Depreciation is the decrease in value of an asset. It reflects the use of the asset and the passage of time. It spreads the cost of the asset across the years (or more correctly, accounting periods) of it’s useful life.
Happy Accountant
May 062008
May 052008
Capital expenditure is quite simply expenditure on buying or improving an asset (whether that asset be a physical one or not which “provides future benefits” over more than one accounting period).
It is commonly abbreviated to Capex.
Apr 112008
For anyone frustrated by automated call-centres and endless “touch-tone” menu options, this great site, GetHuman.com, shows you how to get through to a proper human being.
Apr 102008
The financial consequences of being inside IR35 are mainly (there are other consequences) you lose the tax-avoidance facility of dividends.
Essentially, if you are within IR35, you must calculate a “deemed payment” and pay NICs and PAYE (tax) on that deemed payment.
The tax-deductible amounts that you can claim in travel and expenses will also be affected.
HMRC publishes an introduction and a list of guiding questions to help you to decide whether you fall inside or outside IR35.
You will need to examine whether IR35 applies on a “contract by contract” basis. It is possible to have some contracts within IR35 and some outside IR35
The circumstances of your “intermediary” is also a factor. For example, if the intermediary is a limited company – who owns the shares and in what proportion?
The wording of your contract and your working practises are also factors. Although, it is worth knowing that there is no such thing as an “IR35-proof” contract. In the event of an enquiry, HMRC would examine the reality of your situation, not just your written contract.
If you are a “borderline” case, it may be worthwhile consulting an employment law specialist to examine your contract, working practises
(“Inside IR35″ – IR35 legislation applies to your circumstances
“Outside IR35″ – IR35 legislation does not apply to your circumstances)
Although, traditionally IR35 affected IT contractors and engineers, the legislation is not actually limited to a particular trade, occupation or business sector.
If you personally perform services for your customer, through an intermediary, but you could be deemed an employee of your customer if it were not for the existence of the intermediary, you could fall within IR35.
Apr 072008
IR35 was first propsed in 1999 and was introduced into UK legislation in 2000. The primary aim has been to prevent the avoidance of tax and national insurance by trading through an intermediary (commonly a limited company) rather than being an employee.
Prior to IR35, individuals could form a limited company and invoice their “client”/”employer” and then have their own limited company pay them a minimum salary and take the remainder as dividends. This avoided national insurance and tax through PAYE on the dividend element.
Mar 072008
… and other non-geographic numbers.
In recent years, more and more companies have been moving to “non-geographic” numbers (generally with a dialing code starting with 05 and 08, or worse still, a premium number which begins with 09).
If you have an inclusive tarif which means that all calls to geographical landlines are “free” (well, included in the standing charge), you may be charged extra (sometimes a premium) for calls to non-geographic numbers such as 0845, 0890 numbers.
There is always an underlying “geographic” landline number beneath the “non geographic” one. Some organisations will give this number out, on request. Unfortunately, some organisations (shamefully, this includes HMRC) will not give out the underlying geographic landline number that “underlies” the non-geographic number. Personally, I am not sure why a company would want to put off its customers/potential customers in this way, but that is another debate.
However, at www.saynoto0870.com there is a growing database of corresponding geographic landline numbers. It is possible to search for an alternative number by either company name or by non-geographic number and find the underlying geographic number. It is also possible to add your own entry should you discover an underlying geographical number that isn’t already listed.
A quick guide to UK dialing codes:
- 01 geographic landline code
- 02 geographic landline code
- 03 non-geographic code (charged at or below rates for geographic numbers)
- 0500 national freephone numbers
- 055 corporate numbers
- 07 radio, personal or mobile numbers
- 0800, 0808 national freephone numbers
- 0844 non-geographic numbers (up to 5p/min from BT landline)
- 0845 non-geographic numbers (up to 4p/min from BT landline)
- 0870 non-geographic numbers (up to 8p/min from BT landline)
- 0871, 0872 non-geographic numbers (up to 10p/min from BT landline)
- 09 premium rate numbers
Mar 062008
Once a payroll is in operation, HMRC lay down certain requirements as to what records and information needs to be kept. These include:
- employees names, addresses (and their dates of birth)
- gross pay, NICs, PAYE, other deductions, net pay (keeping a copy of their payslip would normally satisfy this requirement, assuming the payslip contained all the correct and required information)
- copies of the employees’ P60
- holiday, sickness, overtime, bonuses, commission details
- value of benefits in kind and expense payments
- amounts paid over to HMRC
Other information will also be required in the event of maternity/paternity/adoption and sickness/sick pay.
In addition to records relating to payroll, you will be required to keep records relating to other matters, for example: hours worked, pensions, holidays taken, accidents. (This is not an exhaustive list by any means)
Mar 052008
Logically, the basics of payroll are straightforward but unfortunately, there are various rules and thresholds which can make actually operating a payroll less so.
In calculating an employee’s pay, normally, you begin with their gross pay and then work out the deductions. After taking away all the deductions, the net pay figure is what is left owing to the employee.
Generally, (assuming the employee is earns over the threshold amounts), there is tax to deduct under (PAYE – pay as you earn), National Insurance. There may be other deductions, such as pension contributions, student loan repayments (after 1998), deductions arising from attachment of earnings order and charitable donations (this list is not exhaustive).
On top of that, an employer must pay employers national insurance contributions (generally on the gross pay, if above the threshold).
There is also national insurance contributions payable on certain benefits in kind.
The employee gets paid their net pay (gross pay less all the applicable deductions), the employer pays over the deductions to the relevant organisation. (eg. PAYE, NICs – both employees and employers NICs – and student loans to HMRC, pension contributions to the pension company and so on)
