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).
Businesses tend to start off just having ordinary shares with full voting and dividend rights, however, there are lots of good reasons why you might create multiple share classes:
1. To reward the owners based on their contribution – for example say one owner worked full time and the other only part time – they may want dividends to be based on their efforts whilst still retaining their original voting rights
2. To offer non voting shares to employees
3. Convertable or Redeemable shares might be offered to an investor
4. Preference Shares might have a fixed dividend
Dividends are very tax efficient so its great way to reward the owners for the risk of running a business.
Before creating additional share classes check your articles of association and change them if necessary, then you will need a resolution to create new share classes, fill the appropriate forms at Companies House and then are ready to go.
If you have any questions please feel free to contact me.
Most employees pay 20% tax, 12% Ees NI and their employer pays 13.8% NI, so thats a total tax of 45.8% on employment income.
There are a range of tax and NI free benefits, for example childcare vouchers, where £55 per week can be paid by the employer, so lets use that as an example, using the calculator
An employee earning £30k a year gets
| Wage Summary
|Tax free Allowances
Total Tax and NI = £10401.70
If they use Salary Sacrifice for £55 x52 = £2860, new salary would be £27140
| Wage Summary
|Tax free Allowances
Total Tax and NI = £9091.82
A saving of £1309.98 (45.8% of £2860)
For saves on this scale should you be looking at Salary Sacrifice schemes for your employees,I have seen schemes where it can be applied to a wide variety of things from Pensions to Cars
There is a special concession which ends on 30th October 2012 which allows holiday pay to be paid without the Employee or the Employer paying any National Insurance.
Its been used in the Construction Industry for years and orginally employees had physical cards and collected stamps, it much easier now with companies like B&CE doing all the work for you.
Check to see if your business sector qualifies
All companies spending at least £10,000 in their accounting year on qualifying R&D are entitled to claim a deduction when calculating their taxable profits of:
- 175% of qualifying expenditure for SMEs in respect of expenditure incurred on or after 1 August 2008 rising to 200% from April 2011 and 225% from April 2012, subject to EU approval under the State aid rule
- 130% of qualifying expenditure for larger companies until 31 March 2008
Companies can claim R&D tax credits for their revenue expenditure on:
- employing staff directly and actively engaged in carrying out R&D
- paying a staff provider for staff provided to the company who are directly and actively engaged in carrying out R&D
- consumable or transformable materials used directly in carrying out R&D (broadly, physical materials which are consumed in the R&D)
- power, water, fuel and computer software used directly in carrying out R&D
Lots of businesses carry out R&D and never claim, so why not see if your R&D qualifies?
Yes £50,000, thats how much you could save in employers NI if your business qualifies for the regional employers NICs Holiday.
Under this scheme, for a limited period and subject to meeting certain conditions, new businesses may qualify for a deduction of up to £5,000 from the employer NICs that would normally be due – for each of the first ten employees they take on.
The National Insurance contributions (NICs) holiday is available to new businesses that start up during the period from 22 June 2010 to 5 September 2013.
The types of business that may be able to apply for the holiday are:
- a sole trader, company or partnership that begins to carry on a trade, profession or vocation
- a property business or investment business
- a new trading charity whether or not it is carrying out activities with a view to profit
Managed Service Companies do not qualify for the holiday.
If you have recently started a new business its well worth finding out if it will qualify.
In the current economic climate every business needs to look for new ways to improve but few businesses take advantage of the HMRC approved schemes
Basically there are 2 types of award:
Encouragement Awards where the employer can pay £25 tax and NI free
Financial Benefit Awards where employees can be paid up to £5000 tax and NI free
Financial benefit awards are exempt from tax and NICs up to the greater of the following, subject to an overall limit of £5,000:
- 50 per cent of the financial benefit you reasonably expect the suggestion to lead to in the first year following its adoption
- 10 per cent of the financial benefit you reasonably expect in the first five years following adoption
Sounds like a win win to me
Whether you are changing systems or just want a fresh start with the latest version its worth trying the Sage Templates to upload data.
Once you have loaded Sage, click on Help, then About then Program Directory and you will find a folder called Import Templates, in that folder are Templates for:
Audit Trail Transactions
Fixed Assets Record
The templates are excel files and on the top row are comments on the content required. If you are already using Sage you can export the data, clean it and then re import it.
Basically as a minimum you will want to import outstanding customer and supplier transactions (using the audit trail), static data for customers, suppliers and nominal and unreconciled bank transactions. The opening trial balance can be entered using the Audit Trial import.
Use the Practice Company on Sage until you are confident you know your imports will work.
It takes a bit of time to get the imports correct but once its done it works really well.
Its often worth having a Tax Group even if you don’t have Group Accounts ie you have multiple businesses under common control but that are not directly owned subsidiaries. The reason for this is to offset profits and losses to reduce the total tax payment.
Generally this means completing a special extra return, the CT600C, unfortunately, this form is not available from HMRC to file on line.
There is a solution regulation 6 SI199/2975 (CTM97690) allows you to write to HMRC and explain which companies make up the group and ask for a simplified arrangement – meaning HMRC will automatically net off the returns with out the need for CT600C returns.
By doing this you can file the CT600’s on line for free with HMRC.