HMRC have now agreed you can have a Virtual Staff Party tax free
So you could organise a Virtual online event, have a hamper delivered to your staff and that would count.
Virtual functions
Where an annual function is provided virtually using IT then the exemption is capable of being met provided all other conditions are also satisfied as the exemption applies to allow for costs of provision which are generally incurred for the purposes of the event itself.
The figure of £150 is not an allowance. For functions that are outside the scope of the exemption (see example at EIM21691) directors and employees, are chargeable on the full cost per head, not just the excess over £150, in respect of:
themselves and
any members of their family and household who attend as guests.
The cost of the function includes VAT and the cost of transport and/or overnight accommodation if these are provided to enable employees to attend. Divide the total cost of each function by the total number of people (including non-employees) who attend in order to arrive at the cost per head.
With the end of the tax year fast approaching, now is a good time to review your business and personal finances to ensure that they are as tax-efficient as possible.
We can help make sure that you don’t miss out on any money-saving opportunities.
Please take some time to read through our 2020/21 Year End Strategies Guide, which contains practical guidance and ideas to implement before 5 April 2021.
With our useful tips and expert assistance, we can help you and your business to increase your profitability and minimise the tax burden.
Some directors will have big decisions to make, both immediately and in the coming weeks and months as the various government initiatives begin to unwind. Such decisions may include which creditors should be paid, whether the losses currently being incurred are sustainable and if the company can continue to trade in its present format.
The current Coronavirus Job Retention Scheme comes to an end on 31 October which means for those businesses with 20-99 employees, any employers looking to make redundancies will hopefully have provided the requisite 30 days’ notice to employees. On 30 September the Government lifted the temporary suspension on personal liability on directors for wrongful or insolvent trading.
In brief, wrongful trading occurs when directors have continued to trade when they knew, or ought to have known, there was no reasonable prospect of the business avoiding insolvency and the directors did not take every step to minimise the potential loss to the company’s creditors. In the event that wrongful trading occurs and the company enters insolvency, the directors could be held liable for the company’s debts from the point they knew or ought to have known the company was insolvent.
The Coronavirus Job Retention Scheme (CJRS) known as Furlough ends tomorrow 31st October 2020 and on the 1st November 2020 the Job Support Scheme (JSS) starts.
When JSS was announced in September, Rishi Sunak, said the scheme would directly support ‘VIABLE’ jobs.
The implication is that if the jobs aren’t viable and the business can’t continue that the business should not claim JSS.
JSS is complicated, take a look at this example from HMRC for an employee on fixed salary
Calculation example 1: fixed hours and fixed salary employee
An employee has worked full time, from Monday to Friday, for A Ltd since 2011, and is paid £2,250 gross at the end of every calendar month. The employee has always been contracted to work 37.5 hours per week. A Coronavirus Job Retention Scheme grant was not claimed for the employee.
A Ltd is a small employer and meets all the eligibility criteria to qualify for Job Support Scheme.
The employee enters into a JSS Open temporary working agreement with A Ltd on 2 November 2020 to work Mondays and Tuesdays (7.5 hours each day, equating to 15 hours per week) from 2 November 2020 to 31 December 2020, at which point the position will be reviewed. The employee’s pay for the working hours in November is £945.
A Ltd calculates the amount of the JSS Open grant for the pay period 1 November 2020 to 30 November 2020 (one calendar month).
The employee’s usual hours are calculated for the days on which the employee is on a JSS Open temporary working agreement within the pay period (2 November 2020 to 30 November 2020). The employee’s usual hours are calculated by A Ltd to be 155 hours:
The steps to calculate the fixed employee’s usual hours are:
The greater of the number of hours contracted for at the end of the last pay period before 23 September 2020 (37.5) and the number of hours contracted for at the end of the last pay period before 19 March 2020 (37.5): 37.5
Divide by the number of calendar days in the repeating working pattern, including non-working days: 7 37.5÷7=5.36
Multiply by the number of days which the employee is eligible to be claimed for under JSS Open: 29 days x 5.36 = 155.44 rounded to 155 usual hours.
The employee did not take any time off in November, so the actual hours worked in November are 67.5 hours. A Ltd calculates that the employee didn’t work for 87.5 hours of their usual hours for November.
To calculate the percentage of hours worked: (67.5÷155) x 100 = 43.55%
A Ltd checks that the employee can be claimed for under Job Support Scheme. In November, the employee worked for 43.55% of their calculated 155 usual hours for November. Because the employee is working at least 20% of their calculated usual hours for November, providing other Job Support Scheme conditions are met, a claim can be made for the employee.
A Ltd calculates the employee’s Reference Salary as £2,250 for the pay period. The maximum Reference Salary that can be covered under the scheme is £3,125 per calendar month. The cap does not affect the calculation here because the Reference Salary is less than £3,125.
To work out the overall amount that A Ltd must pay the employee for their non-working hours in each pay period:
Start with £2,250 (the reference salary for the pay period)
Divide by 30 (the number of calendar days in the pay period)
Multiply by 29 (the number of days subject to a Temporary Working Agreement in the pay period)
Divide by 155 (the number of usual hours for the JSS Open days in the pay period
Multiply by 87.5 (the number of non-working hours for the JSS Open days)
Multiply by 66.67% = £818.59
This is made up of a 5% employer contribution, and a 61.67% government contribution which A Ltd can reclaim.
To work out the government contribution to the employee’s pay for the non-working hours: 1. Start with £818.59 (the total pay for the non-working hours) 2. Divide by 66.67 3. Multiply by 61.67 = £757.20
The employee’s total gross pay for November will be £1,763.59 (£945 + £818.59).
If the business is about to go into liquidation or the directors plan to end the business then the accounts can’t prepared on a going concern basis.
The basis used for businesses which aren’t a going concern would generally be the break up value.
Directors may also include notes in the accounts to explain the status of the company.
In order to prove that business is not insolvent it will need need cashflow projections, budget and business plans, otherwise the directors risk being personally liable if the business fails.
You can now apply for the amount of £1,000 – £3,000 or £5,000 in exceptional circumstances
Dorset LEP – The closing date for applications is the 31st January 2021 or when the total budget of £550,000 is allocated, whichever is first.We advise you to apply as soon as possible as we expect there to be a huge demand.
Dorset SME recovery grant can be used for eligible project costs, which may typically be:
# 1-2-1 specialist advice which SMEs could call on to address their immediate needs in response to the impact of COVID-19 e.g. HR, accountants, legal, financial, H&S, IT / digital or sector specialists etc.
# For the visitor economy, this could also include productivity improvements such as enhanced use of digital tools such as yield management software, mentoring, networking or other measures.
# It could also support to develop innovative delivery in a socially distanced economy – for example, new ways of delivering cultural events and festivals that are so critical to the visitor experience; and / or
# Purchase of minor equipment to adapt or adopt new technology in order to continue to deliver business activity or diversify in response to COVID-19.
Small Self Administered Pensions (SSAS) are common for owner managed businesses.
In general a company can pay up to £40k per year into a SSAS for a employee and if the allowances haven’t been used there is 3 year carry forward option, which could mean up to £120k.
However, where a SSAS has multiple members a company could contribute £500k and get full tax relief. This known as an indirect payment.
Corporation Tax relief on the indirect contribution is available in the year it’s made. It needs to meet the “wholly and exclusively for the purpose of trade” test.
If the contribution exceeds £500,000 (up to a maximum of £2 million), the relief must be spread over future years.
The Job Support Scheme is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce. The company will continue to pay its employee for time worked, but the burden of hours not worked will be split between the employer and the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job.
How can I claim? • The scheme will be open from 1 November 2020 to the end of April 2021. Employers will be able to make a claim online through Gov.uk from December 2020. They will be paid on a monthly basis. • Grants will be payable in arrears meaning that a claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI return
Examples • Beth normally works 5 days a week and earns £350 a week. Her company is suffering reduced sales due to coronavirus. Rather than making Beth redundant, the company puts Beth on the Job Support Scheme, working 2 days a week (40% of her usual hours). • Her employer pays Beth £140 for the days she works. • And for the time she is not working (3 days or 60%, worth £210), she will also earn 2/3, or £140, bringing her total earnings to £280, 80% of her normal wage. • The Government will give a grant worth £70 (1/3 of hours not worked, equivalent to 20% of her normal wages) to Beth’s employer to support them in keeping Beth’s job.
Today Chancellor Rishi Sunak announced a new job scheme starting 1 November 2020 to replace the current Job retention (“furlough”) scheme which ends 31 October 2020.
All small and medium-sized businesses are eligible, larger businesses must show their turnover has fallen during the pandemic. Employers can use the new scheme even if they have not previously used the furlough scheme.
The new Government scheme will last for six months to 30 April 2021 and to be eligible employees will need to be working a minimum of 33% of their hours. For the remaining hours not worked the Government and employer will pay one third. of wages each. This means:
Employers will continue to pay the wages of staff for the hours they work – but for the hours not worked, the government and the employer will each pay one third of their equivalent salary.
Employees who can only go back to work on shorter time will still be paid two thirds of the hours for those hours they can’t work.
The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.
By way of an example an employee working 33% of their hours will receive at least 77% of their pay, 22% paid by the Government and 55% paid by their employer (the “worked” 33% plus 22%).
SELF-EMPLOYED INCOME SUPPORT SCHEME
The existing self-employed grant (SEISS) will also be extended on the same basis as the job support scheme.
An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.
An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April.
VAT CUT FOR HOSPITALITY SECTOR CONTINUES
The reduction in VAT to 5% for the hospitality and tourism sector will be extended until 31 March 2021.
DEFERRAL OF VAT BILLS
Up to half a million businesses who deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller instalments. Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
SELF-ASSESSMENT TAXPAYERS – TIME TO PAY EXTENSION
Approximately 11 million self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.
BOUNCE BACK LOANS – FLEXIBILITY GIVEN TO PAY BACK AMOUNTS BORROWED
More than a million businesses who took out a Bounce Back Loan will get more repayment time through a new Pay as You Grow flexible repayment system.
This includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses.
The Government also intends to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.
The chancellor also announced an extension in applications for the government’s coronavirus loan schemes until the end of November.
From April 2016 the number of qualifying years to get the full New State Pension has been 35 years, before that it was 30 years.
You can find out how many qualifying years you have by logging onto your government gateway
On the main page go to the bottom and click on ‘View your personal Tax Account’
Then go to the National Insurance box and click on ‘view gaps in your record’ you will then get the summary below and details for each year
You have:
xx years of full contributions
xx years to contribute before 5 April 20xx (retirement year)
xx year when you did not contribute enough
Eligibility – New State Pension
You’ll be able to claim the new State Pension if you’re:
a man born on or after 6 April 1951
a woman born on or after 6 April 1953
The earliest you can get the new State Pension is when you reach State Pension age.
Your National Insurance record
You’ll usually need at least 10 qualifying years on your National Insurance record to get any State Pension. They do not have to be 10 qualifying years in a row.
This means for 10 years at least one or more of the following applied to you:
When you’re working you pay National Insurance and get a qualifying year if:
you’re employed and earning over £183 a week from one employer
you’re self-employed and paying National Insurance contributions
You might not pay National Insurance contributions because you’re earning less than £183 a week. You may still get a qualifying year if you earn between £120 and £183 a week from one employer.
Gaps in your National Insurance record
You may get gaps in your record if you do not pay National Insurance or do not get National Insurance credits. This could be because you were:
employed but had low earnings
unemployed and were not claiming benefits
self-employed but did not pay contributions because of small profits
living abroad
Gaps can mean you will not have enough years of National Insurance contributions to get the full State Pension (sometimes called ‘qualifying years’).
You may be able to pay voluntary contributions to fill any gaps if you’re eligible.
You can use the Kickstart Scheme to create new 6-month job placements for young people who are currently on Universal Credit and at risk of long-term unemployment. The job placements should support the participants to develop the skills and experience they need to find work after completing the scheme.
Funding is available for 100% of the relevant National Minimum Wage for 25 hours a week, plus associated employer National Insurance contributions and employer minimum automatic enrolment contributions. There is also £1,500 per job placement available for setup costs, support and training.
If you are a representative applying on behalf of a group of employers, you can get £300 of funding to support with the associated administrative costs of bringing together these employers.
Kickstart is not an apprenticeship, but participants may move on to an apprenticeship at any time during, or after their job placement.
The Kickstart Scheme is available in England, Scotland and Wales.
The resources our website are designed to help you with new ideas, news, training and the tools to move your business forward, expand opportunities and to get you where you want to be!
Talk to us about any information contained on our website. We are with you all the way!
Who are Starling Bank?
Founded in 2014 by Anne Boden, Starling is the UK’s first mobile bank offering super-fast setup,
beautifully simple money management and 24/7 support, all with no monthly fees. From small
businesses with big ambitions to freelancers figuring out tax returns, Starling’s award-winning
business bank account is designed to make entrepreneurial life a little easier.
Key features
# No monthly account fees
# Speedy setup
# Apply in minutes, with no three week waits.
# Integrate with Xero, QuickBooks and FreeAgent
# 24/7 UK customer support
# Stay in the know
# With real time payment alerts and categorised transactions
for spending insights.
# Easy deposits
# Deposit money at over 11,500 Post Office branches*. Send cheques via freepost, too.
# FSCS protection
Starling are a fully registered bank and the FSCS protects any money you keep with us up to £85,000 for
eligible customers.**
Who’s eligible for a Starling business bank account?
• You’re the owner of a limited company and you’re the only person with significant control
(PSC) over it.
• You’re part of a limited company with multiple owners. With our multi-PSC account, you and
your fellow PSCs will each get a Mastercard debit card and access to a beautifully simple
mobile bank account. For more information, read our blog post titled ‘Introducing: Multiowner mobile business accounts for limited companies’.
• You’re self-employed. Our sole trader account is available exclusively to those who already
have a Starling Bank personal account.
Entities engaged in, or linked in any way to, certain activities may not be able to open or have a business
bank account with Starling. Visit our Legal Documentation page at https://www.starlingbank.com/legal/
and select Business Current Account Terms for more information.
Getting started
Apply in minutes
It takes just a few minutes, direct from your mobile. No paperwork or branch visits required.
● Click on your Accountants application link https://www.starlingbank.com/business-account/?site_id=accounting_partners&creative_id=Bicknell_Business_Advisers
● Download the app from Google Play Store or the App Store.
● Enter your personal details
● Verify who you are by uploading your identification documents and sending us a short video
● We’ll carry out some quick checks at a UK Credit Reference Agency
● Provide a few details about your business, such as its day to day activities and online
presence
● We will then look to approve your application as soon as possible so you can start making
the most of all the features to help you manage your business finances better.
Ready to switch to Starling?
With the Current Account Switch Service (CASS), you* can make Starling your main business bank account in
just seven working days. It’s worth noting that the CASS service is currently only available to Starling business
customers with companies that have one person of significant control.
