Going for Xero Gold

 

Going for Xero Gold

We have some good news to share: Saint & Co. was recently awarded Xero Gold Partner status.

So, what exactly does this mean for both us and you?

Well, Xero awards several different status levels, ranging from Partner to Platinum Partner, with Bronze, Silver, and Gold in between. Each level achieved is an indication that certain criteria has been fulfilled, particularly the number of clients subscribed to use Xero.

Our Journey to Gold Champions

Using Xero was a deliberate and careful decision. It wasn’t something we rushed into. We carefully examined a number of solutions for our clients, before working closely with Xero for around a year to determine if their platform met the needs of our existing clients.

Over the past 12 months, our partner, Carlisle Accountant, Stuart Farrer – who was heavily involved with introducing Xero to the company – gave up time to attend workshops and travel to observe what other firms were doing well. Thanks to his dedication and input, and the hard work of our team in general, we have managed to convert over 350 clients to Xero’s cloud accounting software.

Retaining Our Status, and Aiming Higher

Growing to that number of subscriptions has directly contributed to achieving the gold status level, but it can change on a monthly basis. Part of the criteria also refers to the number of staff we have certified to use Xero, so we’ve spent even more time and resource training our team to make the most of Xero and its features.

We want to ensure that our clients will receive an answer to almost any query when it comes to using Xero and that being on the cloud complements their day-to-day business activities.

And with the platinum status in our sights, we need to retain our high standards of customer care, and our dedication to learning and improving.

What Can Xero Do For You?

When we introduce you and your business to Xero, you’ll have the opportunity to streamline your accounting processes. You’ll have 24-hour access to review your financial information via your own dedicated real-time dashboard, allowing both you and us as your accountant to make faster, better decisions.

Instead of dropping off documents or emailing information, you’ll enjoy a modern and up-to-date accounting system that will improve financial management and decision making within your organisation.

What’s Next for Saint and Xero?

Thanks to our newly acquired gold status, some of our partners have been invited to special Xero events, giving them a fresh perspective on the platform and an opportunity to expand their knowledge; something that we can then pass directly onto our clients.

Stuart and Michelle will also be attending Xerocon London in October. It’ll be yet another chance to enhance their understanding of Xero and its accounting system.

And we’ve also been running our own Xero client events (with lunch!). Our last one saw around 50 clients, many of whom weren’t on Xero at the time, attend and learn how cloud accounting could boost their business.

Learn More About Xero

If you’d like to learn more about how Xero can improve your accounting and financial management, chat with one of our friendly team members.

Simply fill out our contact form, or call us on: 01228 534371

Cumbria Flood Recovery Fund application deadline extended to 30th September 2017

The Cumbria Flood Recovery Fund 2015 was set up for those affected directly or indirectly by storm damage and flooding in December 2015.

Cumbria Community Foundation said that the Fund “has supported more than 3,000 households and helped communities rebuild after the floods.   Over £9 million has been awarded in total, with more than £2.5 million being invested in resistance and resilience measures for both households and communities, to help minimise the extent of damage in the future.

Cumbria Community Foundation have advised that the deadline for applications to the Cumbria Flood Recovery Fund 2015 has been extended to 30 September 2017 and are encouraging households to apply to the Fund by the same date as all district councils who are providing the Property Level Resistance (PLR) grants have extended their deadline to 30 September.

Priorities for grant making are:

  • Individuals and families suffering hardship as a result of the storms and floods
  • Community relief and ‘community rebuilding’ projects

For further details or to apply visit www.cumbriafoundation.org.

New Tax-Free Childcare Scheme

New Tax-Free Childcare Scheme

At the end of April 2017, the new Tax-Free Childcare scheme was launched by the government. The government has started inviting parents to apply for Tax-Free Childcare beginning with parents of the youngest children and parents of disabled children.

This may be of interest to you as:

  • if you are an employer, you may be asked questions about the new scheme by your employees
  • you may be interested in using the scheme yourself, particularly if you are self-employed, as this is the first childcare scheme providing a tax break for the self-employed.

What is Tax-Free Childcare?

Eligible parents will open an online childcare account. When a parent pays into the account, the government will pay in an extra 25%. So if £80 is paid into the account, the government will automatically add £20. The maximum government payments are £2,000 per child per year. This means annual childcare costs of £10,000 per child can be met by £8,000 of payments by the parents and £2,000 by the government.

For a disabled child, the maximum top-up payments are £4,000.

How much parents pay into their Tax-Free Childcare account, and when, is up to them.

Who can qualify for Tax-Free Childcare?

Parents need to be ‘working parents’ paying for ‘registered childcare’ for children under 12 (or under 17 for disabled children). If parents are not living together, the qualifying parent depends upon with whom the child usually lives.

The main criteria for a parent are:

  • earns on average at least £120 a week
  • earns less than £100,000 a year
  • not receiving other support for childcare such as Child Tax Credit or Universal Credit.

The self-employed parent can average self-employment income across the year to meet the minimum income requirement.

If the parent has a partner, he/she also needs to be working and satisfy the criteria above.

It is possible for an individual who is not the parent to qualify if the child usually lives with them. The income criteria would apply to that individual (and their partner).

Partners are people who are:

  • married or in a civil partnership, and live together in the same household, or
  • a couple who live together as if they are married or in a civil partnership.

Registered childcare

Only childcare providers registered or approved by a UK regulator can sign up to receive Tax-Free Childcare payments. HMRC has written to childcare providers, asking them to sign up online for Tax-Free Childcare. Parents will be able to check online who is registered for the Tax-Free Childcare scheme.

Parents will send payments online from their Tax-Free Childcare account to the bank account of the registered childcare provider. Therefore when a provider receives a payment from a parent, this will include both their payment and the government contribution.

What if you have an Employer Supported Childcare scheme?

As an employer, you may have set up and still run an Employer Supported Childcare scheme. Employer supported childcare, commonly by way of childcare vouchers, has provided tax and national insurance efficient benefits for many employers and employees. Many schemes have been set up under a salary sacrifice arrangement. The employee receives a childcare voucher which, within certain limits, provides income tax and national insurance savings.

An employee cannot benefit from both an Employer Supported Childcare scheme and the Tax-Free Childcare scheme. However, employees are free to choose between the schemes if already in an Employer Supported Childcare scheme or join such a scheme before April 2018.

This choice is, of course, dependent on you continuing to offer a scheme. If you do continue to run a scheme, your employees will need to decide what to do. There are winners and losers when the two schemes are compared. For some, this will be a difficult choice to make.

The government has provided a ‘childcare calculator’ which provides an estimate of the financial support parents may be able to receive after they have answered a number of questions on their childcare costs and income. The calculator is available at www.gov.uk/childcare-calculator

Your childcare voucher provider should also be able to supply information to your employees to help them decide what is best for them.

30 hours free childcare (please note that this applies to England only)

The government is introducing an extension to the current schemes available in England for free childcare for three and four-year-olds. The current scheme provides 570 hours of free early education or childcare over 38 weeks of the year (typically taken as 15 hours a week over 38 weeks). It is available for all three and four-year-olds. The 30 hours scheme potentially extends the entitlement to an additional 570 hours. However, not all children will be entitled to receive the extra hours. The criteria for the extension are similar to the criteria that apply for the Tax-Free Childcare scheme – for example the requirement for parents to be working and not earning above £100,000 a year.

The scheme will begin in September 2017 but eligible parents can apply for the Tax-Free Childcare and the 30 hours schemes through one online application. See the link below.

New government website – Childcare Choices

The government has recently launched a website – Childcare Choices – which guides parents through the various ways help is, or will be available. Please see: www.childcarechoices.gov.uk

The childcare calculator which has been referred to above in the section ‘what if you have an Employer Supported Childcare scheme?’ is also useful.

Currently, parents with a child under four on 31 August 2017 or disabled can apply through the Childcare Choices site. Parents will be able to apply for all their children at the same time when their youngest child becomes eligible.

Other parents can request to receive an email from the government as to when they are able to apply. The link is also available on the Childcare Choices site. All eligible parents will be able to join the scheme by the end of 2017.

Information sheets for employees

If you would like to provide information to your employees about Tax-Free Childcare we can supply you with an information sheet. Please contact us and we will supply you with a digital version.

We hope you find this information useful. Please do not hesitate to contact us if you have any questions.

Motor racing sponsorship was tax deductible

Motor racing sponsorship was tax deductible

In order for an expense to be deductible against business profits, it must be incurred “wholly and exclusively” for the purposes of the trade.

In a recent tax case, a hotel owner near Silverstone sponsored his granddaughter’s career as a racing driver by making payments through his company. The argument was that this would promote the motorsport credentials of the hotel, rebranded as Silverstone Hotel. The granddaughter was well known in motor racing circles and her endorsement of the hotel was designed to promote the company’s business.

HMRC sought to disallow the expense on the grounds that there was a “duality of purpose” and consequently not incurred wholly and exclusively for the purposes of the hotel trade. However the Tax Tribunal allowed the company’s appeal and consequently, the payment was tax deductible.

One business or two for VAT?

One business or two for VAT

A recent VAT Tribunal had to decide whether two hairdressing businesses should be treated as a single business for the purposes of VAT registration.

The distinction was critical as the two separate businesses were operating below the registration limit (currently £85,000) and the combined operation would have exceeded the limit meaning that VAT would need to be charged.

Note that HMRC have been successful in a number of cases aggregating the turnover of two businesses carried on by the same person(s).

However in this recent case it was established that the couple had never intended to run a single business in partnership. There was also physical separation of the premises, separate clientele, different stylists worked for each salon and separate books were kept.

Note that where the same person carries on several businesses, the combined turnover of all of those businesses need to be considered in deciding whether or not the VAT registration threshold is exceeded.

3 things to know about tax when selling business assets

3 things to know about tax when selling business assets

As a business owner, you may at some point be in a position to dispose of a capital asset, such as a share of a business or a property for example. However, more often than not, we find business owners perplexed by the different legislation surrounding selling capital assets.

That’s why we’re on hand to advise you on the complex issues and have put together 3 things you need to know before selling a capital asset. Knowing this will help you, as the business owner, ensure that maximum relief is obtained were available.

1. Considering Capital Gains Tax

When you sell a business asset, capital gains tax needs to be considered. The gain or loss is calculated by taking the sale proceeds and deducting the purchase price.

There are different rates of capital gains tax. Currently, the standard rate is charged at 10%, with the higher rate of 20% being applied where the gain takes the individual into higher rates.

In addition to these rates, if the disposal is of residential property, then the rate is 18% for those within the basic rates tax band, and 28% for those who are within the higher rate of tax.

Capital Gains Tax can often be a complicated affair, and so it is highly recommended that you consult with a specialist advisor before proceeding with disposing of your asset.

2. Reducing your Tax Liability

It is important to try and reduce your tax liability when you are looking to dispose of an asset, and you can do so by looking at what tax reliefs are available.

For example, if the asset which has been disposed of is regarded as a business asset, then you may be able to claim Entrepreneurs’ Relief, which would, in turn, reduce the rate of tax to 10%. Careful planning is required to ensure all of the detailed conditions are met for ER, as the relief only applies to gains arising on a disposal of:

● A trading business of an individual or partner,
● Shares in a trading company, or holding company of a trading group,
● Assets used by a business or a company

Other reliefs may also be available and need to be considered such as private residence relief and lettings relief for residential property

Rollover relief may be available if the proceeds are reinvested or holdover relief may be claimed if assets have been gifted.

3. Tax Planning

You should always remember that with Capital Gains Tax, there won’t be any tax liability if the gain is less than £11,300 per individual. However, trustees will only have £5,650 as an annual exemption.

When exploring your options for tax planning, it is always important to remember the following:

● Transfers between spouses or civil partners can be made tax free.
● Involve your tax adviser at an early stage to ensure that the small print in any agreements does not result in the loss of any reliefs

Where can I go for more information?

Our team is on hand to provide you with assistance in disposing of your capital assets and you can contact us for support.

We’ve also put together a set of frequently asked questions for those who may have more queries about selling an asset and Capital Gains Tax.

If you’re still not sure, then let’s talk. Simply fill out a contact form to get in touch with our team of experts!

Which business structure is best for me?

Which business structure is best for me?

Starting a business on your own can be very exciting. You get to be your own boss, and plot your own course. There are lots of things to think about and you will need to make lots of decisions about many aspects of your business. One such decision you’ll need to take very early on in your entrepreneurial journey is the structure of your business.

In short, which business structure is best for me?

The decision is really between four different structures: sole trader, partnership, limited company or limited liability partnership.

Should I set up as a sole trader?

Setting up as a sole trader is the most simple way to start a business. It’s incredibly straightforward, with very little paperwork, less red tape, and fewer costs involved.

If you want to get going quickly, with less paperwork and compliance, it’s a great option.

There are, however, a few disadvantages. Namely, any business debt accrued is your own, there is no limitation of liability. And your profits are taxed as self-employment income. Tax rates for 2017/18 are 40% where your gross income exceeds £45,000.

To set up as a sole trader, you’ll need to register as self-employed with HM Revenue and Customs (HMRC) and complete a personal tax return annually too. One tip we would recommend is to open a separate business bank account to keep your personal and business finances separate enabling you to have better control over both.

Should I set up as a partnership?

Setting up a partnership is step beyond a sole trader model where you go into business with someone else. This is great to work together with someone and bounce ideas off each other.

It has many of the advantages of a sole trader business, being flexible and having less paperwork. But also has some of the same disadvantages. As a partner you are jointly liable for the whole debt of the partnership and again there is no limit on liability. Each partner is taxed on their profit share as self employment income. A partnership tax return will need to be completed in addition to each partners own personal tax returns.

We would recommend for most partnerships that a a partnership agreement is drafted to cover all the legal bases, including detailing how the profits, liabilities and ownership is split and what happens when a partner wants to leave the business.

Should I set up a limited company?

Setting up a limited company adds real credibility to a business. Even if you’re completely on your own, you can operate with the perception of scale and security; something many would-be clients will look for before handing out lucrative contracts.

The biggest advantages is as a limited company is its own legal entity, you liability as shareholder is limited (in other words, you won’t be liable for all business debt accrued (unless you have given personal guarantees).

However structuring your business as a limited company requires a great deal more paperwork than if you were to start as a sole trader, and the ongoing management can be onerous. This is something that puts some people off setting up a limited company

For example, there are certain legal responsibilities that you must fulfil as the director of a limited company, and being a limited company involves much more administration.

A limited company must prepare annual accounts at the end of the financial year, and complete a corporation tax return. A limited company must also submit an Annual Return to Companies House, outlining information regarding directors, shareholders, and the company’s registered office.

Another major plus for opting to set up as a limited company is the favourable tax landscape. Corporation tax is on its way down to 19% from 20% in April 2018, before dropping again to 17% in April 2020.

Consideration would need to be given as to how you would remunerate yourself and the tax consequences of this would need to be considered. Should you pay yourself a salary? Dividends? Or a combination of salary and dividends?

Should I set up a Limited Liability Partnership?

This structure is really a combination between a partnership and a limited company. It gives you the limited liability of a limited company but also gives you the flexibility of a partnership. But it is taxed in the same way as a traditional partnership which can be less favourable than a limited company. This structure is more typical of professionals such as solicitors or accountants.

Which should I choose?

The answer to this comes down to your circumstances.

Do you want the benefit of limited liability? Or are you happy that this would be a low risk.

What is your tax position? Which regime would be more tax favourable to yourself?

Are you testing the water with a new business idea? Well, it’s much easier and quicker to get started as a sole trader. That way you can see if there’s a demand for your product or service and perhaps set up a limited company a year or so down the line. Unravelling a limited company after a few months of trading if your venture is not successful, on the other hand, can be a costly endeavour.

But, if you’ve done your due diligence and you know there’s a market to be tapped into, setting up as a limited company can provide you with credibility and shield you from risk.

Still not sure? Let’s talk

If you’d like to discuss business structure options in greater detail, one of our friendly team members will be happy to do so.

Simply fill out our contact form, or visit www.saint.co.uk for our contact details.

How a recent decision in the court of appeal affects VAT on holiday park’s electricity supply

How a recent decision in the court of appeal affects VAT on holiday park's electricity supply

HMRC have recently won the case of HMRC vs Colaingrove in the Court of Appeal. Colaingrove operates various holiday parks across the UK including Haven. It offers cut-price holidays in static caravans or chalets to the readers of The Sun newspaper. One of the features of the offer is that the customers must pay a separate charge for the electricity that will be supplied to the caravan or chalet. As it was not practical to engage in meter reading for each holidaymaker, a set charge of £12 per day is payable at least 56 days in advance of the commencement of the holiday.

Fuel for domestic use is charged to VAT at the reduced rate of 5%. Hence it is accepted that metered electricity supplied at pitch-sites to those who own their own caravans was liable to VAT at the reduced rate.

Colaingrove argued that the supply of the accommodation in The Sun holiday offer was separate to that of the electricity and that the later was, therefore, subject to VAT at 5% and not the standard rate of 20% which applied to the caravan/chalet accommodation. HMRC accepted that if the supply of electricity was done on a metered basis it would constitute a separate element of the supply and would also be liable at the reduced rate. However, because a flat-fee was payable which did not relate to the amount of power consumed by any particular customer the supply was a composite supply liable to VAT at the standard rate applicable to the supply of the holiday accommodation.

The Court decided in favour of HMRC saying that The Sun holidaymaker purchased a package of goods and services and paid a standard rate where fuel was not optional. The charge made for electricity provided in Colaingrove’s holiday accommodation could not be split out from the provision of that holiday accommodation and was therefore liable to VAT at the standard rate. The supply of holiday accommodation is a different transaction from the supply of fuel to the owner of a caravan parked on a pitch owned by the appellant.

As is always the case with VAT, it is very important to look carefully at what you are actually supplying and in particular are you making a composite supply or separate single supplies. The VAT issues with regard to caravans are complex and ever shifting.

Please contact Saints Tourism & Leisure on 01228 534371 if you need further advice.

Ten reasons why you need a specialist accountant for your hospitality business

Ten reasons why you need a specialist accountant for your hospitality business

Saint’s Tourism & Leisure (ST&L) have many years experience in advising clients who run hotels, guest houses and holiday parks. Here are ten reasons why you need ST&L as part of your professional team.

1. Time of purchase

Whether you’re buying a hotel, guest house, or holiday park, we need to be involved at an early stage of your negotiations, and certainly before you sign a purchase contract.

We can give advice on the best apportionment of the purchase price for you, the stamp duty implications of the apportionment, and claims to tax relief via capital allowances, including those on items fixed into the property such as sanitaryware in en-suite bedrooms, etc.

2. Keeping an eye on gross profit margins

Amalgamating sales and all the associated purchases to produce one overall gross profit and GP% for the business may seem simple. But such a performance indicator can be masking the financial performance of the different sides of your business.

Food and beverage sales have associated direct costs, and margins on these specific areas can be masked by room sales which carry fewer direct costs in the form of guest supplies, laundry and booking commissions.

3. Specialist format accounts

While we offer a simple set of accounts for houses, hotels and holiday parks are diverse businesses with effectively lots of different income streams.

It is essential to see how each part of the business is doing, and to this end, we provide specialist format accounts for guest houses, hotels and holiday parks which show key performance indicators and the key cost areas.

Our accounts contain lots of graphs and pie charts so you can easily understand what the figures mean for your business.

4. Departmentalised payroll reporting

In a service led industry, payroll costs are one of the largest outgoings and need to be carefully monitored and controlled. In addition to processing payroll for PAYE and national insurance, we also provide departmentalised payroll reports, showing the cost of running each operation within your business.

Auto-enrolment pension costs also need to be factored into the overall cost of your staffing costs. We can set up a scheme for you, and make the necessary payments to your pension provider on your behalf.

5. VAT issues specific to tourism businesses

Advance guest deposits, cancellation fees, and gift vouchers are all part of hospitality business transactions.

There are special VAT rules regarding these types of transactions, and getting them wrong can mean either overpaying VAT or the risk of penalties for underpayment.

6. Dealing with tips and troncs

Guests like to leave gratuities to staff for good service. You, as an employer, probably want to ensure that tips are fairly shared between your staff, and the tips are subject to as few deductions as possible.

There are various ways to legitimately deal with tips, such as using a troncmaster, whereby tips will not be subject to national insurance contributions.

7. Benefits in kind specific to hotel staff etc.

Providing living accommodation to staff and meals while working can result in a tax charge for a benefit in kind.

We can assist with understanding the rules to reduce taxes and charges where possible, and complete the necessary tax year end P11Ds.

8. Business Plans and helping to raise finance

Obtaining funding has been difficult since the credit crunch, and financial institutions now look more closely at the financials.

ST&L can assist in reviewing the required figures and, if necessary, putting together a cashflow forecast or business plan specific to a hospitality business.

9. Tax Strategy on sale

The time of sale is another critical time to get ST&L on board. We can assist in preparing accounts specifically for the purposes of presenting the business in the best light for the purposes of sale.

Thereafter, we advise on the best apportionment of the sale price, how to minimise capital gains tax liabilities, and how to deal with capital allowances.

10. Inheritance Tax (IHT)

If you have a business in your estate on death, Business Property Relief (BPR) should be available, which reduces the value of your estate for IHT.

For many years now, HMRC have argued that a Holiday Park is effectively a rental business and denied BPR. ST&L’s Park Format Accounts are key to providing the necessary evidence that Park income is derived from services as well as pitch fees.

Get in touch with us to arrange a coffee and a chat with Saint’s Tourism & Leisure

Advisory HMRC Tax Free Fuel Rates from 1 September 2016

COMPANY OWNED VEHICLES

HM Revenue and Customs have announced revised tax free advisory fuel rates from 1 September, 2016 which may be paid for business journeys in a car owned by the business. Rates for the previous quarter are shown in brackets.

Engine size Petrol Diesel LPG
1,400 cc or less 11p (10p) 7p (7p)
1,600 cc or less 9p (9p)
1,401 cc to 2,000 cc 13p (13p) 9p (9p)
1,601 cc to 2,000 cc 11p (10p)
Over 2,000 cc 20p (20p) 13p (12p) 13p (13p)

These rates may be used in the following circumstances:-

  1. Where employers reimburse for business travel in company cars.
  2. Where employers provide fuel for company cars but employees are required to reimburse the cost of fuel for private use.

INPUT VAT CLAIMS ON MILEAGE PAID FOR COMPANY CARS OR EMPLOYEE OWNED VEHICLES

HM Revenue & Customs will accept the above figures for claiming input VAT on fuel for company cars, provided a VAT receipt is available to cover the cost of the fuel. They will also accept use of the above rates by the employer when calculating input VAT on the fuel element for employees using their own vehicles and claiming mileage under the tax free approved mileage rates for business travel of 45p for the first 10,000 miles and 25p thereafter.

If you have any queries regarding the above or require any further information please  contact us.