Category: News

6 July is the deadline for filing the P11D to HMRC but what is it?

The P11d is a statutory form required by HMRC from UK based employers to detail the cash equivalents of benefits and expenses that they have provided during the tax year to directors and employees.

The basic rule is that if you provide an employee with anything other than pay it may count as an expense or benefit, and you will need to check whether you need to report it to HMRC and pay any tax or national insurance on it.

Who completes the P11d?

The company, as an employer, is responsible for preparing a P11D. When completing form P11d you must enter the total value of the expenses and benefits in various categories that you provided to your employee during the tax year.

What sort of expenses and benefits are included?

• Company cars
• Company car mileage allowances and fuel
• Company vans provided for private use
• Private car mileage allowances and fuel
• Motorcycles provided for private use
• Payments for use of home telephones
• Mobile telephone usage and reimbursements
• Private medical insurance
• Subscriptions and professional fees
• Living accommodation
• Credit Card payments
• Interest-free and low interest loans
• Assets transferred
• Assets placed at the employee’s disposal
• Employer supported childcare
• Other benefits or expenses such as childcare costs, spouse or partner expenses on business trips etc

Key dates

You must make sure that you give your employees a copy of the information from their P11D or P9D no later than 6 July. Payment of any Class 1A NICs owed on expenses or benefits you’ve provided must reach HMRC’s bank account by 22 July.

Exemption

You don’t have to report some routine employee expenses to HMRC. This is called an ‘exemption’ and business expenses such as travel and subsistence, business entertaining and professional fees and subscriptions do not need to be reported on the P11D. However, these expenses can only be reimbursed at the actual cost incurred or repaid using an approved HMRC rate.

Penalties

If you fail to meet the filing deadline of 6 July, you won’t incur penalties straight away. However, if the P11D isn’t filed by 19 July the employer will incur fines of £100 per month (or part month) per 50 employees.

YES. Sorry to be the bearer of bad news! As an employer, any staff you employ in your hairdressing salon will have to pay income tax on tips they receive, and national insurance sometimes too, it depends on who actually receives the tip and how it is actually received.

Here’s our 5 Top Tips all about…wait for it…tips!

 

1. Cash tips paid directly to your staff

Here’s a little good news! If your staff receive cash tips directly from customers, they have to pay tax on them but not national insurance. If they complete a Self Assessment tax return, they need to include the tips on it. If they don’t fill out a tax return then HM Revenue and Customs (HMRC) will estimate their tips based on information from you as their employer.

HMRC will give you a tax code so that any tax is collected through the payroll and deducted from staff wages before they get them.

 

2. Tips included in card payments

If your customers include a tip when paying by card, which is intended for the member of staff who provided the service, the tip is paid directly to you, the employer. You, as the employer, are then responsible for making sure income tax is paid through the PAYE system.

Sometimes the tips are pooled together and shared out – this is called a ‘tronc’. The person who looks after it is called the ‘troncmaster’ and they are responsible for making sure income tax is paid. You have to tell HMRC if there’s a tronc and who the troncmaster is.

As the employer, if you decide how the tips are shared out, national insurance is due as well as tax. You’re also responsible for making sure it’s paid through PAYE.

 

3. Bonuses

You’ve had a really busy month at the salon and you’ve decided to reward your staff with a bonus as a sign of appreciation for their hard work. Bonus payments are treated as part of your member of staff’s pay and they will pay tax and national insurance on the amount paid to them through PAYE.

 

4. VAT

Tips are outside the scope of VAT when genuinely freely given by customers. It doesn’t matter if they’re paid by cash or card, they’re not subject to VAT.

 

5. Tax Credits

Any tips received by staff will be considered as income for tax credit purposes. HMRC now uses the information provided by employers on their Real Time Information PAYE submissions as part of the tax credits renewals process. These submissions do not show cash tips, so unless staff declare these themselves, it is possible that their tax credits award will be too high which could result in recoverable overpayments and possibly a penalty.

We love working with hairdressing and beauty salons, helping them achieve their goals and setting them on a secure and tax efficient road for the future. You’re a creative and enthusiastic bunch, just like us, that’s why we’re a great fit. If you’re operating your salon through a limited company, then we’d love to work with you!

You can benefit from our wealth of experience within the industry, whilst we take care of all of the financial aspects of your salon. We know you want to focus your efforts on growing your salon and serving your clients so we’ll free up your time and make life easier for you.

We embrace modern technology. It’s clever stuff and helps us do our job better but it makes running your salon much simpler for you too. We’ll work with you closely throughout the year, using the very latest software and the financial data that we have at our fingertips, to help you make better decisions about the future, so you can grow your hairdressing salon and your profits. That’s what we do, it’s what we love!

Let’s chat

If you think we could be what you’re looking for or you’d simply like to find out more about us, please contact us to arrange a Discovery Call. It’s the first opportunity to get to know each other.

We’ll ask you a few important questions to make sure we can provide you with the service you’re looking for. Having a think about the following questions, they might seem a little intrusive but it’s to make sure we really understand your goals and challenges, so that we can maximise the value provided to you:

• What is important to you in your life?
• What would make this year a great year personally?
• What would you need to achieve in your business to achieve those goals?
• How can we help you to get there faster?
• What information would you need from us to know you’re on track in reaching those goals?
• How can we best help you to stay on track?

We’re sure you have lots of questions for us too and we’d be delighted to answers any queries you may have.

If after our initial conversation you wish to proceed further, we can arrange a Proposal Meeting, this can be done via video call or face-to-face, whichever suits you best. At our Proposal Meeting, we will agree the level of service to be provided, make recommendations and of course confirm the cost of those services.

If you wish to sign up, you can do so there and then at the Proposal Meeting using our slick proposal system. It’s that simple and hopefully this is the start of a great partnership with exciting times ahead!

Onboarding

Once you’re all signed up, we’ll begin working with you straight away. We’ll be in touch on a regular basis to make sure you have a smooth and efficient introduction. We’ll be finding out as much as we possibly can about your business and identifying where we can add most value. We’ll also take care of the set up of your new software and provide you with any hands-on training that you may need in order for you to get to grips with the range of apps we offer. You’ll have lots of opportunities to ask any questions that you may have.

We’ll continue working closely with during the year and you’ll be invited to attend webinars and workshops specifically aimed at the hairdressing industry during the year. You’ll also have access to our dedicated Facebook community, where you can share experiences with like minded business owners.

 

If you think that we could be the right fit for your hairdressing salon, or if you’d simply like to find out a little more about us and what we do, please give us a call. We’re always here to help and we’d be delighted to hear from you!

“Rent a Chair” is common place across the hairdressing industry. The salon owner will rent or hire out one of the salon chairs to a self employed hairdresser for an agreed period, who then utilises that space to serve their own clients. It’s a very popular way for salon owners to grow their business but there are also plenty of pitfalls so it’s important to plan in advance to avoid these:

1. Confirm the arrangement

There are three main types of arrangement to consider:

• Charge a flat weekly rental rate
• Share a percentage of the takings i.e. 60/40 split.
• A combination of both of the above 

Failing to agree the basic arrangement properly can lead to lots of problems down the line. Also consider the employment status of the hairdresser using the chair, in HMRC’s eyes, are they really self employed?  If they are a disguised employee then you will be liable for tax, national insurance and a great deal of employment legislation.

2.  Get a Contract

It’s absolutely essential to get a legal contract in place from the start so that both parties know their responsibilities and what is included in the rental charge. There is so much to think about!

• agree what days/hours the chair can be used
• agree the length of the contract – 1 year, 2 years? Also agree what happens at the end of the contract period. Can the contract be terminated earlier?
• what happens to clients appointments if the chair hirer is ill?
• who provides the hair products, towels and equipment?
• who actually takes ownership of the client?
• who is responsible for equipment damages or breakages?
• who is responsible for marketing and attracting new clients to the salon?
• does the agreed rent include laundry, use of salon receptionist, heating etc?
• agree the pricing – if the chair hirer prices are significantly less than salon prices, this may be an incentive for existing salon clients to move across to the chair hirer.
• how are client payments taken and who is responsible for managing these?
• how are tips managed and distributed?
• can the chair hirer sell their own salon products to their clients?

3. Get the right person

Whoever rents the chair space within your salon will not be a employee, therefore you will have limited control over their performance compared to your usual employees. Make sure they’re the right fit for the salon.

The chair hirer may wish to choose their own products, dictate their own working hours, set their own prices and possibly even attract a completely different type of clientele to yours, which may have an impact on your reputation. Make sure the hairdresser fits your salon both now and in the future. Watch them at work, obtain references and consider an initial probation period to make sure the arrangement is suitable for both parties.

4.  Insurance

The hairdresser hiring the chair should hold their own public liability insurance as a self employed person. If providing products and equipment under the arrangement, the salon owner should also make sure that the chair hirer is also included under their insurance policy as a contractor. In case things go wrong, it’s essential to make sure both parties are adequately insured.

5. Speak to your accountant

We couldn’t forget this one, could we?! Have a chat with your accountant to make sure that both parties account for the income and expenses correctly. Rent a Chair has a big impact on VAT so it’s vital that you fully understand what you need to do and that you’re doing everything correctly from the start.

We’re rapidly heading to that time of year when school’s out for six weeks which realistically feels more like six months!

So what can we do to keep the kids entertained whilst keeping business disruption to a minimum? Clients’ regularly ask if they can employ their children during the school holidays. It’s a way of keeping the little darlings quiet (theoretically, at least) as well as them independently earning some pocket money. They also gain some valuable work experience! From a business perspective, the wages paid are a tax allowable expense, helping to reduce the tax bill. So, yes you can employ your children during the holidays but there are rules to be aware of before you break the good news to them:

General rules

• You cannot employ children under the age of 13
• During school holidays, 13 to 14 year olds can work a maximum of 25 hours a week. This includes a maximum of 5 hours on weekdays and Saturdays and a maximum of 2 hours on Sunday
• 15 to 16 year olds can work a maximum of 35 hours a week in the school holidays. This includes a maximum of 8 hours on weekdays and Saturdays a maximum of 2 hours on Sunday
• Children under 16 years of age are not entitled to minimum wage and they don’t pay national insurance. The amount you pay them must be justified by the amount of work which they actually do in your business
• Children aged 16 to 17 are entitled to at least minimum wage and if you’re a registered employer, you’ll need to record and report their pay as part of your payroll
• Between the ages of 13 and 16, children can’t work unless they have a child employment permit.  It is illegal for businesses to employ 13-16 year old children without one so you should contact your local council for information on applying for a permit. A young person is ’employed’ when they assist with any business which is carried out for profit, whether paid or not. This also applies to children assisting their parents or relatives in a family business.
• You should ensure that you hold the necessary insurance such as public and employers liability
• You must prepare a risk assessment for each set of duties, ensure that you adequately train the child for the job and make them aware of any risks which may be involved. You must also supply the child with any necessary safety equipment and clothing

Types of work allowed

Children can carry out light work in the following areas:

• agricultural or horticultural work
• delivery of newspapers/printed material
• shop work
• hairdressing salons
• office work
• private car washing by hand
• café or restaurant – but not in the kitchen
• domestic work – for example: in a hotel

Types of work not allowed

No child of any age can be employed in the following areas:

• cinemas or night clubs
• commercial kitchens
• collecting or sorting rubbish, rags or scrap metal
• any work more than three metres above the ground/floor level
• telephone sales
• fairgrounds or amusement arcades, as an attendant or assistant
• in the personal care of residents in a residential care or nursing home
• collecting money, selling or canvassing door to door

The above list is not exhaustive so always check beforehand!

Let’s chat

Need help? Want to know more? Please give us a call on (01386) 764741 and we’ll be delighted to help.

One of the most popular questions we’re asked by our clients’ is “What information do you need from me?” when they reach the end of their financial or tax year.

Whether you operate as a sole trader or limited company, many of the records required will be fairly similar. You will need to provide full details of your business income and expenses so that the business profit can be calculated. Here is our simple checklist and the documents typically required:

• petty cash records
• bank statements for your business accounts
• cheque books (if you’re still writing cheques!)
• stock value
• purchase invoices and receipts
• sales income records
• payroll records
• credit card statements
• finance agreements
• loan statements
• any other expenditure that wasn’t paid directly through the business
• assets and equipment purchased during the year
• assets that were sold, scrapped or disposed of during the year
• copies of VAT returns submitted during the year
• mileage records
• dividends paid to the shareholders or drawings paid

 

If you’ve prepared your own books for the year or you have your own bookkeeper who has done this for you, we won’t necessarily need all of the above documents. However, initially, we will require access to your online accounting system (if you have one) or your completed and reconciled accounts including trial balance, profit and loss and balance sheet. We will also need your payroll records and copies of VAT returns submitted, if applicable.

 

Personal information

We have a personal tax organiser available each year which acts as a useful checklist to understand what needs to be reported on your self assessment tax return. The list below indicates information typically required:

• P45 from your employment if you left a job during the tax year
• P60 from your employment if you continued to be employed during the tax year
• P11d from your employment
• Rental income – a summary of your rental income and expenses if you rent out property
• Details of any savings income
• Details of any pension income
• Details of any capital gains (sale and purchase of assets such as shares, antiques, property etc)

 

You can supply all of the above information electronically. Please note the above lists are not exhaustive and your individual circumstances need to be considered as to what information is relevant. 

It’s official – we’re the winners of the Accounting Excellence 2018 “Client Service of the Year” award. We’re absolutely delighted to receive such an accolade and thank all of clients for their support. We couldn’t have achieved this without you!

The Accounting Excellence Awards 2018 celebrate the achievements of ambitious growth-oriented firms and technology suppliers. Now in their 8th year, this year’s awards concluded at an awards evening on the 20th September at the InterContinental London, Park Lane.

We’re delighted to be bringing this award back to Evesham! This award is a huge achievement for a very small firm because we were up against much bigger firms from across the country. Of course, we will be celebrating this week with cake, what else?! We’ll be making sure that there’s plenty for our clients too!

Last year, The Accountancy Office won the Accounting Excellence’s coveted ‘Client Service Firm of the Year’ award, amongst stiff national competition.

This year, AO’s founder and Director, Sarah Sallis, is delighted to have been invited to the Accounting Excellence awards as a Judge for the ‘Client Service of the Year’ category.

Entries for the awards have now closed with Judging taking place later this month. The awards evening will be held in London on 12 September.

Sarah said “I’m honoured and delighted to be invited as a Judge this year. As an entrant last year, it was a fantastic experience although I was unable to attend the ceremony presentation due to my late mother’s illness. I’m really looking forward to being part of the awards process this year, it’s very exciting!”

One of the most common questions we get asked is ‘How much are accountancy fees for a limited company?“

“It depends” is the straight answer. Think of buying accountancy services as if you were buying a holiday. There’s a lot to think about and you’ll find a host of varying prices on the internet. How many people will be travelling?What standard of hotel would you like? Would you prefer an all inclusive resort or self catering? What hotel facilities do you need? All of these options affect the price you pay.

We don’t offer ‘one size fits all’ accountancy packages. Whilst we do ‘bundle’ together a range of services to ensure you have all you need to move your business forward on a monthly basis, the package is tailored specifically for your business, so you can be assured you only pay for what you actually receive value from.

We have a fully qualified in-house bookkeeping team who can handle all of the day to day accounting entries, VAT returns, Payroll etc for you, saving you from the hassle and headache of bank reconciliations and leaving you to focus on where your time matters, your business. However, some clients may prefer to carry out these tasks themselves, if they have the time and resources to do so. This is one reason why accountancy fees for a limited company can vary so much – it depends what you actually want from us.

Before we work with any client, we will hold an initial telephone call (we call it a ‘Discovery Call’) to find out a little more about you’re looking for. As part of that process, we’ll ask what’s working well for you at the moment and what isn’t. If we think we can help and if we believe that we’re a good fit, we then arrange a meeting to delve deeper into your business. During that meeting, we’ll prepare a proposal for you, clearly setting out the services we’ll provide to you and the cost of those services. Our fees take into account many factors, such as the level of your business turnover, the number of staff you employee and the services required. There’s no hidden surprises either, what you see is what you’ll pay and not a penny more.

We’re firm believers in that accountancy isn’t just about profit and loss. Profit is only part of the successful outcome of business growth. We believe as accountants, we’re here to make sure your business is giving you the life you dream of. It’s not just about ticking boxes but setting goals and helping you achieve them. To do this, we use the latest technology and software, not only to tell you how much profit you’ve made each month, but to also focus on budgeting, cashflow and detailed reporting. We’re here to work with you on a monthly basis and to help you see the bigger picture, so that you know exactly how your business is performing in every aspect.

If you’re looking for more certainty in your business, we can help you through financial insight. The future starts now!

It sounds too good to be true, but yes you can – providing certain conditions are met!

A staff Christmas party or annual function (such as a summer barbecue) qualifies as a tax free benefit for your employees and it’s also a tax deductible expense for your company.

It’s important to note that this applies only to limited companies and not sole traders.

• The party cannot cost more than £150 (including VAT) per person and this includes any travel or accommodation expenses.
• The party must be open to all of your employees.
• You can also claim an additional £150 per person for a plus one for each employee, providing they are a family member or partner.
• You can claim back input VAT on the party cost but this may be restricted where you are also entertaining customers

This is an exemption and not an allowance. This means if your party costs £151 or more per person, you won’t be able to claim the first £150 as a business expense, the whole benefit becomes taxable.

The exemption also covers the whole year, so the combined cost of all parties held in a single year cannot exceed £150 per person.

If you have any further questions, please give us a call on 01386 366741 or contact us here. We will be delighted to help!