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Nathan Brady

New Year New Company | Accounting Advice for Business Start-Up 2018
758 513 Stepping Stones Accountancy

New Year, New Company?

Many people use the Christmas break to reflect on the last 12 months and plan for the year ahead. For some though that can mean an entire career shift and the launch of a new business venture. For those of you considering taking the plunge into self-employment in 2018 there are a number of things to consider along the way.

Firstly, test your business idea. Market research is an essential part of ensuring that your idea will work and that you are targeting the right audience in the right way. Make sure you have a clear vision of the direction of the business to keep you focussed o your journey.

Write a business plan. Writing down your idea in black and white rather than keeping it in your head can help bring it to life. Remember though, it doesn’t need to be complicated, often the simpler the better. Your business plan should help you prove that your business idea is worth investing in both financially and in terms of your time and effort.

Choose an accountant. Ask for recommendations from other business, your bank or even trade associations. Your accountant should be an invaluable addition to your business, guiding you, supporting you and ensuring that you stay compliant with all the business regulations. You should be able to build a strong relationship with them based on mutual trust.

Finally, take advice. There are so many sources of good advice out there for start-up businesses, use them. From Companies House to HM Revenue & Customs, from your local Chamber of Commerce to your small business adviser at your bank, let the experts help you so that you can get off to a flying start.

Trivial Benefits Rule | Tax Efficiency at Christmas | Tax Free Gifts for Employees
758 513 Stepping Stones Accountancy

Trivial Benefits at Christmas

With Christmas fast approaching, many companies are starting to plan for the festivities. With parties, presents and puddings to look forward to, don’t forget that there are some tax efficient ways to help with the cost!

The Trivial Benefits Rule allows employers to spend up to £50 on gifts for their employees completely tax and NI free. There are a few straight forward criteria that must be met though, such as the gift must cost £50 or less, it must not be cash or a cash voucher and shouldn’t be a reward for their performance over the last 12 months. The rule also applies to single director companies, though there is a cap of £300. However, it is still possible to buy a gift card of £50 as a Christmas present for their only director. So, whether it’s a bunch of flowers, a box of chocolates or even a meal out, don’t forget to factor this in to your Christmas budget.

Without this exemption, any gift would need to be reported on a P11d and mean that the employee would pay tax and the employer would need to pay National Insurance on the value of the gift.

If you are in any doubt please speak with your local Accountant to discuss your specific circumstances or alternatively visit the GOV.UK website.

So, take advantage of this useful benefit and make Christmas a little jollier this year, your staff will certainly thank you for it!

Cloud Accounting | Benefits of Cloud Accounting Solutions | Accountancy Advice in Bristol
758 513 Stepping Stones Accountancy

The Advantages of Using a Cloud Accounting Package

Accounting packages have come a long way in recent years. No longer do you need to install software on one computer in the office, restricting who can use it and when. No longer do you need to put up with expensive packages with high support and upgrade costs. Cloud accounting packages are the way forward and if you’re not sure why you should use one, then this article should help you understand how it works and what a difference it would make to your business.

  • Cloud based software allows you to access your up to date business information anytime, anywhere. Whether you need to check your latest cash flow forecast, your latest invoices or indeed any outstanding debtors. Cloud accountancy packages provide the relevant information at the touch of a button.
  • Using up to date information, which is easy to retrieve and presented in an easy to understand format enables you to make informed business decisions about the financial future of your company.
  • Cloud based software makes it easy to become a paperless office. With documents easily stored and retrieved online, keeping your paperwork in order has never been easier. Digital information allows you to minimise the risk of error and enables your business to become more efficient.
  • Try not to think of these packages as merely information storage, they are so much more. By integrating the system into your payroll and HR you can easily generate payslips and HMRC returns. You can also use the system to automatically generate invoices and chase debtors, think of the time you would save!
  • Gone are the traditional once a year meetings with your accountant, wading through piles of paperwork, looking for misplaced receipts. You can easily input all of your receipts and other vital paperwork, meaning that your accountant can access your financial data all year round and advise you as and when needed.
  • Software updates used to mean hours of work and a huge bill! Cloud based software is updated and improved automatically by the developers, providing you with peace of mind that your business is up to date with any legislation changes, free of charge.
  • No need to worry about data security either. Cloud based servers are constantly backed up and are very secure meaning you don’t need to worry about hackers or computer crashes and losing all of your valuable business information. 

If all of this has not managed to persuade you about the benefits of cloud based accountancy packages then why not do a simple cost comparison exercise? Factor in not only the direct costs but also the costs of your time for the old labour-intensive packages, the support costs and of course the upgrade costs and you will soon see that cloud based accounting is the way forward for the modern business.

Auto Enrolment | Pensions Act 2008 | Small Business Advice | Pension Advice Bristol
758 513 Stepping Stones Accountancy

Auto Enrolment

Most companies are by now, aware that under the Pensions Act 2008 they have a duty to not only put certain members of staff into a pension scheme but also to contribute towards it. This is called Auto-Enrolment and if you employ at least one member of staff then you are classed as being an employer and have to comply with the legislation.

However, are you aware of exactly what you are required to do and when you need to do it by, otherwise known as your staging date? The Pensions Regulator has produced a useful online ‘Duties Checker’ that allows you to determine your staging date and what next steps you need to take by asking you a series of questions.

Put simply there are a number of steps that employers need to undertake to ensure compliance with the new regulations:

  • Nominate a contact for The Pensions Regulator as soon as possible, this is usually the most senior person within the business.
  • Establish your Staging Date as soon as possible
  • Choose a workplace pension provider
  • Assess your employees on your staging date. Determine who is eligible to be enrolled. This will include:
    • All employees younger than state pension age but older than 22 years
    • All employees who earn £10,000 or more per annum
    • All employees employed in the UK
  • Enrol all eligible employees on your staging date
  • Inform all of your employees in writing, how automatic-enrolment affects them. This includes staff who are automatically enrolled and those that are not being enrolled. This must be done within 6 weeks of your staging date passing
  • Submit a Declaration of Compliance within 5 months of your staging date to The Pensions Regulator
  • Remain compliant by ensuring you make ongoing contributions to your employees’ pension schemes. Until 05/04/2018 all employers must contribute the equivalent of 1% of the employee’s salary every time the employee is paid. However, this is set to rise over coming years

Over the last 2 years there has been a phased introduction of auto-enrolment, meaning that there has been a time delay between employing someone and having auto-enrolment duties. This is now changing.

If you have employed someone between 2nd April 2017 and 30TH September then your date of automatic enrolment will depend on whether you set up your PAYE scheme with HMRC before or after your staff started working for you.

However, it is important to note that as of 1st Oct 2017, your legal duties start on the first day of employing a new member of staff.

For further guidance please see The Pension Regulator website which is full of easy to follow advice and guidance.

Top Tips for New Employers | Support for Growing Businesses | Accountancy Support in Bristol
758 513 Stepping Stones Accountancy

Top Tips for New Employers

As a business owner, there are many tasks to juggle and many hours to work. On top of this if you wish to grow your business, comes the challenge of employment. To ensure successful growth you must employ the right people but more importantly you have to look after these people and make sure they feel valued in what they do, in order to retain them.

It is vital that from day one of becoming an employer you have the right tools in place to make sure you know what your legal obligations are, that you stay compliant and remain up to date with any changes. There are 10 key areas which you should always be aware of;

  • Salary
  • National minimum wage
  • Holiday entitlement
  • The written statement
  • Flexible working
  • The right to be accompanied
  • Maternity leave
  • Notice
  • Discrimination
  • Unfair dismissal

When you start your employment journey we suggest you make sure you are 100% clear on the following:

Knowing the law

This is probably the most important item you need to be clear on and something that you must continue to remain up to date with.

Ensuring you have a suitable and legally binding employment contract

Put in writing an employment contract that outlines the full job specification, salary, holiday entitlement and working hours. Make sure copies are signed, dated and safely secured in case of future use.

Paying the right rates

Research what the correct salary scale is for the role you are looking to fill and make sure the monthly outgoing is what you can ultimately afford. It is important to remember that when looking at costs you need to consider pensions, loans, travel and subsistence as well as the salary.

Recruiting the right people

Make sure that when you prepare your job description it is accurate and accurately reflects the role that you have available. Ensure you list the skills required and the personal qualities you are looking for in a new member of team. Try to establish what some of your current weaker skills are and try to make sure the new recruit is strong in some of these areas.

When advertising for the role make sure you capitalise on your own resources before using a recruitment agency. Advertise the role on your website and make good use of social media tools, in particular LinkedIn.

Implementing a 6-week induction programme and a continual ongoing training programme for all employees

Don’t just expect your new member of staff to work at full capacity from day one. Implement them slowly in to the business, pay specific attention to training them correctly and don’t rush this process, it should take a good 6-weeks for them to find their feet. Never stop supporting them and make sure you regularly review their training needs.

Being very specific on your protocol for discipline and grievances

Any new employee needs to be full clear on company rules, there should be no uncertainty around absences, health and safety, standard of performance, timekeeping and use of company equipment.

Should any problems arise then they will need to be dealt with quickly and efficiently, you should have a clear and well documented disciplinary procedure.

Pay specific attention to managing attendance, making sure sickness attendance is clearly defined and practices are in place to get employees back to work as soon as possible.

You must manage sickness absence and make sure you keep in contact with the employee who is away from the office. Upon their return, you need to have an immediate review with them and ensure they are able to resume their normal work activities. Again, make sure everything is clearly documented and stored in the personnel file of the employee

Communicating regularly with all the team

It is very important that you communicate well with all staff members (this is as important as keeping a regular line of communication with your clients). Make sure you provide a monthly update on the business, any new clients that have been signed up and new products or services being introduced. Make sure they continually feel part of the team and encourage them to share their own personal news or success stories.

By paying proper attention to these points you should be better placed to start employing staff and enjoy growing your business.

640 289 Stepping Stones Accountancy

Spring Budget 2017 Tax Summary


  • Class 4 National Insurance paid by the self-employed to rise to 11% by April 2019.
  • Dividend allowance to fall from £5,000 to £2,000 in April 2018.
  • Corporation Tax decrease to 19% in April 2017 and to 17% in 2020 confirmed.
  • Some small businesses and landlords given extra time to prepare for Making Tax Digital.
  • Pubs with a rateable value of less than £100k will get a £1,000 a year rates discount.

National Insurance

Class 4 National Insurance paid by the self-employed was announced to increase from 9% to 10% in April 2017 and to 11 in April 2018. Class 4 National Insurance is paid on profits earned over £8,060. The change will affect 2.84 million people with an average annual increase of £240.

The newly announced change in Class four also coincides with an announcement in an earlier budget that class 2 is to be abolished in April 2017. Class 2 was a flat rate of £145.60 annually in 2016/17 and was payable where profit exceeded £5,965.

The net effect is that the self-employed with profits of more than £16,250 will see an increase in the National Insurance they pay.

The government have sold the tax rise on a platform of fairness as the employed pay Class 1 National Insurance at a current rate of 12%. But the employed are entitled to more government benefits and there has been no talk of making this equal.

Dividend Allowance

A new tax on dividends was introduced in April 2016 and it came with a £5,000 dividend allowance. It was announced in the budget that from April 2018 the dividend allowance will be reduced to £2,000. For small company owners who receive most of their income as dividends this will cost them an extra £225 in tax per year.

Most small company owners have yet to prepare a tax return and see the effect of the new dividend tax. This announcement is clearly aimed at increasing the tax take from small business owners even more.

Corporation Tax

The chancellor has committed to the decreases announced on Corporation Tax meaning a reduction from 20% to 19% in April 2017 and further decrease in 2020 to 17%. This goes someway to offsetting the Dividend Tax and the reduction in the Dividend Allowance.

Making Tax Digital

Making Tax Digital is the government programme to abolish tax returns and replace them with automatic data collection and a quarterly reporting structure. The plans are highly controversial and have been criticised by the accounting profession and small business groups.

There was a bit of relief announced for the smallest businesses and landlords in that they will be delayed by a year to April 2019. This is welcome news to help the smallest businesses prepare for the change from an annual tax return to quarterly reporting of their profit.


Pubs with a rateable value of less than £100k are to get an annual discount of £1,000 on their rates. The net effect of the rates rise and the discount could still see some pubs paying an increase in rates but the impact will be reduced and some pubs could even see a fall in rates.

A cap in rate rises has been introduced for those losing small business rate relief they will see their rates increase by no more than £50 per month.

Dividend & Tax Support in Bristol
758 513 Stepping Stones Accountancy

Dividend Tax

The largest change to the taxation of small company owners in a generation came into effect on 6 April 2016 but small company owners are yet to see the effect on their tax bill. With the 2015/16 tax returns now all submitted it’s time to look ahead to the impact the dividend tax will have on your 2016/17 tax return.

Under the previous rules dividends were taxed at effectively 0% if they were within the basic rate. They also included a complication in the 10% tax credit where the actual dividend would be increased by 10% with this then refund by way of a tax credit. With the introduction of the dividend tax the tax credit has been removed which should make the numbers on your return a bit easier to understand.

Tax on dividends within the basic rate band will now be at a rate of 7.5% with the higher rate taxed at 32.5%. this will mean the majority of small business owners that operate through a company will now need to pay personal tax as well as corporation tax.

There is some relief as a new dividend allowance, which is essentially a personal allowance that can only be used against dividends, of £5,000 per person has been introduced.

Let’s see an example of a small business owner who takes £8,000 in salary and £32,000 in dividends. Under the old rules no tax would be payable but with the introduction of the new dividend tax their tax position will look like this:

  • Income                           £40,000
  • Less
  • Personal allowance        (£11,000)
  • Dividend allowance        (£5,000)
  • Net income                     £24,000
  • Tax payable (24,000×7.5%) £1,800

That’s an increase of £1,800 in tax but it’s not the worst part. If your personal tax liability exceeds £1,000 you need to make payments on account every January and July. These are payments in advance towards the following tax year. They are calculated as 50% of the last year’s bill and the first payment is due with all of last years tax. In our example above the January 2018 payment will be the £1,800 in tax due for 2016/17 plus a payment on account of £900 towards 2017/18 giving a total amount payable of £2,700. From then on if everything remains equal payments of £900 will be payable every July and January.

So what can be done to help ease this tax bill? Generally, we’ll look to other family members to gift shares to starting with your spouse. A gift of shares to a spouse will attract no capital gains tax and you can then take advantage of the £5,000 dividend allowance that your spouse has available. Gifts of shares to other family members can work but need planning to avoid capital gains tax and you’ll need to be careful not to fall foul of anti-avoidance legislation and make sure the dividend is spent by the family member and doesn’t come back to you. Another option would be to reduce the dividends down and keep investments within the company, this of course assumes you have excess cash.

Whatever measures taken to reduce the tax bill it’s likely a great deal of small company owners will be paying this tax. It’s essential small company owners understand the impact and save for that first January 2018 bill.

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