Business Advice

Subcontractors and the Construction Industry Scheme | Payment Advice for Subcontractors | HMRC Advice & Guidance
758 513 Stepping Stones Accountancy

Subcontractors and the Construction Industry Scheme

The Construction Industry Scheme (CIS), in its present form, has been around since 2004 but not everybody is clear on what is required and who it applies to. In essence the scheme means that when subcontractors are working for a contractor, that contractor must deduct money from their pay on behalf of the HMRC as an advance payment towards the subcontractor’s tax and National Insurance.

Whilst Subcontractors are not legally required to register with the scheme, they are technically penalised if they do not. Instead of the designated 20% deduction for those that are registered, the contractor is required to deduct 30%.

Anyone who does construction work for a contractor, as either a sole trader or limited company contractor, can register as a subcontractor on the scheme, this includes:

  • preparing the site, e.g. laying foundations and providing access works
  • demolition and dismantling
  • building work
  • alterations, repairs and decorating
  • installing systems for heating, lighting, power, water and ventilation
  • cleaning the inside of buildings after construction work

However, there are a number of exceptions from the scheme:

  • architecture and surveying
  • scaffolding hire (with no labour)
  • carpet fitting
  • making materials used in construction including plant and machinery
  • delivering materials
  • work on construction sites that’s clearly not construction, e.g. running a canteen or site facilities

Under certain circumstances it is possible for subcontractors to make a request to the HMRC to receive their gross earnings and pay their tax and National Insurance themselves at the end of the tax year. However, there are a number of criteria that subcontractors must meet in order to be eligible for this. More information is available from GOV.UK

At Stepping Stones we work with many companies within the construction industry and as such are well placed to provide advice and guidance to both contractors and subcontractors. Why not give us a call and see how we can help you, we would be delighted to work with you.

VAT Oddities | UK VAT Rules | VAT Advice Bristol
758 513 Stepping Stones Accountancy

VAT Oddities

VAT rules are known for their complexities and the headaches that they can cause businesses around the UK. But it’s the peculiarities of the system that can have people scratching their heads, particularly in the world of food!

Recently, the case of Nesquik flavoured milk has been highlighted. Bizarrely chocolate flavoured milk is already VAT exempt, however, strawberry and banana are classed as standard rated and so 20% VAT is applied. Nesquik tried, and lost, to argue that all three flavours should be exempt

Fancy a biscuit with your milkshake? Depending on whether or not it has chocolate on can make all the difference when it comes to VAT. A plain biscuit, traditionally a zero-rated product, when coated in chocolate, a standard rated item, suddenly becomes a luxury item and has 20% VAT added.

Sounds fairly straight forward? Think again. If the chocolate is included inside the biscuit, in the case of chocolate chip cookies, it is back to being zero rated. This is also the case where the chocolate is sandwiched between two biscuits.

Think that is peculiar? Spare a thought for the poor gingerbread man. If he just has two chocolate eyes there is no VAT charged, but as soon as he starts to put on any clothing made from chocolate, such as trousers or a nice smart bow tie, he suddenly has VAT added.

And don’t even mention Jaffa Cakes….. McVities have very cleverly argued that they are classed as a cake not a biscuit and so no VAT is not applied despite being coated in chocolate.

VAT rules – they really take the biscuit!

Contractors and Construction Industry Scheme | Accountancy Advice
758 513 Stepping Stones Accountancy

Contractors and the Construction Industry Scheme

The Construction Industry Scheme (CIS) requires contractors to deduct payments from any subcontractors that they use in order to make advance payments towards the subcontractor’s tax and National Insurance.

It is a legal requirement that all contractors register for the scheme, whether a sole trader or a limited company, if:

  • they pay subcontractors to do construction work
  • their business doesn’t do construction work but usually spends more than £1 million a year on construction

There are a number of professions within the construction industry though who are exempt from the CIS including architecture, surveying, planning and civil/structural engineers. Such peculiarities can make the scheme a little tricky to understand.

For those companies who are required to register though there are some very specific guidelines that must be followed:

  • they must register for CIS before taking on their first subcontractor
  • they must check if they should employ the person instead of subcontracting the work. There may be a penalty if they should be an employee instead
  • they must check with HM Revenue and Customs (HMRC) that their subcontractors are registered with CIS
  • when paying subcontractors, they usually need to make deductions from their payments and pay the money to HMRC.
  • they need to file monthly returns and keep full CIS records – they may get a penalty if they don’t
  • they must let HMRC know about any changes to their business

Whilst more information is available from GOV.UK , the rules surrounding the Construction Industry Scheme can be somewhat confusing so it always best to get professional advice if you are unsure.

At Stepping Stones we work with many companies within the construction industry and as such are well placed to provide advice and guidance to both contractors and subcontractors. Why not give us a call and see how we can help you, we would be delighted to work with you.

 

Changes to Tax Relief for Residential Landlords | Financial Advice for Property Investors
758 513 Stepping Stones Accountancy

Changes to Tax Relief for Residential Landlords

For many years, investors have seen their buy-to-let properties as an excellent source of income. However, the Government has acknowledged the need to discourage savvy investors from procuring properties that would otherwise have been sorely welcomed by first time buyers.

As of 6th April 2017, a phased implementation began of new rules, designed to restrict the relief available for higher rate taxpayers. When calculating taxable profits, landlords will no longer be allowed to deduct the interest costs of their mortgage. In its place, tax relief on mortgage interest payments will be reduced incrementally until 2020, with tax calculated on the total rental income instead.

Despite the changes taking place gradually until 6th April 2020, the changes could have huge implications for individuals that are near the higher tax rate threshold. For those with high interest costs, the new rules could push them over the tax threshold without them being aware.

For detailed information on how these changes will impact investors go to the GOV.UK website where there are some clear examples on what this means in practice. Essentially though, the changes certainly mean larger tax bills for property investors and in turn lower profits.

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.

Your Name (required)
Your Email (required)
Subject
Message