My staff want to Opt Out of Auto Enrolment…
Not every employee will want to be in Auto Enrolment, for example they may have their own pension arrangements.
But be very careful that you don’t induce or encourage them to opt out.
Most employees will want to be IN
Once staff have been enrolled into the pension scheme, they have one calendar month during which they can opt out and get a full refund of any contributions. This is known as the ‘opt-out period’. It starts from the whichever date is the later of:
- the date active membership was achieved, or
- the date they received your letter with the enrolment information.
Staff can’t opt out before the opt-out period starts or after it ends. If they decide to leave the scheme outside this period, they will instead be ‘ceasing active membership’. Whether they get a refund of contributions will depend on the pension scheme rules.
Staff opt out by giving you an ‘opt-out notice’. The opt-out notice is provided by the pension scheme. This is to avoid any employer involvement in the decision to opt out, which could lead to a breach of the law.
If an employer does anything to encourage or induce an employee or potential employee (at interview) to opt out they will be subject to harsh penalties.
If an employee does Opt Out they will be re-enrolled every 3 years.
steve@bicknells.net
5 reasons to move business premises into your pension?
Often business premises are owned by the business, this could be for many reasons for example the business has multiple owners or it helps to increase the business net worth.
But in many cases it would be better for the premises to be owned by the business owners pension fund because:
- The object of the business is not to own its own property, the objective should be for the business to make profits from trading
- The business could use cash tied up in the premises to invest in trading activities
- Pensions are a very tax efficient method of ownership – no capital gains, no tax on rental profits
- Company Pension Contributions are Tax Deductible and Individual contributions get income tax refunds
- You may be able to use 3 year Carry Forward to get funds into your pension scheme
In summary to move your business premises from your business to a SIPP or SSAS pension you would do the following:
- Find a lender prepared to lend a third of the property value to your pension scheme (which will be half the value of the fund ie if the property was valued at £300k, your pension could borrow £100k which is 50% of the £200k which will need to be funded by your pension scheme)
- Have the premises independently valued and rent assessed and appoint solicitors
- Create a SSAS or SIPP pension (you can include other people in your SSAS or SIPP investments)
- Transfer into your SSAS or SIPP any funds you have in other pension schemes
- As you are the business owner and its your pension scheme your business could make a payment into your pension scheme, the maximum for the last 3 years would be £140k (£50k + £50k + £40k) see details of NRE
- The pension contribution from your company could be an In Specie payment (meaning its in kind not cash)
- You could make a personal payment to your pension and if you are a higher rate tax payer your will get a tax refund via your self assessment return
- Then your pension scheme buys the premises from your business and rents it back to the business
steve@bicknells.net
Can I have a Tax Free Lunch?
Let’s look at the options….
Exemption for Canteen Meals
Employees can be provided with free or subsidised meals provided generally to employees served on the business premises where the following 3 conditions are met:
- The meals are provided on a reasonable scale
- That all employees or all those at a specific location may obtain free or subsidised meals
- If the meals are provided in a restaurant or hotel at a time when meals are being served to guests/clients part of the dining area is designated for employees
Not everyone needs to use the facility they just need the option to use it and its is possible for senior management to have superior meals.
This exemption is not available where only select employees are able to get a free lunch.
HMRC are happy to accept Tea and Coffee as trivial benefits that can be ignored.
Benchmark Subsistance
Since April 2009 employers have been able to pay their employees HMRC approved flat rate allowances referred to as Benchmark Subsistance, the rates are:
- £5 if you buy a breakfast and start your business journey before 6am
- £5 if you’re out of the office on business for more than 5 hours, and buy one meal
- £10 if you’re out of the office on business for more than 10 hours, and buy 2 meals
- £15 if your business trip keeps you beyond 8pm, and you buy an evening meal
So £15 is the maximum
You can only claim if:
- travel is required as part of your dutues or you are working at a temporary work place
- you are away from your work place or home for more than 5 hours
- you are expected to pay for food and drink after starting your journey
Meal Vouchers
Vouchers can be issued tax free but only up to the value of 15p per working day and the voucher must be non-transferable and used for meal only.
Travel Expenses
I have separate blog on this topic http://stevejbicknell.com/2013/02/13/what-travel-expenses-will-the-taxman-allow/
steve@bicknells.net
Risk
Risk. It’s not a word you’d normally associate with financial people, or at least not in a positive sense.
I recently attended a training course, offered by a company who I’d met whilst networking. I didn’t have any expectations. I guess I was open minded.
As the day enfolded, I was recognising some of the theories and explanations.
Then we played a game. A very simple game. Our group of 6 each had an envelope with flat shaped pieces in. None of the envelopes had enough to make a square individually but collectively, there were 6 squares of the same size to be made. Easy, then. Yes? Well, no, actually. No speaking or communicating in any way was allowed. You could offer one of your pieces to someone else and they could either accept it or not. No expressions allowed, either. And the game would only be over when we had all completed our squares.
I was offered a piece, took it and made my square. So did someone else. We both sat back, arms folded. Job done. Just need these other 4 to work it out now. But I was still being offered a piece. Why? I’d got my square. After a couple of minutes, I realised that my square wasn’t the right size. I needed to do something. I needed to offer one of my pieces to get one back that made a bigger, correctly sized, square. No, 2 pieces. Actually it was 3 pieces. Now I had the right square, as did 3 others. Still, though, 2 people hadn’t. One didn’t have enough pieces and one had too many. They weren’t offering any pieces up. That’s when the rest of us realised (without communicating remember), that we had to give up pieces from our completed squares to get them to move their pieces, so we could complete the game. We did, the other 2 realised and we all completed our squares. 10 minutes that took. That’s very good, we were told. One group previously, had taken 1 hour and 40 minutes!
This was a light bulb moment for me. I realised that even though you may think you’ve achieved something, it doesn’t mean you have and that sometimes, you have to give something up to help others, which ultimately benefits them and you.
Risk. Not a word you’d normally associate with financial people. Only, in this instance, you should.
How does Auto Enrolment Postponement work?
You can choose to postpone automatic enrolment for up to three months for some or all of your staff. You must write to your staff to tell them you’re postponing automatic enrolment for them. One of the times you can postpone is from your staging date.
Key points
- You can postpone automatic enrolment for up to three months from certain dates.
- If you postpone from your staging date, your staging date does not change.
- If you choose to postpone from your staging date, you must write to tell the staff who will be postponed within six weeks of your staging date.
Why Postpone?
- Its unlikely that your payroll processing period will match your staging date, most staging dates are the 1st of the month but many payrolls are weekly, it makes sense to start auto enrolment on a pay processing date
- If you have short term staff or you are a temp agency you will probably postpone in order to avoid unnecessarily assessing staff who will leave within the postponement period
- You may also postpone to reduce auto enrolment pension payments and admin
- You can choose any business reason
When can you postpone?
You can only postpone automatic enrolment from:
- your staging date
- a staff member’s first day of employment
- the date a staff member first becomes eligible for automatic enrolment.
If you postpone from your staging date, it doesn’t change your staging date.
Staff whose automatic enrolment you’ve postponed can choose to opt in to your pension scheme during the postponement period.
The Pension Regulator has further details
Don’t mess this up, if you don’t get postponement right…..
- You will get a Warning
- Followed by a penalty of £400
- Followed by fines of £500 to £2,500 per day (depending on the number of employees)
Even the smallest business will get fines of £50 per day!
steve@bicknells.net
You will initially be given a warning, which will be followed by a fixed penalty of £400. Not too severe so far, but then the penalties shoot up for those companies who still fail to comply.
If you employ between 50 and 249 employees the fine for on-going non-compliance is a whopping £2,500 per day. For businesses with fewer employees, between five and 49 the penalty is still £500 per day and even the smallest of businesses will be fined £50 per day.
I need an accountant for my business!
Often business owners wait too long before they realise that they need help from an accountant.
Key reasons are:
- They don’t understand the difference between a book keeper and an accountant
- They think an accountant will just be an extra cost – the reality is that most accountants will save the business many times their cost
- They think they accountants are just bean counters
But if you choose a qualified and experienced accountant they can bring huge benefits….
- Management tools to improve profitability
- Cost Controls
- Tax Savings
- Identifying Cash Flow needs and funding solutions
- Growth Strategies
- Business Planning
- Budgeting
- Business Structures
- Business Accounting and Reporting Systems
- Maximise Credit Scores to win more business
So don’t wait too long, getting an accountant should be a priority for all businesses!
steve@bicknells.net
Is an SME really exempt from the ‘Arms Length’ inter company pricing?
You might think you can charge related companies whatever you want, but is that true?
First a quick lesson in Transfer/Internal Pricing ….
SME’s do have tax exemptions….
There’s an exemption that will apply for most small and medium sized enterprises. The conditions attached to this exemption can be found in HMRC’s International Manual.
A business is a ‘small’ enterprise if it has no more than 50 staff and either an annual turnover or balance sheet total of less than €10 million.
A business is a ‘medium sized’ enterprise if it has no more than 250 staff and either an annual turnover of less than €50 million or a balance sheet total of less than €43 million.
There are some exceptions:
- Transactions with Parties in Non Qualifying territories
- Where HMRC have issued a notice to Medium Sized enterprise
- Election to remain subject to transfer pricing rules
- Patent Box
steve@bicknells.net
65% of SME’s rejected for a loan want to try alternatives… would you
A government consultation ended last week into whether legislation should force banks to refer rejected loans to alternative sources of finance.
At present the largest four banks account for over 80% of UK SMEs’ main banking relationships. Many SMEs only approach the largest banks when seeking finance. Although a large number of these applications are rejected – in the case of first time SME borrowers the rejection rate is around 50% – a proportion of these are viable and are rejected simply because they don’t meet the risk profiles of the largest banks. There are often challenger banks and alternative finance providers with different business models that may be willing to lend to these SMEs.
Although the largest banks will sometimes refer these SMEs on, in many cases challenger banks and other providers of finance are unable to offer finance as they are not aware of their existence and the SMEs are not aware of the existence of these alternative sources of finance.
SME’s most trusted advisors are Accountants, according to Accountancy Age a fifth of SME’s are more open with their accountant than their bank manager and half believe that their Accountant is the most valuable source of business advice and just under half turn to their Accountant first for advise.
So why aren’t banks working more closely with accountants? I think its because its hard to work with individual accountants and build multiple relationships, its much easier to work with groups of accountants on a national basis such as www.business-accountant.com
Would you ask your accountant if you were looking for finance?
steve@bicknells.net
Why do I need a Forensic Accountant?
Forensic accountants are called upon to help in many situations:
- Shareholder and partnership disputes
- Divorce Cases – assessing assets and liabilities
- Professional Negligence claims
- Personal Injury Claims
- Insurance Claims – Business interruption and loss of profit
- Fraud Investigations
- Criminal Investigations
Often Solicitors will appoint Forensic Accountants and obtain quotes from several accountants before making a recommendation to their client.
CIMA Accountants are well suited to Forensic Accounting because of their business experience and analytical skills.
Divorce is a growth area for Forensic Accounting as its common for both parties to value assets and liabilities in different ways, to resolve this in some cases accountants will be jointly appointed by both parties.
The process is normally as follows:
- The Solicitor issues instructions to the Accountant
- The Accountant reads the brief, investigates the information supplied and searches for undisclosed information (for example Land Registry, Companies House, Internet etc)
- The Accountant requests further information via the solicitor
- Appropriate calculations are carried out
- A report is prepared which can be presented to the Court
steve@bicknells.net
Are you your worst enemy?
I have been spending time mentoring fellow accountants in practise who have moved from the world of industry to working for themselves as accountants to SMEs.
As with many business owners one of their key problems is a lack of confidence, not in their abilities as accountants, but in determining the value they bring to their clients. This leads to them taking on work which is below their qualifications and experience, because it is easier to ‘sell’ lower level work if you don’t understand the value to clients of more challenging projects.
It is then very easy to get onto the tread mill of having to take on lots of low value clients/projects just to pay the bills. Because all their time is taken up servicing clients, rather than developing their business, they don’t have time to go after higher value work. This then means they find it very difficult to break out of the rut they have dug for themselves.
Another problem is that, even if they are trying to go after higher level projects, they are not clear enough on what their ‘perfect’ client looks like. To the ‘perfect’ client the work professionals can do for them is of real value. They want the service and are prepared to pay an appropriate fee for it.
Other clients may have been told they need the service but it has less value to them because they do not get why it is important to them. These clients will view a professional’s fees as a cost and are much more likely to want the service at a cut down fee. In this situation the management accountant (in this scenario) may still be in the position of doing a large number of hours for a relatively low rate and have the same problem as detailed above.
They have become their own worst enemy!
The key to understanding the value you can bring to customers is to talk to them! I know this sounds obvious but we are often put off from talking to our clients because we are afraid they will tell us something we don’t want to hear. However, it is more likely they will tell us something we DO want to hear!
If you don’t have any ‘perfect’ clients you will still have introducers and other business professionals with whom you can talk to chrystalise your value proposition.
Although this blog has focused largely on accountants the same problems can be found with other professional service providers and the solutions are the same:
– Have confidence in yourself and your abilities
– Understand the value your clients realise from what you do and charge accordingly
– Concentrate on projects in which you have particular expertise
– Identify your perfect clients and market to them
Become your best friend and give yourself the best chance of running the business you deserve
Fiona 🙂
Business Accountant 