Our Christmas opening hours:
Merry Christmas and a happy new year from the team at Fletcher Thompson. Our festive opening hours are as follows:
Tuesday 24th December – Business as usual 8:30 to 5:00
Monday 25th December to Wednesday 1st January – Closed
Thursday 2nd January – Business as usual 8:30 to 5:00
Yet to sort out your tax return for the 31 January deadline and need help? Contact us to see how we can help.
Christmas gifts of up to £50 to employees:
Remember that certain gifts to staff at Christmas are tax free if structured correctly. Ever since April 2016 employers are allowed to provide their directors and employees with certain “trivial” benefits in kind tax free.
The rules were brought in as a simplification measure so that certain benefits in kind do not now need to be reported to HMRC, as well as being tax free for the employee. There are of course a number of conditions that need to be satisfied to qualify for the exemption.
Conditions for the exemption to apply
• the cost of providing the benefit does not exceed £50
• the benefit is not cash or a cash voucher
• the employee is not entitled to the benefit as part of any contractual obligation such as a salary sacrifice scheme
• the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services)
This exemption will generally apply to small gifts to staff at Christmas, on their birthday, or other occasions and includes gifts of food, wine, or store vouchers. Note that where the employer is a “close” company and the benefit is provided to an individual who is a director or other office holder of the company, the exemption is capped at a total cost of £300 for the tax year.
Please feel free to contact us if you are considering taking advantage of this exemption.
Get on your bike! Using the cycle to work scheme:
The government has recently announced that the previous £1,000 limit on the cost of a bicycle provided under the cycle to work scheme has been removed. This will apply where the employer uses a firm authorized by the Financial Conduct Authority (FCA) to hire out cycles to employees who use them to commute to work.
Note that where the cycle is provided under a salary sacrifice arrangement there continues to be no taxable benefit if the amount paid by the employee is within HMRC approved limits. Note that where the bicycle is transferred to the employee after 6 years HMRC accept that value is negligible.
The provision of a bicycle to employees under the governments cycle to work scheme is an exception to the general rule introduced from April 2017 where the amount taxable is the greater of the salary foregone and the taxable benefit as set out in the tax legislation.
Other exceptions to the general rule include employer pension contributions and childcare vouchers.
Please get in touch for further details.
Reduce debtor days to improve cash flow:
Customers are reluctant to part with their money, even if it's to pay for your goods or services. As such, it can take a while for them to pay their invoices.
While longer debtor days might not be a big issue for huge international corporations, for the rest of us, it can be a very real source of stress. You need your customers to pay you as quickly as possible so you can continue to run your business, so it's easy to find yourself working extra hours, chasing up late-paying clients. Here are a few tips to help you to reduce your debtor’s days.
Be clear and concise
When creating an invoice, think about your messaging. Is the due date easy to see on the page, does your invoice state exactly how much payment is required and have you clearly outlined the various payment options that you accept (such as bank transfers, cash, cheque, etc.)? Options such as “pay now”, “pay by instalments” or “pay on the due date” should be clearly set out.
Sometimes offering a small discount can motivate your clients to pay on time. Offering say, 5% off the total bill for clients who pay within 2 weeks of the invoice date can help a business to get cash in quicker. Setting this type of incentive out at the beginning of a client relationship can go down well as clients can see the early payment discount as a “value add”.
Charge fees for late payment
Incentivise customers to pay you on time by charging a fee for late payments. If you communicate the terms and conditions around late fees clearly, clients will not be surprised if they are charged for late payment.
If you are going to charge clients for late payment, it is usually effective to give some sort of warning. It may be helpful to send clients an email saying that “payment is due in 10 days time and if it isn’t received, a late payment fee will be applied.” This gives the client an opportunity to respond.
There are a vast array of systems available to help businesses to track invoices, monitor payments and manage clients who have missed payment deadlines. With an automated accounts receivable system, you can keep track of the status of each invoice, who has paid and what is outstanding. You can set up automatic reminders at crucial moments in the payment cycle and significantly reduce your administration time.
By implementing the above strategies, you can reduce debtor days in your business and ensure that you are getting cash in as quickly as possible.