Allowance will be straightforward to claim using standard payroll software.

More details on how to claim the Employment Allowance will be available in the New Year – there is no need to call HM Revenue & Customs or do anything to claim the Employment Allowance now.

Accounts and payroll firm IRIS has bought cloud-based bookkeeping software company KashFlow, creating a combined user base of more than 60,000 accountancy firms and smaller businesses in the UK.

According to IRIS, it will continue to provide its OpenBooks product to existing customers through online accounting company FreeAgent but expects to add functionality through a “close tie-in” between the IRIS Accountancy Suite and KashFlow bookkeeping in the cloud.

The acquisition, the terms of which were not disclosed, brings IRIS expertise in cloud bookkeeping software and gives KashFlow greater sales, marketing and support resources.

KashFlow was set up in 2006, initially selling software to Federation of Small Businesses and Prince’s Trust members.

“Around half of all UK accountancy firms already use IRIS to run their business. Now they will be able to collaborate with their clients through tight integration with the KashFlow cloud bookkeeping system,” its CEO, Duane Jackson, said in a statement.

“Being part of the wider IRIS Software Group not only gives us direct access to a significant section of the UK accountancy and SME sector but it also makes us part of a wider suite of cloud offerings.”

IRIS Software Group CEO Phill Robinson said KashFlow’s cloud services fitted well with his company’s existing suite of products.

The Government thinks that employees who own shares in their employing company feel more involved in that business and hence are happy and loyal employees. So it has introduced a new share scheme from 1st September 2013 which allows you, as an employer, to give your employees tax-free shares in your company, but in return the employees must give up some key employment rights.

How does this work?

The employee must sign a fresh employment contract called an ’employee shareholder’ contract, then they must be issued with shares worth at least £2,000 (and up to £50,000) in their employing company. When the individual sells those shares any gain arising on that disposal is completely exempt from capital gains tax. However, any gain up to £10,900 (for 2013/14) would be tax free anyway.

Normally where shares are awarded to an employee their value is treated as taxable income for that employee, unless the shares are issued under an approved share scheme. In this case the first £2,000 worth of shares awarded will be free of income tax and NIC, but not any further shares.

The downside is the employee must surrender all of following rights to take up employee shareholder status and receive the free shares:

• compensation for unfair dismissal, apart from when this is automatically unfair or relates to anti-discrimination law;
• request for time off for studying or training;
• request for flexible working; and
• statutory redundancy pay.

Also the employee must give 16 weeks’ notice (instead of 8 weeks) when returning from maternity or adoption leave.

This sounds like an attractive deal for an entrepreneur who doesn’t care about his own employment rights. However, any person who holds 25% or more of the company (alone or with associates) can’t take up employee shareholder status and enjoy the tax-free shares. So this share scheme can only be used to give shares to employees who don’t already have a significant share in the company.

Before implementing this scheme you should take employment law advice, and specialist advice on how to value your company’s shares. The employees should also take independent advice before signing away their employment rights, but you, as their employer, can pay for that advice with no tax consequences.

Personal Allowances The latest budget has confirmed that the basic personal allowance will be increased from the current £8,105 to £9,440 for 2013/14. The Coalition Government plan to ultimately raise the allowance to £10,000 from 2014/15. The additional tax rate of 50% is reduced to 45% for 2013/14 for taxable income over £150,000.

BancPay is an intelligent cloud invoicing service that allows all types of companies to create & exchange invoices electronically to improve cash flow & reduce administration costs. BancPay is free during 2013

What is BancPay?

BancPay is a paperless invoicing system that helps businesses reduce administration costs and manage cash flow by automating the way invoices are handled.

BancPay removes the hassle of dealing with all those different types of invoices you have to send or receive. BancPay handles; paper, PDF, scanned image, web form and electronic invoices.

BancPay operates in the Cloud, offers greater security, drastically reduces paper handling, allows you to know what is happening to your invoices and helps the environment by reducing paper and transport costs.

BancPay supports multiple languages and multiple currencies – so if you have subsidiaries across the globe, or are looking to expand internationally, BancPay is there to support you.

By using Cloud commerce, businesses can send, receive, approve or refer their invoices without the additional costs of printing and posting by mail. BancPay is fast, simple and flexible. So flexible, that every company can create their own business network of suppliers and customers.

We know that running a business is more than just sending and receiving invoices, it’s also about managing your finances. So BancPay allows you to see the status of all your invoices and when they will be paid. This helps you to improve your cash flow and benefit from early payment discount opportunities.

Imagine a paperless invoicing system. Imagine BancPay.

Entrepreneurs thrive on a DIY mentality: Do everything you can yourself and don’t pay for anything new until you have absolutely have to. It’s especially difficult to justify hiring financial help like a bookkeeper.

With user-friendly software available, many business owners feel they should be able to do keep their records on their own, even as they wrestle with finding the time and wonder if they’re doing things correctly.

Entrepreneurs who hire accounting help usually discover they weren’t doing nearly as well on their own as they thought they were.

So what are a small-business owner’s options for professional help with financial tasks? Here is a primer:

Do I Need a Bookkeeper or an Accountant?
Actually it’s a trick question. You may need both.

An accountant can analyze the big picture of your financial situation and offer strategic advice. He or she produces key financial documents, such as a profit-and-loss statement, if needed, and files a company’s taxes.

After tax season is over, an accountant can also act as an outsourced chief financial officer, advising an entrepreneur on financial strategies, such as whether to secure a line of credit against receivables when introducing new products.

In contrast, a bookkeeper does the day-to-day hands-on tasks: making sure new employees file all the right paperwork for the company’s payroll, submitting invoices (promptly) and following up on them, and paying the bills. The bookkeeper also tracks company expenses and can assure that every cost has been entered — and recorded correctly — into software like Xero or Sage so that the business is ready for tax time along with filing any other reporting to, say, creditors or investors.

When to Bring in a Bookkeeper

The rates for hiring a bookkeeper on a part-time basis in the U.K are a small price to pay for accuracy, depending on location, the workload and whether work is done at the company’s office or from home.

Most small businesses typically sees his accountant once a year, at tax time. But business owners requiring capital or frequently negotiating credit with a bank are likely to contact their accountants more often.

Did you know there is a tax relief for companies which invent stuff? The process of inventing and solving the associated problems is called research and development (R&D). Companies can more than double the tax deduction given for the costs of R&D.

The new ‘stuff’ could be a product, a material or a process which has been changed or improved. For example if you find a way of speeding up a production line, or changing the process to cope with a new type of material, the work to achieve that aim is R&D which should qualify for the tax relief.

Many innovative ideas don’t actually work. That doesn’t matter. The costs expended when working on your new idea are tax allowable as R&D, if you can show you were pushing the boundaries of knowledge or capability in the fields of science or technology.

Working on some types of computer programming can count as R&D, particularly where you are making previously unrelated computer systems work together. The key is that no-one else has done what you are trying to, or if they have achieved it, they have kept their discovery to themselves.

Even small costs are worth claiming as there is now no minimum claim for each year.