The rise of UK National Minimum Wage

The National Minimum Wage refers to the minimum pay per hour that any employee may receive in the UK, regardless of their job. Every October sees a review of the minimum wage, usually resulting in an increase which in turn benefits more than 1.4 million UK citizens. As a legal stipulation, it is important for all employees to keep up to date with changes in the minimum wage as this will in turn affect their expenses.
The UK’s Low Pay Commission recommendation to the UK government to increase the minimum wage to £6.70 equalling a 20p rise for adult workers as of October was duly accepted and implemented. Apprentices will also see a 20% increase in their wages against the LPC’s
recommendation of 2.6%. The justification behind this move is that apprentices will after 2 years of work be earning up to £26,000 a year. It also reduces the stigma surrounding apprenticeships as a second hand career and promotes it as a stepping stone towards a full time job.
With the aim of creating a more equal and fairer society, the UK government stated the increases will work to build a stronger economy while rewarding tax payers for their hard work.
The increase also seeks to help employers attract the best employees for their businesses by offering them competitive wages. In a bid to address in-work poverty, meaning workers still experience poverty while employed, the United Kingdom’s government has turned to an increase in minimum wages as a way to decrease the phenomenon as well as improve workers’ lives, especially the younger generation. It is also a boost for younger workers to see their apprenticeship jobs as viable future careers and thus continue their training and mentorship.
This increase is seen as the largest real-term increase in 7 years, but considering the current inflation figures, sources say the minimum wage should have risen up to £7.03 to mitigate inflation’s negative influence. The Trades Union Congress also said the increase is nowhere near enough to reduce in-work-poverty and more drastic measures should have been taken.
By 2020, David Cameron, the UK’s current Prime Minister aims to increase the minimum wage up to £8 as part of his re-election campaign. About 5% of Britain’s workforce earns the minimum wage or slightly more meaning the impact on the economy as a whole would generally improve
Cameron’s standing as the next PM.
Some parties however think that the drastic increase in apprentice’s minimum wage is a political move as they will be the most influenced to vote for the current government. This is also not the first time government has ignored the LPC’s recommendation regarding the raise in apprentice minimum wage as the same thing happened in 2013.
In addition, Britain’s current government plans on launching a minimum pay accelerator which will let employees check the minimum wage across regions, sectors and occupations thus giving them powerful knowledge with which to negotiate with their employers.
The various increases in the minimum wage can be seen, however, as a good step forward to reviving Britain’s former economic status and increasing the overall standard of living for people all over the UK.

5 Basic Bookkeeping Tips for Start-up Businesses

Bookkeeping is one of the most important tasks in a company; it’s a task that involves keeping records of all business transactions. Despite being a vital function, most small companies tend to neglect this part of their business functionality and end up rushing at the year end, as they close their books of accounts. This practice is contrary to the Accounting Standards that require timely maintenance of accounting records. So how can you be able to maintain your books and manage your start up business with ease? Here are a few tips:-

Open a separate bank account to manage your personal expenses
This concept forms part of accounting principles referred to as the principle of separate business entity. It requires one to treat his/her private transactions separate from those of the business. This business concept will work efficiently when you open another bank account separate from your business that will track all your personal expenses. This way, you will be able to update your accounting ledgers with ease.

Be neat and organised
In order to be effective in your bookkeeping, you need to schedule at least a day in a week to update your books. It is advisable that you neatly jot down your weekly transactions on your pocket diary and refer to it any time you sit down to update your books.

Maintain proper records of your receipts and invoices
It is a requirement by law to keep records of your receipts and invoices for a minimum of five years. This helps auditors to easily form their audit trails. These records may assist you in tracing all your expenses and invoices, which are key in updating your books.

Choose the right software.
Updating your books using traditional manual ledgers can be really frustrating. It is advisable that one adopts accounting software programs such as Quickbooks that will make your record keeping as simple as possible. These programs save time and reduce errors; they also provide a backup of all your data; this protects your work from being distorted or getting lost.

Hire professional help.
Lastly, if your time is all clogged up and you end up too busy to update your books, outsource your bookkeeping and accounts preparation to a professional. There are many professional firms that have qualified personnel that will do your accounts from bookkeeping and payroll to preparation of your final accounts.

If you experience difficulties in updating your books, as mentioned in the last point, we are the right solution for you. Accounted For offers all financial accounting services to all types of firms. We offer professional accounting services ranging from daily financial management, payroll processing to human resource obligations.

http://www.accountedforltd.co.uk/bookkeeping-services

A look back at our 2014 highlights

We at Accounted For, being a full-service accountancy specialist, pride ourselves in our high standards and delivering what we stand for which is the aim to be different; different in that we choose to not just offer a generalised accounting service to our clients. We know our clients are unique and present problems that have different dimensions to them. This has contributed hugely to our success since our establishment in 2006.

Our approach has served us well as has been attested by our clients who’ve had a taste of our services. Our clients have often expressed their satisfaction in our services through the testimonials they give.

The services we offer include, but are not limited to the following: Book keeping, Credit Control, Payroll, Management Accounts, VAT Returns, End of Year accounts preparations, Audit preparations and Tax planning. We offer accountancy services to a broad range of industries that include Properties, Cleaning Services, GP’s, Plumbing & Heating, Web Development, Sports Nutrition, Transport, Pizza and Cosmetics.

Our clients who received these services from us have given us great feedback; they have experienced value for money in comparison to other accountants they’ve formerly hired. We at Accounted pride ourselves in the quality of our work and our ability to meet our clients’ needs; we take the time to talk to our clients.

Our clients have noted that they’ve been saved a huge amount of both money and time. Accounted For can be counted on: we allow you to focus on the growth of your company, we are able to find and provide any information as and when needed, we enable you to meet all deadlines so that no fines are incurred, and all of this at a great price.

This level of confidence and complete trust expressed by the clients, coupled with the customised and unique solutions that Accounted For offers only means one thing: we remain the only choice for your accounting needs.

http://www.accountedforltd.co.uk/

Remember! New Rules for VAT in the EU came into effect on 1st of January 2015

As of January the 1st 2015, new rules were put in place in the EU regarding VAT for businesses that provide “broadcasting, telecommunications and e-services (digital services)” to consumers. These new rules only affect businesses that provide these services directly to a consumer (ie a private individual), meaning that, for example, if you provide goods to an online store (that is not specifically your own) then it’s the store’s owner who handles the VAT details.

Currently, the ‘place of taxation’ for all of the services mentioned above, when dealing with a consumer, is wherever the supplier is located. Previously, if a website in the UK supplied something to a consumer in France, the VAT would be paid in the UK. However, as of January the 1st, the ‘place of taxation’ has been changed to wherever the consumer is based, rather than the supplier. So, in the above example, the VAT would be paid in France, rather than the UK.

 

Will this affect my business?

For the most part, your business will only be affected by these changes if your business provides any of the above services directly to consumers. If you provide any of these services to a business who then in turn supplies them to consumers, that business will be responsible for the new VAT rules. As you would be providing to a business, there would be no change from your perspective.

 

I’m providing my services to a consumer. What do I need to do?

You must establish the ‘place of taxation’ based on the consumer’s location. According to HMRC, you can “presume that the location of the consumer, and therefore the place of taxation, is as follows:

  • if the service is provided through a telephone box, a telephone kiosk, a wi-fi hot spot, an internet café, a restaurant or a hotel lobby, the consumer location will be the place where the services are provided
  • if the service is supplied on board transport travelling between different countries in the EU (for example, by boat or train), the consumer location will be the place of departure for the journey
  • if the service is supplied through an individual consumer’s telephone landline, the consumer location will be the place where the landline is located
  • if the service is supplied through a mobile phone, the consumer location will be the country code of the SIM card
  • if a broadcasting service is supplied through a decoder, the consumer location will be the postal address where the decoder is sent or installed

Basically, if a transaction falls into any of these situations, you can presume the consumer’s location and list it without the need for further evidence. However, if you do not believe that these points provide an accurate reference for the consumer’s location, you can choose it yourself. However (again), if you do so then you’ll need to obtain and keep three pieces of non-contradictory evidence supporting your claim. These can include, for example, evidence of the consumer’s billing address, their bank details or their IP address.

If you have any more questions regarding the changes to VAT, or any accounting queries in general, please don’t hesitate to contact us at Accounted For Ltd.

Shared Parental Leave

New rules to enable Shared Parental Leave coming into effect in 2015

The Government is planning to reform the statutory pay and leave entitlements available to employed parents. From next year, parents will be able to claim the new Shared Parental Leave and Pay (SPL). The aim is to give parents more flexibility in the way they share their leave and pay between them. Some employers will need to update their payroll systems to allow them to properly pay employees taking SPL (sometimes discontinuously).

What do we have now?

The current maternity/adoption leave is 52 weeks (of which 39 are paid) and two week’s statutory paternity leave and pay. Under the new rules this will actually remain the same. The difference is that working parents of a baby due on or after 5 April 2015 may be eligible to take SPL.

How is SPL different?

Shared Parental Leave will allow mothers (or adopters) to be able to choose to end their maternity/adoption leave early – at any point from two weeks after the birth/adoption – and share their untaken pay and leave with their partner.

The idea is to give families greater choice over their childcare arrangements in the first year. It no longer has to be a year for the mother and two weeks for father (or partner). The intention is to allow fathers to take a greater role in caring for a child, and to help both parents to better balance childcare responsibilities with staying in work.

Parents will be able to take their leave in phases, for example 20 weeks for the mother/adopter, followed by 20 weeks for the father/partner, followed by 10 weeks for the mother/adopter and so forth. In this example the statutory parental pay could be paid over one or two discontinuous periods.

According to the government, employers can expect to start receiving notice about SPL from February 2015, and HMRC will be providing online tools to check eligibility for SPL.

 

For more information on shared parental leave, you can consult the HMRC website here, or the relevant information on http://www.gov.uk here.

HMRC Tax Information

Income tax broken down – Which parts of my income are taxable?

Income tax is, as the name suggests, a tax on your income. While a lot of income is taxable, there are plenty of exceptions to the rule. Not all income is taxable and the reasons for a type of income not being taxable are extremely varied, so we won’t be going into great detail about them here. We will, however, explain which types of income are taxable and which aren’t.

Which types of income are taxable?

  • Any income that you gain from full-time, part-time or temporary employment, including certain perks or benefits you receive from your employer (such as a company vehicle, fuel, loans at low interest rates and accommodation).
  • Any income you make from being self-employed (defined as working for yourself as a sole trader or partner)
  • Income from a pension (this includes state pensions, personal or company pensions and retirement annuity)
  • Interest gained from savings (Including both bank and building society interest as well as National Savings and Investments accounts and bonds)
  • Dividends on company shares
  • Certain state benefits (including carer’s allowance, jobseeker’s allowance, employment and support allowance, incapacity benefit – after 29 weeks and bereavement allowance)
  • Rental income
  • Pensioner bonds
  • Any income from a trust

It is worth noting that taxable income from rental property only applies either to a second property that you are renting out, or to your only/ family property where the rent gained from a lodger passes the taxable income threshold of £4,250 a year.

 

Which types of income are non-taxable?

A number of state benefits, including but not limited to:

  • Disability living allowance
  • Attendance allowance
  • Lump sum bereavement payments
  • Pension credit
  • Free TV licenses for over 75s
  • Winter fuel payments and Christmas bonus
  • Housing benefit
  • Employment and support allowance (if you haven’t paid enough National Insurance contributions)
  • Certain income support payments
  • Child benefit
  • Guardian’s allowance
  • Maternity allowance
  • Industrial injuries benefit
  • Severe disablement allowance
  • War widow’s pension
  • Young person’s bridging allowance

Non state benefit sourced of income that are non-taxable or have a taxable income limit:

  • All ISAs and savings certificates
  • As mentioned above, the first £4,250 a year of rent from a lodger in your only/ family home
  • Working and child tax credits
  • Wins from premium bonds

 

In addition, almost everybody in the UK is entitled to a ‘personal allowance’, which is the amount of your usually taxable income that is tax free in a year. More information can be found on HRMC’s website, as well as a helpful taxable income calculator and taxable income tables which lay out how much you would need to pay based on your income.

We hope that this has helped to increase your understanding of income tax and what is and isn’t taxable. In future articles we’ll be covering income tax in more detail, but for now if you have any questions or problems related to income tax or accounting in general, feel free to contact us at Accounted For Ltd, where we will be more than happy to help.

HMRC Tax Information

Are you getting your taxes in on time?

Are you an employer?

Do you get your taxes in on time?

You’d best make sure you do, because from the 6th of October, HMRC are implementing a new penalty system for those who don’t get their tax returns in on time.

It effectively boils down to this: when HMRC hasn’t received payment info by the 5th of October, a penalty charge will be applied. Payment info needs to be given via a Full Payment Submission (FPS) for an employee on a PAYE scheme. If you do not pay any employees, for example, if you haven’t hired any freelance workers or contractors, then you need to send an Employer Payment Summary (EPS), which needs to arrive with HMRC no later than the 19th of the next tax month. Bear in mind that each PAYE scheme requires its own, separate FPS to be sent.

If your payment information is late, you’ll be subject to the penalty fines. The amount you would need to pay depends on the number of employees within the PAYE scheme, as shown here:

Number of employees Amount of the monthly filing penalty per PAYE scheme
1 to 9 £100
10 to 49 £200
50 to 249 £300
250 or more £400

 

Bear in mind that just as you need to submit a separate FPS for every PAYE scheme, you would get fined for every PAYE scheme separately.

Something else to note is that firstly, new employers will not have pay a penalty if their first FPS is received within 30 days, but after that the normal rules will apply. Secondly, the first month in the tax year where there is a filing default (i.e., a late FPS or EPS) will not incur a penalty, but after that the penalties will be applied like normal, so don’t be late!

That being said, there are exceptions to the penalties. If HMRC agrees that there is a reasonable excuse for your returns being late, and you made sure to file the returns as soon as you realistically could. What actually constitutes a reasonable excuse will vary depending on situation, however HMRC says that it is ‘normally an unusual event that is either unforeseeable or beyond your control’. Obviously, since it varies case to case, it is impossible to give a full list of what is defined as reasonable, however, some examples include:

  • Death of a close relative or domestic partner
  • Serious illness of the above, or the person responsible for filing the return
  • Severe system failure, such as a fire, flood or serious IT difficulties

Something that is NOT a reasonable excuse is saying that you relied on somebody else who hasn’t filed the information. Nor is claiming a lack of information or not being aware of the laws and rules regarding tax.

On the other hand, if you receive a penalty and don’t think you deserve it, you can appeal it at HRMC’s website.

Remember that if you have any questions about your tax returns, or are just looking for an accountant in Cardiff, Accounted For can help you with whatever you need.