Entertaining / rewarding staff

As we look forward to our 10th anniversary celebrations here at MyTax (how time flies), thoughts turn to partying! When you do the same, it’s reassuring to know that the costs of entertaining your staff may be an allowable deduction against your business taxes and VAT may also be reclaimable (if you’re registered). You can avoid creating a benefit-in-kind for your employees provided all staff are invited and the total annual spend is within prescribed limits.

A long service award / gift to an employee with at least 20 years service is usually an exempt benefit, so not taxable on the employee nor reported as a P11D benefit. The value of the gift should be limited to £50 for each year served. Gifts of cash or assets readily convertible to cash (shares, for example) are best avoided as these are likely to be treated as income and taxed accordingly.

As always, exceptions and conditions apply, so please ask us for guidance – we’re here to help you save tax!

 

Money box with key labelled Pension Fund

Maximise your Pension contributions before 5th April

Making pension contributions before the end of this tax year can help mitigate your tax liability. Such contributions attract tax relief at your highest marginal rate, be that 20%, 40% or 50%.

This form of tax planning has become even more appealing with the announcement in this weeks budget of plans to make it easier to take benefits in retirement. It may no longer be necessary to purchase an annuity, or suffer punitive tax for income drawdown.

Take advantage of the pension carry forward rules in order to benefit from any unused allowances from the previous three tax years. This is generally the difference between the annual contribution limit (currently £50,000) and the pension input each year and can be added to your relief for 2013/14. Note that the annual pension allowance reduces to £40,000 from 6 April 2014.

Contact us if you require guidance on end of tax year planning.

Putting money into piggy bank

£2,000 National Insurance saving for employers

From April 2014 virtually every business, charity and community amateur sports club will be entitled to an annual ’employment allowance’ of up to £2,000 to reduce their liability for Class 1 Employer National Insurance Contributions (NIC)s. There are a few exceptions, for example those who employ personal, household or domestic staff such as nannies.

The allowance will be obtained via standard payroll software and also HMRC’s Real Time Information (RTI) system. The employer will offset the allowance against each monthly Class 1 secondary NICs payment until fully claimed or the tax year ends. Any unused allowance cannot be carried forward to the next year.

Contact us if you require help with your payroll.

7 top tips to get paid faster

  1. Discuss payment terms before you get started. Getting this sorted upfront means that there is no confusion down the track. It also sets the clients expectations around payment before you start the work.
  2. Keep detailed records of inventory and time. This saves time when it comes to creating the invoice and makes sure you don’t miss anything. It also means if things are going over budget you can let your client know, instead of sending them an expensive surprise at the end of the month.
  3. Make the invoice clear and easy to understand. List the details of the job in a way that makes sense to the client, any confusion could create a payment lag. It’s also good to personalise your invoice with your business logo – it helps carry on the professionalism of your work.
  4. Set appropriate payment terms. If you need to receive payment within 30 days, our data reveals that you will need to set your payment term 13 days or less. Keep in mind that on average, debtors pay invoices 2 weeks after the due date.
  5. Address the invoice to the person paying. Make sure your invoice goes straight to the person who makes payment to avoid getting lost in someone elses inbox. If you’re unsure exactly who that is, give them a call – it pays to know the person paying the bills.
  6. Invoice as soon as possible. Send your invoice as soon as possible, the sooner a client receives an invoice the sooner they will make payment. It also means they will receive it when the value of your work is still fresh in their mind.
  7. Keep on track with debtors. The squeaky wheel gets the oil. When things become overdue send reminders, monthly statements or make a phone call. It will help remind your client that you are serious about getting the invoice paid.

Having a process that helps streamline invoicing can reduce the amount of time you spend collecting your hard-earned money. Find out how MyTax can help you get paid quicker here.

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xero bank reconciliaton

5 easy ways to make your business run smoother and smarter

  1. Use bookkeeping software that connects to your bank account and automatically organises your transactions.
  2. Do a bank reconciliation as often as possible, to see your cashflow in real-time.
  3. Give your bookkeeper and accountant a login, so they can give professional advice sooner rather later.
  4. Use online invoicing for quicker and easier payments.
  5. Connect your business systems to your bookkeeping software so all your data is accurate and up-to-date.

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