Abbreviated accounts abolished

Abbreviated accounts abolished

The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 abolished abbreviated accounts. This means that abbreviated accounts cannot be filed for accounting periods beginning on or after 1 January 2016.
Introducing abridged accounts

The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 also introduced the concept of abridged accounts. Abridged accounts contain a balance sheet that contains a sub-set of the information that is included in a full balance sheet. Likewise, the profit and loss account may also contain a sub-set of the information that is included in a full profit and loss account.
Only small companies and LLPs may prepare abridged accounts

Abridged accounts will be identified by a statement containing wording to the effect of the “members have consented to the abridgement”.

Companies may choose to prepare accounts in accordance with the new regulations for accounting periods that begin on or after 1 January 2015. They must prepare accounts in accordance with the new regulations for accounting periods that begin on or after 1 January 2016.


The difference between abridged and abbreviated

Companies must now prepare and file the same set of accounts for its members as for the public record. This means that a company will decide at the point they are preparing their accounts whether or not to abridge them (or to prepare micro entity accounts). Previously a company would prepare full accounts for its members and would then decide whether or not to abbreviate them for the public record.

A small company now has the following options when preparing their accounts

For accounting periods that start on or after 1 January 2016 small companies basically have 3 choices: they may prepare micro-entity accounts (if they’re within the threshold), they may prepare abridged accounts or they may prepare a full accounts. In all cases a small company can choose whether or not to file their director’s report and profit and loss account. Companies that don’t opt to file their director’s report and profit and loss are said to be filing “filleted” accounts (in every case the company must file at least the balance sheet & any related notes).

Last day for P60

Last date for giving a form P60 for previous tax year to each
relevant employee who was working for you on
5 April 2016


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Summary of a company limited by guarantee and by shares

Both types are LIMITED companies.
Both represent separate legal entities.

Main differences are:

by Guarantee	by Shares
Usually non-profit organisations.	Profit oriented organisations
No share capital, but members are contributing to cover organisation's debts	Share capital. In other words, individuals risk to lose only share purchase amount.
Due to nature of the organisation, no dividends to members. Only salary to employees.	Salary to employees. Dividends to shareholders.

If you are limited by guarantee and wish to re-register to be limited by shares, please follow the link https://www.gov.uk/government/publications/re-register-an-unlimited-company-as-a-limited-company-rr06

Another useful link: https://www.gov.uk/guidance/model-articles-of-association-for-limited-companies

Important dates calendar

New tax year is coming!
How do you celebrate? :)


Copy, add and/or share important dates to your calendar: http://www.apnk.uk/p/important-dates.html

NIC example for a director and owner of a business salary

Director and owner of a business with an annual gross salary of 10,600 GBP for tax year 2015/16.

Directors are classed as employees and pay National Insurance on annual income from salary and bonuses over £8,060.

Both company AND employee pay NI contributions.Thus, in some circumstances it is more tax efficient to set salary at £8,060 and the rest pay via dividends or consider pension contributions.

Here is a calculator: http://nicdcalculator.hmrc.gov.uk/DirectorsClass1NICs1.aspx

This calculator looks purely at national insurance contributions. It does not take into account pension payments or salary sacrifice schemes, student loans, or any benefits.

If this company allowed to receive "Employment allowance", then instead of £648 it will be payable £333. In other words, if eligible for employment allowance, it is more efficient to set salary at 10,600 (=Personal Allowance) level.  

Please note that starting from 2016/17 one director companies will not be eligible for employment allowance.


References:
https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions
https://www.gov.uk/income-tax-rates/current-rates-and-allowances
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/409105/Tax_Tables_B-D.pdf
https://www.gov.uk/employment-allowance

Tips

Expensify - mobile app. Hassle-free expense reporting built for employees and loved by admins. It is for keeping track of cash and/or reimbursable expenses. Just be patient with SmartScanner ;)
It is free for basic use! Enjoy!
If you will decide to get 'Team' or 'Corporate', get in touch. As official parters APNK can offer a discount on subscriptions.  

Excel / Google Sheets / LibreOffice - are easy and (some) free. This software can help you to import your bank transactions and go over them line by line categorising. Then, in one minute create summary/totals for any period of time.

QuickBooks Online / Xero / ClearBooks - these are more advanced tools. Hence, they are not free, but you get more options and reports dedicated for management to make strategic decisions and for accountants to prepare statutory documentation.   
If you will decide to try one of the above cloud accounting/bookkeeping softwares, get in touch. APNK will be able to offer a better price.

Childcare vouchers

If you can, take an opportunity to get childcare vouchers from your business tax free.
Please get in touch for help.


Childcare vouchers: better off calculator

Research & Development (R&D) Relief for Small and medium-sized enterprises (SMEs)

The scheme works as follows:

• Enhanced relief is available if the company spends money on qualifying R&D, as defined by generally accepted accounting principles (GAAP) and guidelines from the Department for Business Innovation and Skills.
• SMEs can deduct an additional 125% of qualifying expenditure for tax purposes.
• If the deduction creates a loss it may be surrendered in return for a cash payment from HMRC = 11% of the surrendered amount.
• If surrendered in return for cash, the loss cannot also be carried forward for future relief.

NOTE: If you have trading losses they are likely to restrict the cashback relief! 

Qualifying R&D expenditure must be revenue expenditure on a project that seeks to achieve an 

advance in science or technology that is relevant to the trade.

It can include expenditure on the following:

• staffing costs, including NIC (Class 1 and Class 1A) and pension contributions but excluding assessable benefits

• agency staff for R&D

• materials, water, fuel and power for R&D

• software directly used in R&D

• payments to subcontractors (Note that only 65% of this expenditure will be eligible for the enhanced tax credit).

It cannot include:

• contributions to other bodies for independent research

• expenditure covered by a grant or subsidy

Record keeping

Min. period is 6 years. However, in cases involving fraudulent or negligent conduct, the time limit is extended to 20 years after the end of the accounting period.

When to claim

You must make any claim for R&D Relief in your Company Tax Return or amended return. The normal time limit for making your claim is 2 years after the end of the relevant Corporation Tax accounting period.

Summary from HMRC is here.

If you require further assistance, please get in touch with us. 

Maternity Allowance and Sure Start Maternity Grant

If you worked for at least for 26 weeks for a company and earning >£30/week over 13 weeks before baby born, you are eligible to claim Maternity Allowance.

Maternity Allowance
for eligible employees can be paid for up to 39 weeks, usually as follows:
the first 6 weeks: 90% of their average weekly earnings (AWE) before tax
the remaining 33 weeks: £139.58 or 90% of their AWE (whichever is lower)

Small company can claim back maternity allowance paid (103%).

Tax and National Insurance need to be deducted.
If you are a a Director and Shareholder of a small company, then
it is beneficial to withdraw up to 10,600 per tax year, otherwise you pay income tax, NI.
+ Dividends up to 31.785 that wont be taxed.

As alternative,
You could get a one-off payment of £500 to help towards the costs of having a child. This is known as a Sure Start Maternity Grant.
You usually qualify for the grant if:

you’re expecting your first child - or you’re expecting a multiple birth (eg twins) and have children already
you already get certain benefits
You must claim the grant within 11 weeks of the baby’s due date or within 3 months after the baby’s birth.
You don’t have to pay the grant back and it won’t affect your other benefits or tax credits.

Can you claim?
Usually, to qualify for a Sure Start Maternity Grant there must be no other children in your family and you must get one of these benefits:
Income Support
income-based Jobseeker’s Allowance
income-related Employment and Support Allowance
Pension Credit
Child Tax Credit at a rate higher than the family element
Working Tax Credit that includes a disability or severe disability element
Universal Credit

If you are eligible to claim, fill in SF100
Remember to fill in and send the form are from 11 weeks before the week your baby is due. The latest you can claim is 3 months after your baby is born.
Take the form to your local Jobcentre Plus or post it to:
Freepost RTGE-EUKR-TBSY
Wembley Benefit Centre
Mail Handling Site A
Wolverhampton
WV98 1HE

Double tax treaties

You might heard of double tax treaties that exist between countries. How might it affect you or your company?
Well, these treaties were created to ensure fair taxation systems across borders.
For example, if you believe that you pay taxes in Russian Federation and UK for the same income, please get in touch with us. You might be eligible for double tax relief (DTR) that save you UK tax dramatically!

A list of tax treaties can be found on gov.uk

Being a sole trader (self-employed) vs company

Opening year rules -> most likely overlap profits	NO opening year rules.
Losses can be used against total income of:  the year of the loss AND/OR the previous year.  the three years prior the year of loss starting with the earliest one.  future income of the same trade.	Losses can be used against income of:  loss relief can be used against total profits (current year first, then 12 months back)  future income of the same trade.
Losing 10% tax credit on dividends as no company.	10% tax credit is available to shareholders
Personal allowance is available.

Example,
Annual Revenue in 2015/2016 = 25,000 gbp
How much cash after taxes will be left for one and only trader/shareholder/owner ?

(1) Sole trader		(2) Company
Revenue	25,000		25,000
less: trading related expenses	[assume] (9,000)	less: trading related expenses	[assume] (9,000)
		Less: salary (no PAYE, NIC for company and employee)	(8,060)
Net income	16,000
less: Personal Allowance	(10,600)
Taxable profit	5,400	Taxable profit	7,940
[within basic rate band] -> 20% of tax  5,400 x 20%	(1,080.00)	small company tax rate = 20%  7,940 x 20%	(1,588)
NIC on 16,000gbp Class 2	(145.60)	Available to pay out as dividend	6,352**
Class 4 (16000-8060) x 9%	(714.60)	** Amount will be tax free for the shareholder due to 10% tax credits

Conclusion:
Option (1) As a sole trader will take home 14,059.80 (10,600 + (5,400-1,080)-(145.60+714.60)).
Option (2) Via company owner will take home 14,412 (8,060 + 6,352).

It is better to choose option 2 as it will give 352.20gbp (14,412.00 - 14,059.80) more after taxes.          

--
PS. Obviously better option will depend on a number of variables. Above is a simple example for a simple trader. To help you to choose the best option for YOU, please get in touch (see contact details).

Payroo - Earlier Year Update (EYU)

If you use Payroo for communicating your payroll to HMRC, here is a quick guide how to report Earlier Year Update.

1. Login to your account.

2. Then find EYU in the menu:

3. Choose employee that needs to be amended by clicking "Enter":

4. Record changes in the right column. Remember to copy any information that hasn't changed as well:

Make sure that you are submitting for correct tax years!

5. Click "Save & Continue" .

6. Submit the report.

Done!

Payroll dates

Companies regardless the size have to inform HMRC (via RTI) about their employees salaries. HMRC wants to see regular updates even if your employees earn below NI threshold.
Remember: you must report your payroll to HMRC on or before your payday, otherwise it is considered late.

Deadlines example:

Lets say that today is 01 June 2015 and you would like to pay employees and file PAYE for May.
Filing dates between 06-05-2015 and 05-06-2015 are valid for this pay period.
Any liability risen to HMRC must be paid settled by 22nd June 2015. It means that you must ensure that your funds reach HMRC by this date. So, it is prudent to make a bank transfer 3 days prior the 22nd. For example, make sure that on every 13-14th funds are set up to leave your bank account.

Minimum Wage rates in England and Wales

If you plan to employ a person on hourly basis, be aware to pay above national minimum wage.


National Minimum Wage rates:

Year	21 and over	18 to 20	Under 18	Apprentice*
2014	£6.50	£5.13	£3.79	£2.73
2015	£6.70

*This rate is for apprentices aged 16 to 18 and those aged 19 or over who are in their first year. All other apprentices are entitled to the National Minimum Wage for their age.

National Insurance for under 21 changes

If you employ anyone under 21 years old you will no longer have to pay Class 1 secondary National Insurance contributions on earnings up to the new Upper Secondary Threshold (UST) £815.00 per week, for those employees.

This comes into effect from 6 April 2015.

•  New Category 'I' - Contracted-out Salary Related standard rate contributions for under 21 years age (Similar to D category earlier)
•  New Category 'M' - Not contracted-out standard rate contributions for under 21 years age (Similar to A category earlier)

VAT note for software suppliers around the world

If you your company based in UK,

+ you supply bespoke software to a client outside EU (below),

then your company should charge 0% VAT on the invoice.

If your client based in UK, charge VAT as usual.

If your client based in another EU country, charge VAT as usual [unless client can provide proof that it pays VAT in the country of operation; then 0% VAT].

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Countries and territories that are part of the EC fiscal area for VAT

Country code shown in brackets.

Austria (AT)

Belgium (BE)

Bulgaria (BG)

Cyprus (CY)

Czech Republic (CZ)

Denmark (DK), except the Faroe Islands and Greenland

Estonia (EE)

Finland (FI)

France (FR), including Monaco

Germany (DE), except Busingen and the Isle of Heligoland

Greece (EL)

Hungary (HU)

The Republic of Ireland (IE)

Italy (IT), except the communes of Livigno and Campione d’Italia and the Italian waters of Lake Lugano

Latvia (LV)

Lithuania (LT)

Luxembourg (LU)

Malta (MT)

The Netherlands (NL)

Poland (PL)

Portugal (PT), including the Azores and Madeira

Romania (RO)

Slovak Republic (SK)

Slovenia (SI)

Spain (ES), including the Balearic Islands but excluding Ceuta and Melilla

Sweden (SE)

United Kingdom and the Isle of Man (GB)

Countries outside of the EC

Andorra

The Aland Islands

The Canary Islands

The Channel Islands

The overseas departments of France (Guadeloupe, Martinique, Réunion, St. Pierre and Miquelon, and French Guiana)

Gibraltar

Mount Athos

San Marino

The Vatican City

We decided to start our own blog to provide important information that could be helpful to companies and self-employed people.

We are here to help you!