Month: November 2011

Simplify your Payroll Year End with Dispensations

Dispensations are granted by HMRC for expenses and benefits and remove the need for P11D’s and P9D’s.

The main expenses routinely covered by a dispensation are:

  • travel, including subsistence costs associated with business travel
  • fuel for company cars
  • hire car costs
  • telephones
  • business entertainment expenses
  • credit cards used for business
  • fees and subscriptions

Provided you have someone checking expense claims and the claims arent excessive, you wont need receipts.

Its worth getting your dispensations now rather than applying in the new year as if you dont get them before April you will end up filling in P11D’s and P9D’s.

steve@bicknells.net

Have a party! £150 per head is tax free

Its will soon be Christmas and its definitely party season, did you know that you can spend £150 per head per year on parties and functions and its not a taxable benefit to the employee and you can reclaim the VAT on entertaining employees.

You can have multiple events, the exact rules are

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

So what are you waiting for? book up now or if you’re a small business you could even hold the party at your home

steve@bicknells.net

Buy your Business Premises with a SIPP

Back in 2002 I created a SIPP syndicate with 10 colleagues and friends, we pooled our pension pots and created self invested pension plans with James Hay http://www.jameshay.co.uk as pension trustees.

Property yeilds are 8% to 10%, basically meaning the rent = 10% of the purchase price. Thats a much better return than most stock market invested pensions.

SIPPs can borrow money too, up to 50% of your fund value, so if you had £100k you could borrow an extra £50k, as the cost of borrowing is less than the yeild you will make a return on the borrowing and your tenant will repay the loan over the life of their lease.

The tenant will have a Full Repairing Insuring lease so they only issue you could have is with void periods.

You can also buy your own business premises using a SIPP.

steve@bicknells.net

Tax Free Fitness

January has got to be a time when we all want to burn off the Christmas calories, but joining a Gym can be expensive so is there a way you could get your company to pay and get it as a tax free benefit.

HMRC allow tax free treatment provided sporting or recreational facilities (or vouchers that are exchangeable for their use) that meet all of the following conditions:

  • The facilities are available for use by all of your employees.
  • The facilities aren’t available to the general public.
  • The facilities are used mainly by employees or former employees or members of employees’ families and households. (The facilities don’t have to be used mainly by your employees – this condition also covers use of the facilities by employees of other employers if you’ve grouped together with them to provide the facilities.

The tax and NICs exemption doesn’t apply if you provide any of the following:

  • facilities based at premises used wholly or mainly as a private dwelling
  • holiday or other overnight accommodation (including any associated sporting facilities)
  • use of a mechanically propelled vehicle (including road vehicles, boats and aircraft)

So that seems to rule out most Gyms, so what can you do?

Personal Trainers could be your ‘sports facility’ provided they are made available to all employees as part of  a benefits package

Join a club run by other employers, many large businesses have their own sports and social club perhaps your company could use their facilities

Get together with other employers and hire a local Gym or Health Club at specific times for example set evenings and exclude members of the public on those evenings

If these options don’t work for you, you could still get your employer to pay for Gym Membership as part of your package, the benefit in kind tax will be less than if you pay direct out of net pay.

For employees earning at a rate of less than £8,500 per year, you have

  • no reporting requirements
  • no tax or NICs to pay

For company directors or employees earning at a rate of £8,500 or more per year:

  • report on form P11D – section K
  • pay Class 1A NICs on the value of the benefit

It goes without saying that you must have written policies in your employee handbook and contracts, you also need board minutes to support and explain the new benefits and all charges must be to the company (you can’t claim on expenses).

steve@bicknells.net