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July 2017

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To July’s Tax Tips & MYOB News

Summer Parties for your Staff
Have you planned your Summer function or Barbeque yet? Remember that HMRC allows your company to spend up to £150 (in total) per staff member on annual parties. This could be, for example, split between a summer trip to the races and a Christmas Party.

You don’t need to report to the HMRC is as long as the parties are:
  •          £150 or less per head (total for year)
  •          annual
  •          open to all your employees

July 2017
· Working from home
· Payment Scam
· To P11d or not to P11d?
· Updating Forms on a Multi-User AccountEdge System
· July questions and answers
· July key tax dates
Working from home top
Payment Scam
Over recent years, it has become increasingly popular for employers to allow their employees to work from home, and in doing so, pay an amount to cover any additional household costs incurred. What are the tax implications of such expenses for the employee?

Broadly, no tax liability will arise where an employer makes a payment to an employee for reasonable additional household expenses, which the employee incurs in carrying out duties of the employment at home under ‘homeworking arrangements’. Read More
What if a customer deposits a cheque into your bank account. He emails to confirm an order placed online. The over-the-counter deposit doesn’t agree to the order.  They then contact you to say that they have put in too much money.  Can they have a part refund?  You can credit to their credit card…. or perhaps pay it back as a BACS to their bank account.  Can you repay them the credit as they ask? 

No, you can’t.  There are two reasons.  Firstly a cheque depositor has the right to bounce a cheque up to twenty one days after deposit.  Therefore the supposed client can (and did) withdraw the funds once again.  They hoped to get a refund and the goods, for no actual cost.  The second problem is perhaps less obvious.  The refund is subject to Money Laundering Regs.  If you are a retailer you are obliged to refund a credit in the same form as you received it – otherwise you have changed the payment form from cheque to electronic or credit card.  Classic laundering.  Therefore the refund could only have been paid in the form of another cheque .. banked into the account of the fake client. 

When you bear a cost on behalf of a customer there is a similar problem.  Say you are asked to post something for a client.  And they ask you to add it to their bill.  When you sell the postage to them, even at cost, then you are compelled to charge VAT and you also suffer business tax.  Say you pay for the postage in cash and then recharge the client?
To P11d or not to P11d?
So you have an expense.  Should you declare it through the payroll of the company that you own, or through your dividends? 

Say the company can pay £1000 for something work–related but normally declared as an employee benefit eg: a holiday, medical insurance or an IFA advisor.  Imagine there is no recoverable VAT (as there would be on a company – issued mobile phone for example).  How does the tax work out?  If the company pays £1000 it usually gets £200 of Corporation Tax relief.  However the company has to declare the benefit on a P11d. 

If you are a 40% tax payer then you have to pay £400 on your tax bill.  The company also has to pay £138 Employer National insurance and will get £28 CT relief on that also.  Net the HMRC is £310 richer.  Meanwhile the expense could be added to your dividend.  You pay a little more: 32.5%, or £325 dividend tax.  So best go with a P11d – but it is marginal.

If you are a 20% tax payer then the situation reverses.  You have to pay £200 on your tax bill.  The company still has to pay £138 Employer National insurance and still gets £28 CT relief on that NI payment.  Now the HMRC is £110 richer.  If the expense could be diverted to your dividends you pay less: 7.5%, or £75 dividend tax.  So best go with dividends.

In general it is best that the company doesn’t have to declare a P11d.  P11ds mess up your tax code and your monthly pay might not be enough to cover the cost.  Less danger of accountancy bills, mistakes or a fine.  So if the company pays a benefit to you, probably describe that you transfer the cost as a personal dividend and add it to the personal tax return.  Don’t try to get Corp Tax relief on the expense.

The tax saved isn’t great either way … but that’s what you pay accountants like us to check.

For more information please look on our website at employee benefits.
Updating Forms on a Multi-User AccountEdge System top
July questions and answers top
Say you’ve changed your bank account.  You now need to notify your customers to pay the new bank account. You want to put these details on the invoice itself. 

First go to Setup / customise forms / invoices  / pick your customised invoice and then press ‘customise’.  Then alter the text field using the simple DTP editor that comes up.   When you’ve updated the custom template press ‘Save Form’. 

Second open an email to send the form to other users.  Attach the new form to your email.  The form can be found in your custom Forms folder.  To get to it go to
  •  Accounts (top left hand tab)
  • “Company Data Auditor” button on the right
  • Look for “Custom Forms Etc” and click on the magnifying glass
  • Open the “Custom Forms” folder that appears in the finder window
  • Copy the form there as an attachment to your email.
The recipients of the email do the opposite:
  • Open their datafile in Accountedge
  • Go to Accounts (top left hand tab)
  • “Company Data Auditor” button on the right
  • Look for “Custom Forms Etc” and click on the magnifying glass
  • Open the “Custom Forms” folder that appears in the finder window
  •  Copy the attachment into this folder. It may ask if you want to Replace – click Yes to save over your current (old) forms.
  • Open Accountedge datafile
  • Go to Accounts (top left hand tab)
  • “Company Data Auditor” button on the right
  • Look for “Custom Forms Etc” and click on the blue link
  • Open the “Custom Forms” folder that appears in Windows Explorer
  • Copy the attachments to the email into this folder. It should ask if you want to Replace – click Yes to save over your current (old) forms.
Now all the multi-users are working off the same invoice format. 
Q. Can I give my house to my children and continue to live in it and avoid inheritance tax? Answer

Q. I am thinking of selling a property that I have owned and rented out for the last ten years, and once it is sold, I will reinvest the proceeds in another property. Will I have to pay capital gains tax on the proceeds from the sale even if all the money is reinvested in another property that is also let? Answer

Q. I lent my brother some money, which I borrowed from my company, for him to use in his business. He is paying it back in monthly instalments over three years. What are the tax implications of this loan? Answer
July key tax dates top
5 – Deadline for PAYE settlement agreement for 2016/17

6 – Deadline for 2016/17 forms P11D and P11D(b) to be submitted and copies of P11D to be issued to relevant employees
Deadline for employers to report share incentives for 2016/17 – form 42

14 – Return and Payment of CT61 tax due for quarter to 30 June 2017

19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/7/2017 or quarter 1 of 2017/18 for small employers
Class 1A NIC due in respect of the tax year 2016/17

31 – Second self assessment payment on account due for 2016/17
Second 5% penalty surcharge on any 2015/16 outstanding tax due on 31 January 2017 still unpaid
Deadline for Tax Credits to finalise claims for 2016/17 and renew claims for 2017/18
Half yearly Class 2 NIC payment due
Penalty of 5% of tax due or £300, whichever is greater for 2015/16 personal tax returns still not filed

Need Help? top
New Clients Welcome top
Please contact us if we can help you with these or any other tax or accounts matters.

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About Us top
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