The sun may be shining and the temperature heading in the right direction – but many businesses are already turning their attention to booking the annual Christmas ‘do’. And it pays to know the party rules.

Most employers are aware that they can throw a staff party for their workers at a cost of up to £150 per head without this being treated as a taxable benefit, but there are conditions to watch out for.

And they are worth noting, not just for Christmas, but for events you may be thinking of having at other times of the year. After all it is barbecue season!

The exemption can apply to any type of party, provided the event is held annually. A one-off event, such as a 25th anniversary party, does not qualify.

Another requirement is that the party is open to staff generally, although it is possible to have an event for employees at one location or put on separate parties for different departments.

A function should not just be for directors, unless of course there are no other employees.

The £150 per head is not an allowance, so the entire benefit is taxable if the per head cost just exceeds £150 by a pound or two.

Along with expenditure on room hire, food, entertainment and prizes, cost includes VAT and any transport or overnight accommodation provided. Two or more annual parties can be exempt as long as the £150 limit is not exceeded.

It may be impossible to establish the exact number attending a large function, but an estimate is permitted based on the number budgeted for or booked.

Alternatively, smaller occasions, such as celebrating employee birthdays, may be funded tax free by making use of the £50 trivial benefit exemption. This may allow a party to be thrown if the “per head cost” does not exceed £50.

There is quite a bit more flexibility here as the function does not need to be open to all employees or held annually.

However, there are other conditions such as the occasion must not be provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services) and the employee must not be entitled to the benefit as part of any contractual obligation.

To discuss this article or any tax matters please contact me on 01772 430000.

The countdown is on for changes to ‘off-payroll’ working rules to be extended into the private sector – a move that could have significant impact on some businesses and sole traders.

The IR35 – also known as ‘off-payroll’ – rules allow HMRC to tax sole traders as employees if it deems their working arrangement are akin to regular staff.

In April 2017, responsibility for deciding whether IR35 should apply to self-employed workers shifted from contractor to employer in the public sector.

From April next year the same change is set to take effect in the private sector, following the publishing of the government’s draft Finance Bill.

However, that has sparked concern in some quarters, with the Blackpool-headquartered Federation of Small Businesses (FSB) among those urging delay.

It has warned that the changes, following a period of sustained political uncertainty and stuttering economic growth “risks significant disruption” to a quarter of a million sole traders.

To highlight the uncertainty it points to the fact the Small Business Index confidence measure was in negative territory for an unprecedented fourth straight quarter in the three months to June this year.

FSB National Chairman Mike Cherry says: “Pressing ahead with IR35 changes in April with no regard for the other pressures facing businesses is a reckless move.”

He adds: “Left unamended, this bill could easily usher in an environment where firms in need of expertise in the short-term steer clear of the self-employed community because they’re afraid of making an incorrect assessment, which would be damaging for all concerned.

“A lot of smaller firms that rely on sole traders have no experience of navigating IR35.”

To discuss if the rule change will have an impact on you please contact me on me on 01772 430000.

Death taxes are set to double to a massive £10bn by 2030, according to recent new analysis – almost double the Inheritance Tax (IHT) receipts for the 2018/19 tax year

The prediction by financial services firm Canada Life came as it was revealed the Treasury benefitted from record IHT receipts of £5.2bn in 2018 – which were also up £200m on the previous year.

However, while IHT receipts are on the rise in a big way, it appears that people’s understanding of the system and how it could help them pass wealth onto their beneficiaries isn’t so high.

Take the survey last month from wealth management specialist Quilter, which revealed that only 37 per cent of those asked were aware of IHT rules.

And under half of those quizzed knew about basic IHT rules around gifting or the nil rate band.

However, 60 per cent thought the rules likely to be important when it came to how they could pass wealth on.

And those percentages really highlight a big disconnect between the information available and understanding the practical implications for individuals and their families.

It is also why the forthcoming review of IHT regulations from the Office of Tax Simplification (OTS) can’t come soon enough.

The OTS is the independent adviser to government on simplifying the UK tax system, to make it easier for the taxpayer.

It is set to deliver the second part of its review of IHT regulations shortly, following an initial report in January that looked largely at administrative issues.

The exercise is aimed at simplifying how IHT is implemented, with the upcoming report expected to focus on specific areas of change.

With additional complications like the residence nil rate band still focusing on the nuclear family, the IHT regime appears out of step with modern families and concerns about inter-generational wealth.

A House of Lords committee on intergenerational fairness has already reported across a range of issues from housing to pension credits and estate tax.

Among a raft of recommendations, they called IHT “capricious and not fit for purpose”. Going back to fundamentals, the Lords report questions why and how assets should be taxed at death or on transfer to the next generation.

The report suggested options such as a capital receipts tax payable on income received by beneficiaries or exempting certain assets from IHT if earmarked for first home purchase by a family member.

Whether any of these ideas come to fruition, and whatever the awaited OTS report recommends, there are ways in which the existing IHT regime can currently benefit your own estate planning and ensure a fairer distribution of your assets through your family.

The £3,000 a year annual gift allowance is good place to start. So is reviewing your will and making sure your assets will be dispersed the way you wish.

The first question you should be asking is: “Is my estate planning up to date?”

To discuss any issues around IHT or other tax issues please contact me on 01772 430000.

Here is a stark statistic. An estimated 88 per cent of spreadsheets include mistakes, and half of those used by big businesses have “material defects,” according to a recent report.

And those errors are costing businesses billions. JP Morgan’s so-called “London whale” fiasco, which led to a $6 billion loss, involved a spreadsheet mistake.

Canada’s Canopy Growth and Societe Generale are two other big names that have suffered big losses. The spreadsheet horror stories keep on coming and it’s not just the big businesses that are at risk.

The serious operational risk businesses are facing because of lack of control over their spreadsheets, or end-user computing (EUC) tools, has been highlighted in a new study by cloud-based application EUCPlus.

More than half the businesses polled admitted to not having a comprehensive policy governing the use of EUC applications, ultimately opening them up to significant risk.

Over 47 per cent of respondents said their organisation used over 1,000 spreadsheets for day-to-day functioning, and 30 per cent admitted that more than a quarter of the spreadsheets used were critical to the running of their organisation.

Little wonder that businesses are being encouraged to switch to accounting software as they grow and develop, in order to avoid potentially costly spreadsheet errors.

Also, when your spreadsheet template isn’t working, you’re on your own. Finding and fixing errors can be time consuming when you’re trying to get on with running your business.

There are other compelling reasons to ditch the spreadsheets, no matter how comfortable you may feel with them.

The bottom line is that spreadsheets lack the power that modern small business accounting requires.

The right accountancy software, linked to the cloud, can help you see the bigger picture when it comes to your business, aiding you in developing your strategy.

We can help businesses implement the right software solutions for them – which will allow them to work much more effectively.

To discuss what software will work best for your business please call me on 01772 430000.

A new project has been launched to support Lancashire SMEs in increasing the skills and capability of their employees.

The UpSkilling Lancashire project team will help businesses identify, design, develop and implement workforce education training programmes in response to the needs of the company.

WNJ is looking to make its clients aware of the benefits of the programme, which was officially launched last month, and how they can use it to develop the skills of their workers.

Charlotte Duffell (pictured), project manager of UpSkilling Lancashire, says the project, funded by the European Social Fund, will support businesses to become more competitive and to achieve their strategic goals.

She said: “The programme has been launched to support SMEs bridge skills gaps through, among other initiatives, workplace training, an important aspect of workforce development.

“Every business has different needs, which is why the team works closely with the employer to gain an understanding of the business objectives to determine exactly the level and type of support they require.

“It will assist SMEs in gaining the competitive edge required to be able to achieve growth and success, providing a vital boost to Lancashire and helping to promote the county as a place where businesses can thrive.”

UpSkilling Lancashire is led by the University of Central Lancashire (UCLan), in partnership with Burnley College, Edge Hill University, Forest of Bowland (Area of Outstanding Beauty) Project, Lancaster and Morecambe College, Myerscough College and Preston’s College.

There are many services available through the programme, including
• Suggested pathways to training opportunities, workshops and courses
• Guidance on the Lancashire apprenticeship offer up to degree level
• Utilising current student knowledge and skills via placements and internships
• Connecting businesses who can benefit from working together whilst supporting the local economy

To qualify for free support through Upskilling Lancashire, businesses must be based in Lancashire and employ 250 employees or less.

For more information on the programme, contact 01772 895500.