# Salary Sacrifice could save 45.8% in Tax and NI – how does it work? 10

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

http://listentotaxman.com/index.php

An employee earning £30k a year gets

 Wage Summary Yearly Monthly Week Gross Pay £30,000.00 £2,500.00 £576.92 Tax free Allowances £7,475.00 £622.92 £143.75 Total taxable £22,525.00 £1,877.08 £433.17 Tax due £4,505.00 £375.42 £86.63 National Insurance £2,732.64 £227.72 £52.55 Total Deductions £7,237.64 £603.14 £139.19 Net Wage £22,762.36 £1,896.86 £437.74 Employers NI £3,164.06 £263.67 £60.85

Total Tax and NI = £10401.70

If they use Salary Sacrifice for £55 x52 = £2860, new salary would be £27140

 Wage Summary Yearly Monthly Week Gross Pay £27,140.00 £2,261.67 £521.92 Tax free Allowances £7,475.00 £622.92 £143.75 Total taxable £19,665.00 £1,638.75 £378.17 Tax due £3,933.00 £327.75 £75.63 National Insurance £2,389.44 £199.12 £45.95 Total Deductions £6,322.44 £526.87 £121.59 Net Wage £20,817.56 £1,734.80 £400.34 Employers NI £2,769.38 £230.78 £53.26

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

steve@bicknells.net

# Holiday Pay without any National Insurance to pay 1

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.

http://www.hmrc.gov.uk/paye/payroll/special-pay/holiday.htm#x4

steve@bicknells.net

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

or

• 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?

Steve@bicknells.net

# Reduce your NI bill by £50,000 5

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 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.

steve@bicknells.net

# Salary v’s Dividend – how much money could I save? Reply

This has to be one of the most popular questions business owners ask their accountants, purely looking at it from a financial perspective I would recommend trying out these free calculators:

http://listentotaxman.com/index.php

This allows you to calculate the Tax and NI payable on Salaries

http://www.contractorcalculator.co.uk/Dividend_Tax_Summary.aspx?uid=0&logon=False&psalary=50000&div=1&status=OutsideIR35&pyt=LimitedCompany&expenses=3000&other=0&pension=0&tc=747L&age=30&salary=12000&rate=25&rt=Hourly&rt2=Hourly&weeks=44&dwpw=5&dwpw2=5&hours=37.5&dni=3000&tty=2011&rate2=25&weeks2=44&hours2=37.5&status2=OutsideIR35&psalary2=50000&mir=0.05&ma=200000&mp=25&cid=0&vat=1&vi=False&cby=1&ar=1&gs1=0&gs2=0&gs3=0&gs4=0&nd=80000&pbt=1&dpo=16-Jul-2011&dop=01-Jan-0001&inv=1&hpd=11&me=150&vt=Car&mpw=0&mpc=0&pt=Monthly&ace=500&mt=Parasol&wl=InsideLondon&uds=Basic&Host=LOCAL

This link calculates the tax on dividends (Dividends are paid after the company has paid Corporation Tax which is 21% for small companies)

steve@bicknells.net

# Can I make a suggestion? £5000 tax free 10

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

http://www.hmrc.gov.uk/paye/exb/a-z/s/suggestion-schemes.htm

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

steve@bicknells.net

# Installing Sage 2012 using Templates Reply

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

Customer Record

Fixed Assets Record

Nominal Record

Product Record

Project Record

Project Transaction

Stock Transaction

Supplier 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.

Steve@bicknells.net

# Group Corporation Tax – why not have a simplied arrangement? 1

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.

steve@bicknells.net

# Free Web Based CRM and Business Applications 1

Rosie Barfoot sent me a comment yesterday about Workbooks, they offer a totally free 2 user version of their software http://www.workbooks.com

I have signed up and downloaded a copy today, looks pretty good, CRM, Quotation Management, Products, Contracts, Invoicing, I need to get my head round how to use it but it seems pretty comprehensive. Its 100% web based, it can link to Sage and Outlook (not sure if thats in the free version), you can customise it and create templates, sounds ideal for a start up business.

steve@bicknells.net

# Free Fundraising, Anti Virus, Office Suite, E Mail and Calendar 1

Tony Croft (4 Networking) said:

Can I recommend ‘Free Fundraising’ with Simply Fundraising.
Let somebody else make donations to your cause/s when you shop, put petrol in the car, eat out, etc and get free flights as a reward for doing it.
Can you beat that? http://www.simplefundraising.co.uk/

Marco Tomat (4Networking) said:

I would like to recommend Microsoft’s free anti-virus software called Security Essentials, you must have a licenced copy of windows of course, it’s much faster and less bloated than the new free AVG 2011 which is causing older or low spec. machine to slow down. If you are a teenager who likes downloading stuff then you need to buy one of the mainstream products!
http://www.microsoft.com/en-gb/security_essentials/default.aspx

Paul Driscoll (CIMA) said:

Fed up with the increasing cost of Microsoft licences some years ago, we implemented Open Office ( http://www.openoffice.org ) to replace Word, Excel etc.. All working well and would not now go back to MS.

We are also in the process of moving all machines to Mozilla Thunderbird for e-mail and Lightening for calendar ( http://www.mozilla.org/projects/calendar/sunbird ) which is part of the same suite as the popular Firefox internet browser.