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What Makes Great Leaders? And Do You Have What It Takes?

What Makes Great Leaders? And Do You Have What It Takes?

When It Comes To Leadership Skills – Do You Have What It Takes? 

Leaders come in all shapes and sizes and it seems these days, looking at recent news, some leaders would tend to emulate certain skills and qualities… So what makes a great leader? The best business managers and leaders create a vision of the future that is compelling and motivates employees to want to achieve it. Great business leaders help the members of their team connect to what they do with the business’s overall strategy and its impact on customers. Are you one of them?

Leaders Communication and Relationships

If you are a business manager, communication is an essential leadership skill.  It is important you communicate with your people often and in a variety of different ways. Whether one-to-one conversations, team meetings, email or phone calls, your communication is key.  Regular communication helps to build relationships across your business and also helps to build trust. As a manager, you should lead by example and communicate regularly with your team members, management team, your customers, suppliers, others in the industry and the wider community.  The stronger the relationships you can build, the better you will be able to lead people. 

Leaders Integrity

In order to be a successful business leader, you need to be honest, transparent and have a high degree of integrity. The key is to do what you say you are going to do. Some people might be happy to sit back and watch from the sidelines, but great leaders like to get involved in making things happen. In order to become a successful leader, you need to persevere, drive your people forward and be accountable. If the buck stops with you, then own it. 

Leaders Strategic problem solving

Ultimately, leaders are recruited, trained, and chosen to solve problems and to take advantage of new strategic opportunities in the market. This requires your good analytical abilities and excellent people skills. At times it is necessary for you to focus on being tactical, however the best leaders maintain a strategic outlook and don’t lose sight of the bigger picture. 

Leaders Innovation

In order to succeed in business it is important you focus on innovation. If you stand still, your competitors will overtake you. Innovation can take many forms – perhaps you may wish to focus on hiring people with a different skill-set or you may want to utilise technology in order to drive efficiency across the business. The best business leaders are innovative people, who come up with new and better solutions to problems. As a manager it is therefore important you continuously develop your technical and professional expertise, stay up to date on new trends in different markets. You should also consider how new concepts can be adopted in order to improve your business.

 

Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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IR35 Government Consultation On Private Sector Off-Payroll Workers

IR35 Government Consultation On Private Sector Off-Payroll Workers

IR 35: The Government Consultation

A few days ago, the government released its long-awaited IR35 consultation on off-payroll workers in the private sector. The consultation talks of the aftermath of the recent public sector changes [resulting in a large number of cases of end clients making tax deductions before paying Personal Service Companies (PSC’s)] which the government concludes were a success.   The document analyses the current compliance of IR35 in the private sector and highlights factors which have led to “endemic non-compliance for off-payroll engagements in the private sector”.  These factors include:

  • The length of time taken for HMRC to resolve enquiries
  • The problems of recovering monies from PSCs (as often they don’t have the funds to pay)
  • An apparent perception of PSCs that there is a low risk of HMRC opening an enquiry and the PSC being liable.

The Options

Three options are offered as potential solutions:

1. Pushing forward the public sector changes in to the private sector. This would see responsibility for the decision, as to whether IR35, applies placed with the end client company and the responsibility of paying the correct tax and National Insurance with the agency paying the PSC for its services

2. Rather than placing the determination of IR35 with the end client, end clients are “encouraged” or “required” to establish that the service provisions in the supply chain are compliant. This option sees the end client seeking surety from agencies and ultimately PSCs that they are complying with IR35. The consultation considers that perhaps the end client could require all PSCs to provide a completed HMRC CEST confirmation.

3. End clients keeping clear records of contracts, provision of services, shift patterns, methods etc of all off-payroll contractors. This additional admin burden, would help to ease HMRC enquiry timescales as it would provide the necessary information needed by HMRC in the event of an enquiry into IR35.

The consultation document indicates that government is reluctant to place onerous additional admin burdens on end client organisations, but the three main options for increased compliance appear to do exactly that.

Duration and Closing Date

The consultation closes on 8 August 2018.

Lotuswise Chartered Accountants and Business Consultants can help you and your business make sense out of IR35 rules, and whether or not they impact on your working arrangements. To find out how, please contact usTo also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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Termination Payments, tax advantages and tax allowances

Termination Payments, tax advantages and tax allowances

Changes To Termination Payments

Your care is always required when any employees are made redundant or payments are made on their termination of employment. When looking at termination payments, not only do you have to consider employment law, but you also have to factor in important tax implications, and this is an area where professional advice is strongly recommended to avoid unnecessary pitfalls. You should know that the tax treatment of these payments changed from 6 April 2018, and that further changes will come into effect in 2019.

Termination Payments – Pay In Lieu of Notice

As an employer, you now need to pay Income Tax and Class 1 National Insurance Contributions (NICs) on an element of all termination payments from 6 April 2018, whether or not they are contractual payments. The element that is now chargeable to Income Tax and NICs is the amount of the termination payment that represents payment in lieu of notice (PILON), sometimes referred to as “garden leave”.

Termination Payments – Ex-gratia Payments

The first £30,000 of genuine ex-gratia continues to be exempt from income tax and national insurance. The £30,000 limit includes statutory redundancy payments. Payments in excess of £30,000 are taxed as employment but there is currently no NIC on such payments. It was originally proposed that employers’ NIC would be applied to such payments from 6 April 2018, but the delayed introduction of the National Insurance Contributions Bill means that employer NICs on termination payments above £30,000 will now take effect from 6 April 2019.

Termination Payments – Periods of Foreign service

In addition, foreign service relief on termination payments was removed for all UK residents – apart from seafarers – from 6 April 2018. Previously, this provided a further exemption from income tax and NIC depending on the period of time working abroad. UK residents whose employment ends after 6 April 2018 who receive a payment or benefit in connection with that termination made after 13 September 2017, will not now be eligible for tax relief for any period of foreign service as part of that job.

Tax Advantage of EMI Share Option Schemes Lapses

HMRC have advised companies to consider delaying the grant of Enterprise Management Incentive (“EMI”) share options until fresh State Aid approval has been granted by the EU. As the UK Government were late in applying for an extension (12 months’ notice is required), the existing approval expired on 6 April 2018 and EMI share options granted after that date, before new approval is received, may be treated as non-tax advantaged employment-related securities options.

The EMI share option scheme introduced in 2000 was the most tax efficient scheme to attract and retain key staff, providing employees in receipt of qualifying option, with significant tax advantages. Depending on the price paid by employees for their shares on exercise of EMI options, the receipt and subsequent share sale is subject to capital gains tax, at just 10% instead of PAYE and NIC.  We are expecting the scheme to be re-approved, under the State Aid rules, and we will let you know when this happens.

Form P11Ds To Include Benefits Provided By Salary Sacrifice 

As an employer, you need to report all Benefits in Kind (BiKs), including those under the Optional Remuneration Arrangements (OpRAs), or “salary sacrifice” arrangements, to HMRC on form P11D from 6 April 2018, unless they are registered to voluntarily payroll benefits. OpRAs are where an employee gives up the right to an amount of earnings in return for a Benefit in Kind (BiK), and includes flexible benefit packages with cash option, cash allowances and salary sacrifice. All BiKs are now valued at the higher end of the cash given up or the value of the BiK. Many previously non-taxable BiKs are now taxable, valued on the cash given up. Note however that cars with emissions of 75g CO2 / km or less, pensions, pension advice, childcare and Cycle to Work benefits are unaffected. Subject to a few specific exceptions, arrangements entered into on or before 5 April 2017, kept their previous tax treatment until the earlier renewal or variation of the arrangement. Such arrangements moved into the new rules on 6 April 2018.

HMRC Loses IR35 Case

In March, we reported the Tax Tribunal decision involving Christa Ackroyd Media Ltd, a company set up by a TV presenter to supply her services to the BBC, where it was held that the IR35 personal service company rules applied to the arrangements. In a recent case involving a night manager on a building site, another tribunal decided that the IR35 rules did not apply.

The facts of the recent case involve a Mr Daniels supplying his services via his company MDCM Ltd. These are entirely different from those in the Christa Ackroyd case, but it indicates that the current rules are very unclear and open to interpretation by the courts. For IR35 rules to apply, it must be inferred that, under the hypothetical contract between “worker” and client,  worker would be regarded as an employee if directly engaged. There are numerous factors taken into account, but the most important factor considered by the courts is the extent to which the “worker” is under the control of the client. Please contact us if you wish to discuss whether these recent cases impact on your particular circumstances.

Taking A Lodger? Don’t Forget To Claim “Rent A Room” Relief 

HMRC are carrying out a review of rent a room relief to discover whether the scheme, introduced back in 1992 provides the right incentives for the rental market. The current scheme exempts from tax, gross rents up to £7,500 where rooms within the taxpayer’s main residence are rented out. Most accountants who responded to the call for evidence, were keen for the relief to continue, as it encourages taxpayers to let out spare rooms and provides them with additional income.

Please note that where the gross rental income exceeds £7,500, say £12,000, the excess of £4,500 would be taxable. Alternatively the taxpayer may deduct costs of providing the living accommodation, such as a proportion of mortgage interest, light and heat. If these allowable expenses amounted to £9,000, then it would be more appropriate to be taxed on the net rental profit of £3,000. Also please note that the current scheme only provides relief where the rooms let are in the taxpayer’s main residence, and if the property is jointly owned, the relief would be £3,750 each. Where the lettings are in another property, the new £1,000 property allowance could be set against the gross rental income, however this allowance applies to each taxpayer.

CGT To Be Paid Earlier On Property Disposals in 2020

HMRC are consulting on the mechanism for collecting CGT on residential property disposals from April 2020, when the tax will be due within 30 days of completion. This will be instead of the normal payment date, on 31 January, following the end of the tax year and is yet another attack on buy to let landlords! 

 

DIARY OF MAIN TAX EVENTS – MAY/JUNE 2018

Date

What’s Due

01/05   Corporation tax payment for year to 31/07/17
(unless quarterly instalments apply)
19/5   PAYE & NIC deductions, and CIS return and tax, for month to 5/05/18
(due 22/05 if you pay electronically)
01/06   Corporation tax payment for year to 31/08/17
(unless quarterly instalments apply)
19/6   PAYE & NIC deductions, and CIS return and tax, for month to 5/06/18
(due 22/06 if you pay electronically)

Lotuswise Chartered Accountants and Business Consultants can help support you and your business with the complexities of these tax and payment rules. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

 

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GDPR Regulation Is Coming…25 May 2018, Are You Ready?

GDPR Regulation Is Coming…25 May 2018, Are You Ready?

GDPR Regulation is coming – 25 May 2018

The implementation date for the EU Data Protection Regulation (GDPR) is 25 May. Despite Brexit, all UK businesses, including yours, will need to comply. In order to maintain business links with EU countries, the UK will need to create EU equivalent rules and regulations. GDPR regulation is an example of this, and you must comply with it, if you want to trade with the EU. You should know that GDPR regulations are more favourable to consumers than businesses.

 

Personal Information

As personal information becomes more regularly shared and you might well hold, as many businesses now do, huge volumes of customer data, there is a need for management and control over what you and other businesses can do with that information.

 

Fines and Penalties

GDPR gives regulators the ability to apply large fines of up to 20m Euros or 4% of global annual turnover – whichever is higher, for non-compliance. As such, you need to take these new regulations seriously and will need to implement changes to the way you operate, depending on the type of personal data you hold. This will include customer records, databases, CRM systems, etc.

 

Contracts, Policies and Procedures

In addition, you will need to ensure that you have appropriate policies and procedures in place, with regards to any personal data you hold or process. It’s also worth you reviewing supplier contracts to ensure they are GDPR regulation compliant. Finally, your recruitment, HR policies and procedures should be reviewed, to ensure personal data is managed in a way which is compliant with GDPR regulations.

 

GDPR Consultants

There isn’t much time left before GDPR regulation comes into force. If you haven’t yet prepared for GDPR regulations, your best approach is probably to consider hiring an external consultant to advise your firm on getting up to date as quickly as possible.

 

To get more insight into data protection and GDPR, please also refer to our previous post on GDPR and how this affects you and your business.

 

Lotuswise Chartered Accountants and Business Consultants can help support you and your business with the complexities of the new GDPR regulations. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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Employee Health And Safety And Staff Coaching

Employee Health And Safety And Staff Coaching

Employee health and safety and staff coaching is your responsibility as an employer. Regardless of the type of business you manage, health and safety is a fact of life. And encouraging growth, confidence and ambition in your employees is important. But just how do you do that?

Employee Health And Safety – The Responsibility Of Every Employer


Regardless of the type of business you manage, health and safety is a fact of life. Apart from their devastating human cost, occupational accidents and ill-health could bear a significant cost to your business through higher insurance premiums and staff absence. You, staying up to date, when it comes to health and safety, is therefore, an essential part of running your business.

Employee Health And Safety – Keep it simple

Managing health and safety in your company doesn’t have to be complicated. If your firm takes reasonable steps to prevent workplace injuries or illness, you are unlikely to have any issues.  The approach you take should be proportionate to the size of your business and nature of your business activity.

Employee Health And Safety – Written health and safety policy

Ideally you should have a written health and safety policy.  If you are a small business, with less than five employees, you may not be obliged to write such a policy. But it is advisable to have one in place, regardless of the size of your firm. 

Employee Health And Safety – Lead by example

Your staff would tend to follow the lead of more senior managers in a safety-critical situation (even if the decision is flawed). In these situations, it is vital to establish a culture that allows everyone to raise concerns and challenge decisions in a constructive manner.

Employee Health And Safety – Carry out a risk assessment

In order to do this, in a health and safety context, think about anything that could cause harm to your employees and ensure that you are taking reasonable steps to prevent that harm.

Employee Health And Safety – Don’t be afraid to ask for help

If you don’t have any expertise in-house, you could consider hiring some external expertise. These experts will ensure your business has someone with the necessary skills to manage health and safety properly.

Staff Coaching – A good coach is a good manager

 

In addition to ensuring the achievement of business objectives and health and safety, managers are also responsible for staff coaching, encouraging growth, confidence and ambition in employees. 

 

Effective leadership techniques have evolved over the last few decades. And the way you, as a manager, should interface with your teams, has become more focused on getting the most out of people, through coaching. Compared to a more directive style, if you use a coaching style, you would tend to foster a better environment for collaboration and more open communication.

Staff Coaching – Build a confident team

Coaching helps to identify the strengths and weaknesses of your team members. As a coach, you could build on each team member’s strengths and weaknesses and help to create a more confident team. If your team members are confident, they are more likely to push harder and go above and beyond what is expected of them. 

Staff Coaching – Employee Engagement

If your team members feel like they are working on repetitive, menial tasks, they will tend to feel less engaged. You should, therefore, coach your teams through new experiences, so they can learn. Your employees will tend to feel more engaged, if they are trusted with new projects, and will be more productive as a result.

Staff Coaching – Active listening

If you adopt a coaching style, you, as a manager, will tend to listen more actively. So, then try to understand things from the perspective of your team members. Your employees will tend to respond more positively to this and can become more motivated as a result.

Staff Coaching – Millennials

Millennials (around 18 to 35 years of age) have become a larger segment of the workforce and if you employ any, they tend to respond well to a coaching style of leadership. Millennials would tend to welcome your feedback and regular dialogue regarding learning and development. They want to be coached and developed rather than managed. So, remember this, as this approach can only be beneficial to both you and your millennials employees!

So, it is your responsibility to make employee health and safety and staff coaching a priority in your business. Making sure your employees are safe at all times and looked after. Coaching them and encouraging their growth and confidence can only be beneficial to both them and your business.

Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

 

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Business strategy – 3 steps to creating a great one

Business strategy – 3 steps to creating a great one

When many of us think about business strategy, academics and expensive business consultants tend to spring to mind. The good news is that creating a really great business strategy doesn’t have to be complex. Put simply, a business strategy is what you need to get your business from where it is today to where you want it to be in say, 5 years’ time. Here are three simple steps to creating an effective strategy for your business:

1. Business Strategy – Manage business risk

Business risk is a fact of life and there are risks you can mitigate and others you can’t. Of those you cannot mitigate, you need to ensure that the opportunity for your business outweighs the potential down side. Don’t try to sweep risk under the carpet. Instead, create a risk register and list all of the major risks to your business.

Beside each line on your risk register, describe what you are doing to mitigate each risk. For example, next to “Cyber Security Risk” you might note that you have put a firewall and internet security software in place on your systems. Creating and maintaining a risk register will ensure that you don’t miss anything and that where possible, you do something to minimise business risk.

 2. Business Strategy – Understand your market

To develop a successful strategy you need to understand which market you operate in. How big is the market sector that you are targeting? Is it growing and if so, how fast? Who are your competitors and how do you intend to compete with them for market share? If you understand the key drivers in your market, you can spot new opportunities, harness the forces that are driving change and create a product or service offering that is competitive.

A good understanding of your market will allow you to calibrate your offering in order to create the right balance of supply and demand, pricing and service levels.

3. Business Strategy – Competitive advantage

Every business has strengths and weaknesses. Your business strategy should take this into account. Take time to analyse your main competitors and identify their weaknesses. Now consider how your product or service offering can exploit these weaknesses to give your business a competitive advantage. For example, if your competitors are expensive, perhaps you could gain a competitive advantage by offering a lower price alternative.  Perhaps you can focus on a particular niche sector in order to create an offering that is differentiated. This could give you a competitive advantage with the potential to last a long time.

Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed and help you with creating a great business strategy. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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Tax and the Spring statement  – No Major Tax Changes

Tax and the Spring statement – No Major Tax Changes

As announced last year, we now know that the Chancellor’s Budget will, in future, take place in the Autumn each year, as opposed to the Spring. And, in his 13 March Spring statement, we saw the Chancellor choosing to focus on the state of the economy. As he hardly mentioned any tax changes and stated that there is “light at the end of the tunnel”. We can see that this contrasts with other recent Chancellors such as Gordon Brown and George Osborne, who used both the Spring Budget and Autumn Statement, to make tax changes announcements. 

New Consultations – Should You Be Concerned?

Should you be concerned by the fact that the Chancellor announced a number of tax consultations into possible future changes? Well yes and no. Yes, if you are worried about the possible changes to the VAT registration threshold. And yes, if you are part of the businesses deliberately operating below the VAT threshold (currently £85,000), as that adds 20% to the price of the goods and services. If this is your case, you could be allowed to exceed the threshold by up to 50% for one year, without the need to register for VAT. HMRC is also seeking views on how they can engage with online platforms, such as eBay and Uber, to promote tax compliance among its users.

Cash And Digital Payments In The New Economy – Do you still use cash?

Do you still use cash? As we could shortly see the possible demise of the 1p, 2p coins and the £50 note, but for different reasons. It seems that more and more of us are paying for small transactions, such as our morning coffee, by using contactless payments. If you still pay in cash and where the cost is say £2.99, you would tend to put the penny change in the charity pot, and many are thrown away! Whereas, the £50 note has been linked to money laundering, and other illegal cash-based payments. But, we are forever increasing our contactless transactions. Which means that with a consequent reduction in the number of small coins in circulation, this will have a significant impact on the charity sector. As many charities are reliant on peoples’ small change being donated outside supermarkets and stations.

Cash And Tax Evasion

When considering the future of cash in the economy, you also have to think of the role of cash in tax evasion and illegal activities. If you are part of the vast majority of traders and businesses accepting payments in cash, you do so honestly. However, in some cases, the anonymous and untraceable nature of cash transactions, is perceived to facilitate tax evasion, hidden economy activity, or money laundering. This harms the honest majority of businesses, like yours, who find it harder to compete, and it means less money goes towards our vital public services. HMRC are aware that payments in cash can be a problem for tax compliance. In some cases, this is because taxpayers find it difficult to keep accurate records of all their transactions. HMRC have identified that cash is used by a small minority of people to hide or disguise their taxable income by not reporting, or under-reporting, what they owe. The increasing use of our digital payments and reduction in the use of our cash could have a positive impact on increasing tax compliance and decreasing money laundering. However, the increase in our digital payments may only have a limited impact, especially if the dishonest minority continue to use cash to hide or suppress their income.

Could the next step be to make it mandatory to pay your window cleaner or gardener electronically? Not just yet…

Charities Gift Aid Small Donations Scheme – Does it help support your charity?

Whilst we are on the subject of the reduction in cash transactions, we take this opportunity to remind you of the Gift Aid Small Donations Scheme (GASDC). Under this scheme, your dedicated charity or community amateur sports club (CASC) can claim top-up payments on small donations up to £20.
From 6 April 2017 your dedicated charities have also been able to claim tax back on donations made using contactless technology, such as a contactless credit or debit card. As opposed to before 6 April 2017, when your charities could only claim top-up payments on small cash donations. Cash donations could be in coins or notes that have been collected and banked in the UK. Your charity does not need to know the identity of its donors or collect Gift Aid declarations. GASDS claims are worked out in the same way as Gift Aid. If the basic rate of Income Tax is 20%, your charity can claim a GASDS top-up payment of £2,000 on up to £8,000 worth of small donations. This is limited to 10 times the amount that your charity receives in Gift Aid donations that tax year.

Scottish Income Tax Rates Due To Rise From 6 April 2018 – Are You Affected?

The Scotland Act 2016 provides the Scottish Parliament with the power to set all income tax rates and bands that will apply to Scottish taxpayers’ non-savings, non-dividend (NSND) income for tax year 2018/19. As of 6 April 2018, there are significant discrepancies between the Scottish rates of income tax and the rates paid by taxpayers in the rest of England, Wales and Northern Ireland. Will this result in some taxpayers moving south or supplying their services via limited companies to avoid this increase? From 2018/19, the Scottish higher income tax rate will be 41% on income between £43,430 and £150,000 where the top rate is 46%. Under the Scottish system, there is a 19% starting band on the first £2,000 of taxable income, and an intermediate rate of 21% for income between £24,000 and £43,430. The 20% rate applies to income between £13,850 and £24,000 (taxable income £2,001 to £12,150).

If you employ Scottish taxpayers, they have a special S PAYE code, so the payroll software collects tax correctly.

 

Tax Efficient Extraction Of Profit From Companies For 2018/19 – Does it apply to you?

 

Salary and Dividends

With this new tax year, if you are part of the many directors of family companies, you will certainly be considering the most tax efficient method to pay yourself. And for many years accountants and tax advisors have suggested that, as a director/shareholder, you should extract profit by paying yourself a low salary. And that you should then extract the remainder of your income in the form of dividends.

Although dividends are not deductible in arriving at the company’s taxable profits, they do not normally attract National Insurance Contributions (NICs). The starting point of NICs rises to £162 a week from 6 April 2018. This is now significantly lower than the £11,850 personal income tax allowance. A salary just below £162 a week, £8,424 a year, would mean no NIC would be due, but would be sufficient to count as a qualifying year for State Pension purposes (if above the £6,032 lower earnings limit).

Tax Allowance and Dividends

Remember that if you are an employer, other than a director as the only employee, you are entitled to a £3,000 employment allowance, that you can set against employer’s NICs. If you have not utilised this against NICs on staff wages, then consider increasing your directors’ salaries up to £11,850. As the additional salary would save corporation tax at 19% on the £3,426 extra salary, which equals £651, whereas the employees NIC would be £411.

As for the level of dividends, the rate of tax changes from 7.5% to 32.5% at £46,350, so ideally, the dividends should not exceed £34,500, if a salary of £11,850 is paid. The first £2,000 would be taxed at 0%, with £32,500 being taxed at 7.5%.

Don’t forget that this dividend tax will then be due on 31 January 2020.

 

Diary Of Main Tax Events

April/May 2018

 

Date

What’s Due

 

1/04

 

Corporation tax payment for year to 30/6/17

(unless quarterly instalments apply)

 

 

5/04

 

End of 2017/18 Tax Year.

2018/19 tax year starts 6 April 2018

 

 

19/4

 

PAYE & NIC deductions, and CIS return and tax, for month to 5/04/18

(due 22/04 if you pay electronically)

 

01/05

 

Corporation tax payment for year to 31/07/17

(unless quarterly instalments apply)

 

 

19/5

 

PAYE & NIC deductions, and CIS return and tax, for month to 5/05/18

(due 22/05 if you pay electronically)

 

 

Lotuswise Chartered Accountants and Business Consultants can help support you and your business discussing the implications of the Spring statement, and other ways in which you can extract profits from your family company tax efficiently. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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GDPR – What is it and how will it impact my business?

GDPR – What is it and how will it impact my business?

 

What is GDPR and how will it impact my business?

 

With the General Data Protection Regulation (GDPR) regime coming into force in the UK from 25 May 2018, key changes will be introduced to the way personal data is handled.  The question is: are you and your business prepared for the forthcoming change?  It is important first to understand the requirements of the Information Commissioners Office (ICO), now concerned about misinformation being shared in the media.  The following outlines the change key features to help you prepare. 

What is GDPR and why is it necessary?

The purpose of GDPR is to reflect the importance of safeguarding your clients and customers individual personal data in the digital age.  Currently, for a data protection law breach, you could be fined up to a maximum of half a million, whereas, under GDPR, you could be looking at a maximum of £17 million or, if higher, 4% of worldwide annual turnover. You should also consider the negative public implications if you fail to protect personal data. With this in mind, you should look into the following: 

  • Those who are “controllers” and “processors” of data within your company
  • The principles of data protection
  • Accountability and governance
  • New rights for data subjects
  • Data security breaches 

What is affected?

The definition of personal data is expanded under GDPR and includes a range of online identifiers, such as IP addresses, as well as sensitive personal data coming under special categories as genetic data and biometric data.  Data relating to criminal convictions and offences is not included, although there are extra new safeguards relating to how the information is processed. 

Who is affected?

GDPR will affect anyone handling personal data, from customer and employee records, through to manual data, regardless of where this information is stored – be it in a filing cabinet or digitally accessed via a laptop or computer – This applies to both “Controllers and Processors”. A controller is defined as someone who is in charge of how and why personal data is being processed.  A processor acts on behalf of the controller to process the data.  It may be that, in a business, this role is fulfilled by the one person. For the processor, this means that, in order to remain compliant with GDPR, they now need to keep records of how they process personal data and they can now be held legally responsible for breaches of security. 

Principles of data protection

Your clients personal data must be: 

  • Processed lawfully, fairly, and transparently
  • Collected for specified, explicit, and legitimate purposes
  • Adequate, relevant, and limited to what is necessary for the purpose
  • Kept in an identifiable format for no longer than is necessary
  • Processed securely and protected from unauthorised or unlawful processing, accidental loss destruction or damage.

Accountability and Governance

Your company must be able to demonstrate how your organisation is GDPR compliant and, implement the required technical and organisational measures. These include data protection policies such as: 

  • Internal audits of processing activities
  • HR policies review
  • Employee training and adherence to policies
  • Conducting Data Protection impact assessments and, in some cases, appointing a Data Protection Officer (DPO). The DPO now becomes a legal requirement in public authorities and in organisations carrying out large scale data processing of special categories.

New Rights

New rights have been outlined for individuals / your customers / clients and cover the following points: 

  1. The Right to be Informed – providing your clients with a privacy notice giving details of how their information is being processed and controlled.
  2. The Right of Access – providing your clients with the option to request details of how their information is being held, for which your company has a maximum of 30 days to deal with the request, under a £10 chargeable fee.
  3. The Right to Rectification – such that any of your inaccurate clients data will be corrected.
  4. The Right to Erasure – the right to be forgotten such that your client can request data to be deleted.
  5. The Right to Restrict Processing – such that your clients data can be stored but not processed.
  6. The Right to Data Portability – such as to obtain and reuse personal data across different services, allowing the movement, copy or transfer of clients personal data, provided that this is done in a structured format.
  7. The Right to Object – such that processing of personal data must stop immediately, unless there are compelling and legitimate grounds for processing.
  8. Rights in relation to automated decision-making and profiling – ensuring safeguards are in place to protect against damaging decisions taken without human intervention.

Lastly, if and when your company experiences data security breaches, you must inform the ICO within 72 hours, and your organisation should also have a clear plan on how to resolve / cope with the situation.  Given that GDPR requirements are complex and do not exactly offer a quick fix, you and your company cannot run the risk of incurring significant penalties. 

Lotuswise Chartered Accountants and Business Consultants can help support you and your business with the complexities of the new GDPR regulations. To find out how, please contact usTo also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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Productivity Pointers: How do I do more with my time?

Productivity Pointers: How do I do more with my time?

Productivity Pointers: The survey says

 Microsoft survey on productivity

In a recent survey by Microsoft on productivity, 20,000 European workers were provided with a questionnaire in relation to work-communication tools. Employees indicated that a steady stream of emails, messages, and notifications impacted their levels of productivity and concentration. And that one expert had indicated that staff suffered elevated levels of technostress. The report, which sampled views from 21 European nations, including the UK, found that only 11.4% of European workers said they felt highly productive. This research outlines the challenges to concentration and productivity created by employees constantly exposed to an abundance of communication technology at their fingertips. Employees, who are also bombarded and distracted by endless amounts of notifications, updates, and alerts.  The research also pointed to the dangers of being constantly connected, expecting each and every employee to respond to messages and requests at all hours of the day.

Social Media and productivity

Social media platforms have also taken this condition of distraction to the next level.  Speaking at an industry event recently, early Facebook investor and founding president, Sean Parker, said that the massive social network is “exploiting a vulnerability in human psychology” in order to attract and retain users’ attention. And that “the thought process that went into building these applications, Facebook being the first of them, … was all about: ‘How do we consume as much of your time and conscious attention as possible?” 

So, in light of this, how can you lower your technology stress levels and increase your productivity and that of your employees?

To improve your productivity, you could consider the following pointers:

1. Prioritise the important, not the urgent

 

When missing your deadlines is not an option, the Covey Time-Management Matrix can help you to manage your available time more efficiently. This allows you to package your tasks into one of four different quadrants in the Matrix.  The key is for you to ensure that your time is balancing the short-term aspects of your role / your business with the long-term ones. 

Let’s look at the Matrix quadrants

 

Quadrant 1 Quadrant 2
Urgent and important activities Not urgent but important
These are items that you could not have been foreseen, such as emergencies, problems, last-minute preparations, etc. These are your tasks without a high urgency, but that can play a significant role in future, such as strategic planning, health, education, exercise, and career.
Quadrant 3 Quadrant 4
Urgent but not important Not urgent and not important

These are your items that appear to have a high urgency but that are not important but can impair your ability to deliver on your goals.  Try to delegate or reschedule them. These types of tasks and requests can impact your productivity. Therefore, try to avoid being constantly interrupted. Allocate timeslots in which to address all issues at the same time so that your concentration does not end up suffering. Examples include interruptions, meetings, etc.

This is the space filled with your usual time-wasters: nothing more than distractions, such as surfing the internet, Facebook, TV, trivia, etc.

 

Quadrant 1 – Urgent and important activities. These are items that you could not have been foreseen, such as emergencies, problems, last-minute preparations, etc.   

Quadrant 2 – Not urgent but important. These are your tasks without a high urgency, but that can play a significant role in future, such as strategic planning, health, education, exercise, and career.   

Quadrant 3 – Urgent but not important. These are your items that appear to have a high urgency but that are not important but can impair your ability to deliver on your goals.  Try to delegate or reschedule them. These types of tasks and requests can impact your productivity. Therefore, try to avoid being constantly interrupted. Allocate timeslots in which to address all issues at the same time so that your concentration does not end up suffering. Examples include interruptions, meetings, etc.   

Quadrant 4 – Not urgent and not important. This is the space filled with your usual time-wasters: nothing more than distractions, such as surfing the internet, Facebook, TV, trivia, etc.

 

2. Give yourself dedicated time to work  

To avoid distractions, you could give yourself the time to work on the most important, but not urgent activities (Quadrant 2).  To do this, you want to make sure you allocate two slots of 45 minutes, with a 15-minute break at half-time. This length of time allows your brain to get in the zone, consequently accelerating your concentration and productivity levels. Make sure you switch off distractions completely, such as pop-up alerts from email and social media feeds.

 

 3. Manage email communication

What do you do if your employees tend to start their working day using their inbox as their to-do list?  This inevitably becomes a distraction and wastes time, with your employees trawling through every email, line-by-line.  You could apply the following recommended approach by using the 4 D’s for email communication, in order of priority / preference: 

 

1. Delete it.  

If you can remove any email on an initial scan, all the better.

2. Delegate it.  

If you have a team, or contacts, to whom you can delegate, consider this as your next option.

3. Diarise it.

To avoid distractions that impact on your concentration, identify a suitable calendar time to address the task at hand.

4. Do it. 

If none of the above work, you may need to perform the requested task right there and then. This, however, should always be your last option. 

 

4. Consider Email freedom

Lastly, consider complete freedom from email.  You could, like some firms have done recently, introduce a ‘no email’ day policy once a week. You could also ban emails sent to people sharing the same building. As well as removing the ‘cc’ culture (covering one’s back). This ultimately forces you and your team to have face-to-face or phone call engagements with your other team members. This, in turn, can lead to improved productivity and team morale. Therefore, to be highly productive, the technology you use, needs to be handled with care. It needs to be a supportive solution to your business goals delivery, rather than a designed distraction, reducing your personal and business impact.  

 

 

Lotuswise Chartered Accountants and Business Consultants can help you and your business become more efficient and raise your productivity levels. To find out how, please contact usTo also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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What Makes Great Leaders? And Do You Have What It Takes?

What Makes Great Leaders? And Do You Have What It Takes?

When It Comes To Leadership Skills – Do You Have What It Takes? 

Leaders come in all shapes and sizes and it seems these days, looking at recent news, some leaders would tend to emulate certain skills and qualities… So what makes a great leader? The best business managers and leaders create a vision of the future that is compelling and motivates employees to want to achieve it. Great business leaders help the members of their team connect to what they do with the business’s overall strategy and its impact on customers. Are you one of them?

Leaders Communication and Relationships

If you are a business manager, communication is an essential leadership skill.  It is important you communicate with your people often and in a variety of different ways. Whether one-to-one conversations, team meetings, email or phone calls, your communication is key.  Regular communication helps to build relationships across your business and also helps to build trust. As a manager, you should lead by example and communicate regularly with your team members, management team, your customers, suppliers, others in the industry and the wider community.  The stronger the relationships you can build, the better you will be able to lead people. 

Leaders Integrity

In order to be a successful business leader, you need to be honest, transparent and have a high degree of integrity. The key is to do what you say you are going to do. Some people might be happy to sit back and watch from the sidelines, but great leaders like to get involved in making things happen. In order to become a successful leader, you need to persevere, drive your people forward and be accountable. If the buck stops with you, then own it. 

Leaders Strategic problem solving

Ultimately, leaders are recruited, trained, and chosen to solve problems and to take advantage of new strategic opportunities in the market. This requires your good analytical abilities and excellent people skills. At times it is necessary for you to focus on being tactical, however the best leaders maintain a strategic outlook and don’t lose sight of the bigger picture. 

Leaders Innovation

In order to succeed in business it is important you focus on innovation. If you stand still, your competitors will overtake you. Innovation can take many forms – perhaps you may wish to focus on hiring people with a different skill-set or you may want to utilise technology in order to drive efficiency across the business. The best business leaders are innovative people, who come up with new and better solutions to problems. As a manager it is therefore important you continuously develop your technical and professional expertise, stay up to date on new trends in different markets. You should also consider how new concepts can be adopted in order to improve your business.

 

Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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IR35 Government Consultation On Private Sector Off-Payroll Workers

IR35 Government Consultation On Private Sector Off-Payroll Workers

IR 35: The Government Consultation

A few days ago, the government released its long-awaited IR35 consultation on off-payroll workers in the private sector. The consultation talks of the aftermath of the recent public sector changes [resulting in a large number of cases of end clients making tax deductions before paying Personal Service Companies (PSC’s)] which the government concludes were a success.   The document analyses the current compliance of IR35 in the private sector and highlights factors which have led to “endemic non-compliance for off-payroll engagements in the private sector”.  These factors include:

  • The length of time taken for HMRC to resolve enquiries
  • The problems of recovering monies from PSCs (as often they don’t have the funds to pay)
  • An apparent perception of PSCs that there is a low risk of HMRC opening an enquiry and the PSC being liable.

The Options

Three options are offered as potential solutions:

1. Pushing forward the public sector changes in to the private sector. This would see responsibility for the decision, as to whether IR35, applies placed with the end client company and the responsibility of paying the correct tax and National Insurance with the agency paying the PSC for its services

2. Rather than placing the determination of IR35 with the end client, end clients are “encouraged” or “required” to establish that the service provisions in the supply chain are compliant. This option sees the end client seeking surety from agencies and ultimately PSCs that they are complying with IR35. The consultation considers that perhaps the end client could require all PSCs to provide a completed HMRC CEST confirmation.

3. End clients keeping clear records of contracts, provision of services, shift patterns, methods etc of all off-payroll contractors. This additional admin burden, would help to ease HMRC enquiry timescales as it would provide the necessary information needed by HMRC in the event of an enquiry into IR35.

The consultation document indicates that government is reluctant to place onerous additional admin burdens on end client organisations, but the three main options for increased compliance appear to do exactly that.

Duration and Closing Date

The consultation closes on 8 August 2018.

Lotuswise Chartered Accountants and Business Consultants can help you and your business make sense out of IR35 rules, and whether or not they impact on your working arrangements. To find out how, please contact usTo also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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Termination Payments, tax advantages and tax allowances

Termination Payments, tax advantages and tax allowances

Changes To Termination Payments

Your care is always required when any employees are made redundant or payments are made on their termination of employment. When looking at termination payments, not only do you have to consider employment law, but you also have to factor in important tax implications, and this is an area where professional advice is strongly recommended to avoid unnecessary pitfalls. You should know that the tax treatment of these payments changed from 6 April 2018, and that further changes will come into effect in 2019.

Termination Payments – Pay In Lieu of Notice

As an employer, you now need to pay Income Tax and Class 1 National Insurance Contributions (NICs) on an element of all termination payments from 6 April 2018, whether or not they are contractual payments. The element that is now chargeable to Income Tax and NICs is the amount of the termination payment that represents payment in lieu of notice (PILON), sometimes referred to as “garden leave”.

Termination Payments – Ex-gratia Payments

The first £30,000 of genuine ex-gratia continues to be exempt from income tax and national insurance. The £30,000 limit includes statutory redundancy payments. Payments in excess of £30,000 are taxed as employment but there is currently no NIC on such payments. It was originally proposed that employers’ NIC would be applied to such payments from 6 April 2018, but the delayed introduction of the National Insurance Contributions Bill means that employer NICs on termination payments above £30,000 will now take effect from 6 April 2019.

Termination Payments – Periods of Foreign service

In addition, foreign service relief on termination payments was removed for all UK residents – apart from seafarers – from 6 April 2018. Previously, this provided a further exemption from income tax and NIC depending on the period of time working abroad. UK residents whose employment ends after 6 April 2018 who receive a payment or benefit in connection with that termination made after 13 September 2017, will not now be eligible for tax relief for any period of foreign service as part of that job.

Tax Advantage of EMI Share Option Schemes Lapses

HMRC have advised companies to consider delaying the grant of Enterprise Management Incentive (“EMI”) share options until fresh State Aid approval has been granted by the EU. As the UK Government were late in applying for an extension (12 months’ notice is required), the existing approval expired on 6 April 2018 and EMI share options granted after that date, before new approval is received, may be treated as non-tax advantaged employment-related securities options.

The EMI share option scheme introduced in 2000 was the most tax efficient scheme to attract and retain key staff, providing employees in receipt of qualifying option, with significant tax advantages. Depending on the price paid by employees for their shares on exercise of EMI options, the receipt and subsequent share sale is subject to capital gains tax, at just 10% instead of PAYE and NIC.  We are expecting the scheme to be re-approved, under the State Aid rules, and we will let you know when this happens.

Form P11Ds To Include Benefits Provided By Salary Sacrifice 

As an employer, you need to report all Benefits in Kind (BiKs), including those under the Optional Remuneration Arrangements (OpRAs), or “salary sacrifice” arrangements, to HMRC on form P11D from 6 April 2018, unless they are registered to voluntarily payroll benefits. OpRAs are where an employee gives up the right to an amount of earnings in return for a Benefit in Kind (BiK), and includes flexible benefit packages with cash option, cash allowances and salary sacrifice. All BiKs are now valued at the higher end of the cash given up or the value of the BiK. Many previously non-taxable BiKs are now taxable, valued on the cash given up. Note however that cars with emissions of 75g CO2 / km or less, pensions, pension advice, childcare and Cycle to Work benefits are unaffected. Subject to a few specific exceptions, arrangements entered into on or before 5 April 2017, kept their previous tax treatment until the earlier renewal or variation of the arrangement. Such arrangements moved into the new rules on 6 April 2018.

HMRC Loses IR35 Case

In March, we reported the Tax Tribunal decision involving Christa Ackroyd Media Ltd, a company set up by a TV presenter to supply her services to the BBC, where it was held that the IR35 personal service company rules applied to the arrangements. In a recent case involving a night manager on a building site, another tribunal decided that the IR35 rules did not apply.

The facts of the recent case involve a Mr Daniels supplying his services via his company MDCM Ltd. These are entirely different from those in the Christa Ackroyd case, but it indicates that the current rules are very unclear and open to interpretation by the courts. For IR35 rules to apply, it must be inferred that, under the hypothetical contract between “worker” and client,  worker would be regarded as an employee if directly engaged. There are numerous factors taken into account, but the most important factor considered by the courts is the extent to which the “worker” is under the control of the client. Please contact us if you wish to discuss whether these recent cases impact on your particular circumstances.

Taking A Lodger? Don’t Forget To Claim “Rent A Room” Relief 

HMRC are carrying out a review of rent a room relief to discover whether the scheme, introduced back in 1992 provides the right incentives for the rental market. The current scheme exempts from tax, gross rents up to £7,500 where rooms within the taxpayer’s main residence are rented out. Most accountants who responded to the call for evidence, were keen for the relief to continue, as it encourages taxpayers to let out spare rooms and provides them with additional income.

Please note that where the gross rental income exceeds £7,500, say £12,000, the excess of £4,500 would be taxable. Alternatively the taxpayer may deduct costs of providing the living accommodation, such as a proportion of mortgage interest, light and heat. If these allowable expenses amounted to £9,000, then it would be more appropriate to be taxed on the net rental profit of £3,000. Also please note that the current scheme only provides relief where the rooms let are in the taxpayer’s main residence, and if the property is jointly owned, the relief would be £3,750 each. Where the lettings are in another property, the new £1,000 property allowance could be set against the gross rental income, however this allowance applies to each taxpayer.

CGT To Be Paid Earlier On Property Disposals in 2020

HMRC are consulting on the mechanism for collecting CGT on residential property disposals from April 2020, when the tax will be due within 30 days of completion. This will be instead of the normal payment date, on 31 January, following the end of the tax year and is yet another attack on buy to let landlords! 

 

DIARY OF MAIN TAX EVENTS – MAY/JUNE 2018

Date

What’s Due

01/05   Corporation tax payment for year to 31/07/17
(unless quarterly instalments apply)
19/5   PAYE & NIC deductions, and CIS return and tax, for month to 5/05/18
(due 22/05 if you pay electronically)
01/06   Corporation tax payment for year to 31/08/17
(unless quarterly instalments apply)
19/6   PAYE & NIC deductions, and CIS return and tax, for month to 5/06/18
(due 22/06 if you pay electronically)

Lotuswise Chartered Accountants and Business Consultants can help support you and your business with the complexities of these tax and payment rules. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

 

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GDPR Regulation Is Coming…25 May 2018, Are You Ready?

GDPR Regulation Is Coming…25 May 2018, Are You Ready?

GDPR Regulation is coming – 25 May 2018

The implementation date for the EU Data Protection Regulation (GDPR) is 25 May. Despite Brexit, all UK businesses, including yours, will need to comply. In order to maintain business links with EU countries, the UK will need to create EU equivalent rules and regulations. GDPR regulation is an example of this, and you must comply with it, if you want to trade with the EU. You should know that GDPR regulations are more favourable to consumers than businesses.

 

Personal Information

As personal information becomes more regularly shared and you might well hold, as many businesses now do, huge volumes of customer data, there is a need for management and control over what you and other businesses can do with that information.

 

Fines and Penalties

GDPR gives regulators the ability to apply large fines of up to 20m Euros or 4% of global annual turnover – whichever is higher, for non-compliance. As such, you need to take these new regulations seriously and will need to implement changes to the way you operate, depending on the type of personal data you hold. This will include customer records, databases, CRM systems, etc.

 

Contracts, Policies and Procedures

In addition, you will need to ensure that you have appropriate policies and procedures in place, with regards to any personal data you hold or process. It’s also worth you reviewing supplier contracts to ensure they are GDPR regulation compliant. Finally, your recruitment, HR policies and procedures should be reviewed, to ensure personal data is managed in a way which is compliant with GDPR regulations.

 

GDPR Consultants

There isn’t much time left before GDPR regulation comes into force. If you haven’t yet prepared for GDPR regulations, your best approach is probably to consider hiring an external consultant to advise your firm on getting up to date as quickly as possible.

 

To get more insight into data protection and GDPR, please also refer to our previous post on GDPR and how this affects you and your business.

 

Lotuswise Chartered Accountants and Business Consultants can help support you and your business with the complexities of the new GDPR regulations. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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Employee Health And Safety And Staff Coaching

Employee Health And Safety And Staff Coaching

Employee health and safety and staff coaching is your responsibility as an employer. Regardless of the type of business you manage, health and safety is a fact of life. And encouraging growth, confidence and ambition in your employees is important. But just how do you do that?

Employee Health And Safety – The Responsibility Of Every Employer


Regardless of the type of business you manage, health and safety is a fact of life. Apart from their devastating human cost, occupational accidents and ill-health could bear a significant cost to your business through higher insurance premiums and staff absence. You, staying up to date, when it comes to health and safety, is therefore, an essential part of running your business.

Employee Health And Safety – Keep it simple

Managing health and safety in your company doesn’t have to be complicated. If your firm takes reasonable steps to prevent workplace injuries or illness, you are unlikely to have any issues.  The approach you take should be proportionate to the size of your business and nature of your business activity.

Employee Health And Safety – Written health and safety policy

Ideally you should have a written health and safety policy.  If you are a small business, with less than five employees, you may not be obliged to write such a policy. But it is advisable to have one in place, regardless of the size of your firm. 

Employee Health And Safety – Lead by example

Your staff would tend to follow the lead of more senior managers in a safety-critical situation (even if the decision is flawed). In these situations, it is vital to establish a culture that allows everyone to raise concerns and challenge decisions in a constructive manner.

Employee Health And Safety – Carry out a risk assessment

In order to do this, in a health and safety context, think about anything that could cause harm to your employees and ensure that you are taking reasonable steps to prevent that harm.

Employee Health And Safety – Don’t be afraid to ask for help

If you don’t have any expertise in-house, you could consider hiring some external expertise. These experts will ensure your business has someone with the necessary skills to manage health and safety properly.

Staff Coaching – A good coach is a good manager

 

In addition to ensuring the achievement of business objectives and health and safety, managers are also responsible for staff coaching, encouraging growth, confidence and ambition in employees. 

 

Effective leadership techniques have evolved over the last few decades. And the way you, as a manager, should interface with your teams, has become more focused on getting the most out of people, through coaching. Compared to a more directive style, if you use a coaching style, you would tend to foster a better environment for collaboration and more open communication.

Staff Coaching – Build a confident team

Coaching helps to identify the strengths and weaknesses of your team members. As a coach, you could build on each team member’s strengths and weaknesses and help to create a more confident team. If your team members are confident, they are more likely to push harder and go above and beyond what is expected of them. 

Staff Coaching – Employee Engagement

If your team members feel like they are working on repetitive, menial tasks, they will tend to feel less engaged. You should, therefore, coach your teams through new experiences, so they can learn. Your employees will tend to feel more engaged, if they are trusted with new projects, and will be more productive as a result.

Staff Coaching – Active listening

If you adopt a coaching style, you, as a manager, will tend to listen more actively. So, then try to understand things from the perspective of your team members. Your employees will tend to respond more positively to this and can become more motivated as a result.

Staff Coaching – Millennials

Millennials (around 18 to 35 years of age) have become a larger segment of the workforce and if you employ any, they tend to respond well to a coaching style of leadership. Millennials would tend to welcome your feedback and regular dialogue regarding learning and development. They want to be coached and developed rather than managed. So, remember this, as this approach can only be beneficial to both you and your millennials employees!

So, it is your responsibility to make employee health and safety and staff coaching a priority in your business. Making sure your employees are safe at all times and looked after. Coaching them and encouraging their growth and confidence can only be beneficial to both them and your business.

Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

 

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Business strategy – 3 steps to creating a great one

Business strategy – 3 steps to creating a great one

When many of us think about business strategy, academics and expensive business consultants tend to spring to mind. The good news is that creating a really great business strategy doesn’t have to be complex. Put simply, a business strategy is what you need to get your business from where it is today to where you want it to be in say, 5 years’ time. Here are three simple steps to creating an effective strategy for your business:

1. Business Strategy – Manage business risk

Business risk is a fact of life and there are risks you can mitigate and others you can’t. Of those you cannot mitigate, you need to ensure that the opportunity for your business outweighs the potential down side. Don’t try to sweep risk under the carpet. Instead, create a risk register and list all of the major risks to your business.

Beside each line on your risk register, describe what you are doing to mitigate each risk. For example, next to “Cyber Security Risk” you might note that you have put a firewall and internet security software in place on your systems. Creating and maintaining a risk register will ensure that you don’t miss anything and that where possible, you do something to minimise business risk.

 2. Business Strategy – Understand your market

To develop a successful strategy you need to understand which market you operate in. How big is the market sector that you are targeting? Is it growing and if so, how fast? Who are your competitors and how do you intend to compete with them for market share? If you understand the key drivers in your market, you can spot new opportunities, harness the forces that are driving change and create a product or service offering that is competitive.

A good understanding of your market will allow you to calibrate your offering in order to create the right balance of supply and demand, pricing and service levels.

3. Business Strategy – Competitive advantage

Every business has strengths and weaknesses. Your business strategy should take this into account. Take time to analyse your main competitors and identify their weaknesses. Now consider how your product or service offering can exploit these weaknesses to give your business a competitive advantage. For example, if your competitors are expensive, perhaps you could gain a competitive advantage by offering a lower price alternative.  Perhaps you can focus on a particular niche sector in order to create an offering that is differentiated. This could give you a competitive advantage with the potential to last a long time.

Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed and help you with creating a great business strategy. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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Tax and the Spring statement  – No Major Tax Changes

Tax and the Spring statement – No Major Tax Changes

As announced last year, we now know that the Chancellor’s Budget will, in future, take place in the Autumn each year, as opposed to the Spring. And, in his 13 March Spring statement, we saw the Chancellor choosing to focus on the state of the economy. As he hardly mentioned any tax changes and stated that there is “light at the end of the tunnel”. We can see that this contrasts with other recent Chancellors such as Gordon Brown and George Osborne, who used both the Spring Budget and Autumn Statement, to make tax changes announcements. 

New Consultations – Should You Be Concerned?

Should you be concerned by the fact that the Chancellor announced a number of tax consultations into possible future changes? Well yes and no. Yes, if you are worried about the possible changes to the VAT registration threshold. And yes, if you are part of the businesses deliberately operating below the VAT threshold (currently £85,000), as that adds 20% to the price of the goods and services. If this is your case, you could be allowed to exceed the threshold by up to 50% for one year, without the need to register for VAT. HMRC is also seeking views on how they can engage with online platforms, such as eBay and Uber, to promote tax compliance among its users.

Cash And Digital Payments In The New Economy – Do you still use cash?

Do you still use cash? As we could shortly see the possible demise of the 1p, 2p coins and the £50 note, but for different reasons. It seems that more and more of us are paying for small transactions, such as our morning coffee, by using contactless payments. If you still pay in cash and where the cost is say £2.99, you would tend to put the penny change in the charity pot, and many are thrown away! Whereas, the £50 note has been linked to money laundering, and other illegal cash-based payments. But, we are forever increasing our contactless transactions. Which means that with a consequent reduction in the number of small coins in circulation, this will have a significant impact on the charity sector. As many charities are reliant on peoples’ small change being donated outside supermarkets and stations.

Cash And Tax Evasion

When considering the future of cash in the economy, you also have to think of the role of cash in tax evasion and illegal activities. If you are part of the vast majority of traders and businesses accepting payments in cash, you do so honestly. However, in some cases, the anonymous and untraceable nature of cash transactions, is perceived to facilitate tax evasion, hidden economy activity, or money laundering. This harms the honest majority of businesses, like yours, who find it harder to compete, and it means less money goes towards our vital public services. HMRC are aware that payments in cash can be a problem for tax compliance. In some cases, this is because taxpayers find it difficult to keep accurate records of all their transactions. HMRC have identified that cash is used by a small minority of people to hide or disguise their taxable income by not reporting, or under-reporting, what they owe. The increasing use of our digital payments and reduction in the use of our cash could have a positive impact on increasing tax compliance and decreasing money laundering. However, the increase in our digital payments may only have a limited impact, especially if the dishonest minority continue to use cash to hide or suppress their income.

Could the next step be to make it mandatory to pay your window cleaner or gardener electronically? Not just yet…

Charities Gift Aid Small Donations Scheme – Does it help support your charity?

Whilst we are on the subject of the reduction in cash transactions, we take this opportunity to remind you of the Gift Aid Small Donations Scheme (GASDC). Under this scheme, your dedicated charity or community amateur sports club (CASC) can claim top-up payments on small donations up to £20.
From 6 April 2017 your dedicated charities have also been able to claim tax back on donations made using contactless technology, such as a contactless credit or debit card. As opposed to before 6 April 2017, when your charities could only claim top-up payments on small cash donations. Cash donations could be in coins or notes that have been collected and banked in the UK. Your charity does not need to know the identity of its donors or collect Gift Aid declarations. GASDS claims are worked out in the same way as Gift Aid. If the basic rate of Income Tax is 20%, your charity can claim a GASDS top-up payment of £2,000 on up to £8,000 worth of small donations. This is limited to 10 times the amount that your charity receives in Gift Aid donations that tax year.

Scottish Income Tax Rates Due To Rise From 6 April 2018 – Are You Affected?

The Scotland Act 2016 provides the Scottish Parliament with the power to set all income tax rates and bands that will apply to Scottish taxpayers’ non-savings, non-dividend (NSND) income for tax year 2018/19. As of 6 April 2018, there are significant discrepancies between the Scottish rates of income tax and the rates paid by taxpayers in the rest of England, Wales and Northern Ireland. Will this result in some taxpayers moving south or supplying their services via limited companies to avoid this increase? From 2018/19, the Scottish higher income tax rate will be 41% on income between £43,430 and £150,000 where the top rate is 46%. Under the Scottish system, there is a 19% starting band on the first £2,000 of taxable income, and an intermediate rate of 21% for income between £24,000 and £43,430. The 20% rate applies to income between £13,850 and £24,000 (taxable income £2,001 to £12,150).

If you employ Scottish taxpayers, they have a special S PAYE code, so the payroll software collects tax correctly.

 

Tax Efficient Extraction Of Profit From Companies For 2018/19 – Does it apply to you?

 

Salary and Dividends

With this new tax year, if you are part of the many directors of family companies, you will certainly be considering the most tax efficient method to pay yourself. And for many years accountants and tax advisors have suggested that, as a director/shareholder, you should extract profit by paying yourself a low salary. And that you should then extract the remainder of your income in the form of dividends.

Although dividends are not deductible in arriving at the company’s taxable profits, they do not normally attract National Insurance Contributions (NICs). The starting point of NICs rises to £162 a week from 6 April 2018. This is now significantly lower than the £11,850 personal income tax allowance. A salary just below £162 a week, £8,424 a year, would mean no NIC would be due, but would be sufficient to count as a qualifying year for State Pension purposes (if above the £6,032 lower earnings limit).

Tax Allowance and Dividends

Remember that if you are an employer, other than a director as the only employee, you are entitled to a £3,000 employment allowance, that you can set against employer’s NICs. If you have not utilised this against NICs on staff wages, then consider increasing your directors’ salaries up to £11,850. As the additional salary would save corporation tax at 19% on the £3,426 extra salary, which equals £651, whereas the employees NIC would be £411.

As for the level of dividends, the rate of tax changes from 7.5% to 32.5% at £46,350, so ideally, the dividends should not exceed £34,500, if a salary of £11,850 is paid. The first £2,000 would be taxed at 0%, with £32,500 being taxed at 7.5%.

Don’t forget that this dividend tax will then be due on 31 January 2020.

 

Diary Of Main Tax Events

April/May 2018

 

Date

What’s Due

 

1/04

 

Corporation tax payment for year to 30/6/17

(unless quarterly instalments apply)

 

 

5/04

 

End of 2017/18 Tax Year.

2018/19 tax year starts 6 April 2018

 

 

19/4

 

PAYE & NIC deductions, and CIS return and tax, for month to 5/04/18

(due 22/04 if you pay electronically)

 

01/05

 

Corporation tax payment for year to 31/07/17

(unless quarterly instalments apply)

 

 

19/5

 

PAYE & NIC deductions, and CIS return and tax, for month to 5/05/18

(due 22/05 if you pay electronically)

 

 

Lotuswise Chartered Accountants and Business Consultants can help support you and your business discussing the implications of the Spring statement, and other ways in which you can extract profits from your family company tax efficiently. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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GDPR – What is it and how will it impact my business?

GDPR – What is it and how will it impact my business?

 

What is GDPR and how will it impact my business?

 

With the General Data Protection Regulation (GDPR) regime coming into force in the UK from 25 May 2018, key changes will be introduced to the way personal data is handled.  The question is: are you and your business prepared for the forthcoming change?  It is important first to understand the requirements of the Information Commissioners Office (ICO), now concerned about misinformation being shared in the media.  The following outlines the change key features to help you prepare. 

What is GDPR and why is it necessary?

The purpose of GDPR is to reflect the importance of safeguarding your clients and customers individual personal data in the digital age.  Currently, for a data protection law breach, you could be fined up to a maximum of half a million, whereas, under GDPR, you could be looking at a maximum of £17 million or, if higher, 4% of worldwide annual turnover. You should also consider the negative public implications if you fail to protect personal data. With this in mind, you should look into the following: 

  • Those who are “controllers” and “processors” of data within your company
  • The principles of data protection
  • Accountability and governance
  • New rights for data subjects
  • Data security breaches 

What is affected?

The definition of personal data is expanded under GDPR and includes a range of online identifiers, such as IP addresses, as well as sensitive personal data coming under special categories as genetic data and biometric data.  Data relating to criminal convictions and offences is not included, although there are extra new safeguards relating to how the information is processed. 

Who is affected?

GDPR will affect anyone handling personal data, from customer and employee records, through to manual data, regardless of where this information is stored – be it in a filing cabinet or digitally accessed via a laptop or computer – This applies to both “Controllers and Processors”. A controller is defined as someone who is in charge of how and why personal data is being processed.  A processor acts on behalf of the controller to process the data.  It may be that, in a business, this role is fulfilled by the one person. For the processor, this means that, in order to remain compliant with GDPR, they now need to keep records of how they process personal data and they can now be held legally responsible for breaches of security. 

Principles of data protection

Your clients personal data must be: 

  • Processed lawfully, fairly, and transparently
  • Collected for specified, explicit, and legitimate purposes
  • Adequate, relevant, and limited to what is necessary for the purpose
  • Kept in an identifiable format for no longer than is necessary
  • Processed securely and protected from unauthorised or unlawful processing, accidental loss destruction or damage.

Accountability and Governance

Your company must be able to demonstrate how your organisation is GDPR compliant and, implement the required technical and organisational measures. These include data protection policies such as: 

  • Internal audits of processing activities
  • HR policies review
  • Employee training and adherence to policies
  • Conducting Data Protection impact assessments and, in some cases, appointing a Data Protection Officer (DPO). The DPO now becomes a legal requirement in public authorities and in organisations carrying out large scale data processing of special categories.

New Rights

New rights have been outlined for individuals / your customers / clients and cover the following points: 

  1. The Right to be Informed – providing your clients with a privacy notice giving details of how their information is being processed and controlled.
  2. The Right of Access – providing your clients with the option to request details of how their information is being held, for which your company has a maximum of 30 days to deal with the request, under a £10 chargeable fee.
  3. The Right to Rectification – such that any of your inaccurate clients data will be corrected.
  4. The Right to Erasure – the right to be forgotten such that your client can request data to be deleted.
  5. The Right to Restrict Processing – such that your clients data can be stored but not processed.
  6. The Right to Data Portability – such as to obtain and reuse personal data across different services, allowing the movement, copy or transfer of clients personal data, provided that this is done in a structured format.
  7. The Right to Object – such that processing of personal data must stop immediately, unless there are compelling and legitimate grounds for processing.
  8. Rights in relation to automated decision-making and profiling – ensuring safeguards are in place to protect against damaging decisions taken without human intervention.

Lastly, if and when your company experiences data security breaches, you must inform the ICO within 72 hours, and your organisation should also have a clear plan on how to resolve / cope with the situation.  Given that GDPR requirements are complex and do not exactly offer a quick fix, you and your company cannot run the risk of incurring significant penalties. 

Lotuswise Chartered Accountants and Business Consultants can help support you and your business with the complexities of the new GDPR regulations. To find out how, please contact usTo also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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Productivity Pointers: How do I do more with my time?

Productivity Pointers: How do I do more with my time?

Productivity Pointers: The survey says

 Microsoft survey on productivity

In a recent survey by Microsoft on productivity, 20,000 European workers were provided with a questionnaire in relation to work-communication tools. Employees indicated that a steady stream of emails, messages, and notifications impacted their levels of productivity and concentration. And that one expert had indicated that staff suffered elevated levels of technostress. The report, which sampled views from 21 European nations, including the UK, found that only 11.4% of European workers said they felt highly productive. This research outlines the challenges to concentration and productivity created by employees constantly exposed to an abundance of communication technology at their fingertips. Employees, who are also bombarded and distracted by endless amounts of notifications, updates, and alerts.  The research also pointed to the dangers of being constantly connected, expecting each and every employee to respond to messages and requests at all hours of the day.

Social Media and productivity

Social media platforms have also taken this condition of distraction to the next level.  Speaking at an industry event recently, early Facebook investor and founding president, Sean Parker, said that the massive social network is “exploiting a vulnerability in human psychology” in order to attract and retain users’ attention. And that “the thought process that went into building these applications, Facebook being the first of them, … was all about: ‘How do we consume as much of your time and conscious attention as possible?” 

So, in light of this, how can you lower your technology stress levels and increase your productivity and that of your employees?

To improve your productivity, you could consider the following pointers:

1. Prioritise the important, not the urgent

 

When missing your deadlines is not an option, the Covey Time-Management Matrix can help you to manage your available time more efficiently. This allows you to package your tasks into one of four different quadrants in the Matrix.  The key is for you to ensure that your time is balancing the short-term aspects of your role / your business with the long-term ones. 

Let’s look at the Matrix quadrants

 

Quadrant 1 Quadrant 2
Urgent and important activities Not urgent but important
These are items that you could not have been foreseen, such as emergencies, problems, last-minute preparations, etc. These are your tasks without a high urgency, but that can play a significant role in future, such as strategic planning, health, education, exercise, and career.
Quadrant 3 Quadrant 4
Urgent but not important Not urgent and not important

These are your items that appear to have a high urgency but that are not important but can impair your ability to deliver on your goals.  Try to delegate or reschedule them. These types of tasks and requests can impact your productivity. Therefore, try to avoid being constantly interrupted. Allocate timeslots in which to address all issues at the same time so that your concentration does not end up suffering. Examples include interruptions, meetings, etc.

This is the space filled with your usual time-wasters: nothing more than distractions, such as surfing the internet, Facebook, TV, trivia, etc.

 

Quadrant 1 – Urgent and important activities. These are items that you could not have been foreseen, such as emergencies, problems, last-minute preparations, etc.   

Quadrant 2 – Not urgent but important. These are your tasks without a high urgency, but that can play a significant role in future, such as strategic planning, health, education, exercise, and career.   

Quadrant 3 – Urgent but not important. These are your items that appear to have a high urgency but that are not important but can impair your ability to deliver on your goals.  Try to delegate or reschedule them. These types of tasks and requests can impact your productivity. Therefore, try to avoid being constantly interrupted. Allocate timeslots in which to address all issues at the same time so that your concentration does not end up suffering. Examples include interruptions, meetings, etc.   

Quadrant 4 – Not urgent and not important. This is the space filled with your usual time-wasters: nothing more than distractions, such as surfing the internet, Facebook, TV, trivia, etc.

 

2. Give yourself dedicated time to work  

To avoid distractions, you could give yourself the time to work on the most important, but not urgent activities (Quadrant 2).  To do this, you want to make sure you allocate two slots of 45 minutes, with a 15-minute break at half-time. This length of time allows your brain to get in the zone, consequently accelerating your concentration and productivity levels. Make sure you switch off distractions completely, such as pop-up alerts from email and social media feeds.

 

 3. Manage email communication

What do you do if your employees tend to start their working day using their inbox as their to-do list?  This inevitably becomes a distraction and wastes time, with your employees trawling through every email, line-by-line.  You could apply the following recommended approach by using the 4 D’s for email communication, in order of priority / preference: 

 

1. Delete it.  

If you can remove any email on an initial scan, all the better.

2. Delegate it.  

If you have a team, or contacts, to whom you can delegate, consider this as your next option.

3. Diarise it.

To avoid distractions that impact on your concentration, identify a suitable calendar time to address the task at hand.

4. Do it. 

If none of the above work, you may need to perform the requested task right there and then. This, however, should always be your last option. 

 

4. Consider Email freedom

Lastly, consider complete freedom from email.  You could, like some firms have done recently, introduce a ‘no email’ day policy once a week. You could also ban emails sent to people sharing the same building. As well as removing the ‘cc’ culture (covering one’s back). This ultimately forces you and your team to have face-to-face or phone call engagements with your other team members. This, in turn, can lead to improved productivity and team morale. Therefore, to be highly productive, the technology you use, needs to be handled with care. It needs to be a supportive solution to your business goals delivery, rather than a designed distraction, reducing your personal and business impact.  

 

 

Lotuswise Chartered Accountants and Business Consultants can help you and your business become more efficient and raise your productivity levels. To find out how, please contact usTo also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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