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Charity accounts requirements – incorporated charities

Posted by: edwinsmith on June 28th, 2013

This article follows on from last months Charity accounts requirements.

Charities incorporated under the Companies Acts need to consider the financial reporting requirements under the Companies Acts and the Charities Act. All incorporated charities must prepare accounts under the accruals basis – there is no option for receipts and payments accounts for those with gross income less than £250,000.

Audit exemption under the Companies Acts is available to small charities that satisfy the criteria for small companies but the criteria for an audit under the Charities Act are lower. However, if the company qualifies as small but at least 10% of the members of the company request an audit, then an audit under the Companies Act must take place. The articles of association or constitution or a donor to the charity may also require that the accounts are examined by an independent person or that a full audit is required even if the charity meets the criteria for exemption from audit.

To qualify as a small charitable company the charity must meet two out of the following criteria:-

Gross income < £6.5m
Gross assets < £3.26m
Number of employees     < 50

The audit process and requirements will be similar whether the audit is conducted under the Charities Act or the Company Acts but the report will be different in respect of the legislation it is being issued under.

Under charity law, the reporting requirements for registered incorporated charities that meet the small company thresholds are as follows:

Gross income

Gross assets

Report on the accounts IF audit exemption claimed under Companies Acts for small companies

Under £25,000   None
£25,000 - £250,000  

Independent examination report (no qualification required of examiner)

£250,001 - £500,000

Less than £3.26m

Independent examination report by a qualified examiner

£250,001 - £500,000

Over £3.26m

Charities Act Audit

Over £500,000  

Charities Act Audit

More information can be obtained from the Charity Commission.

If you require further help please contact us.

Filed under: Audit, Charities

Employer payrolled benefits and P11d forms

Posted by: edwinsmith on June 21st, 2013

Employers can make arrangements with HMRC to payroll benefits in kind. This means that benefits in kind and expenses would be put through the payroll for employees. The employees would then be taxed in ‘real time’ rather than be taxed at some future time via their PAYE tax code or if applicable through their self assessment form.

In practice the cash equivalent of the benefit in kind would be calculated on an annual basis and split over 12 months if employee paid monthly or 52 weeks if paid weekly and the appropriate amount added to the payroll.

This can be done for all benefit in kinds or the employer can choose specific benefits to be payrolled which can be agreed with HMRC.

Employers making payrolled benefits still need to complete and submit P11d forms and will be liable to penalties if forms not submitted. Detailed below is an extract from HMRC on the steps to take when submitting forms - HMRC - P11d forms

If all benefits have been payrolled and P11ds filed online.

  1. notify HMRC that you will be sending P11Ds for directors or employees where payrolling has taken place in that year, in order to avoid incorrect processing of the data - there's an HMRC online form payrolled benefits you can use to do this or you can telephone HMRC's Employer Helpline.
  2. complete the 'amount made good or from which tax deducted' boxes (where this box is available for the relevant benefit).
  3. complete the P11D(b) form as normal, ensuring that the total expenses and benefits provided are included irrespective of payrolling.

If some benefits have been payrolled for some or all employees and P11ds filed online.

  1. complete the 'amount made good or from which tax deducted' boxes (where this box is available for the relevant benefit).
  2. submit P11D information, either online/electronically or on paper for non-payrolled benefits.
  3. submit P11D information, either online/electronically or on paper for payrolled benefits, where the benefits that have been payrolled have a corresponding entry for 'amount made good or from which tax deducted'.
  4. submit separately on paper, P11D information for other payrolled benefits - these separate P11Ds and lists must be clearlymarked 'PAYROLLED' .
  5. complete the P11D(b) as normal, ensuring that the total expenses and benefits provided are included, irrespective of payrolling .

Benefits have been payrolled for some employees and paper P11ds.

  1. clearly mark all relevant paper submissions 'PAYROLLED', whether they be individual P11Ds or in list format .
  2. complete the P11D(b) as normal, ensuring that the total expenses and benefits are included, irrespective of payrolling .

Please contact us if you require any further advice on payrolling benefits in future or completing p11d forms.

Filed under: Benefits, Employers, PAYE, Tax

Stamp Duty on Shares and Completion of Stock Transfer Forms

Posted by: edwinsmith on June 14th, 2013

If you buy shares (unless the shares are bought electronically) then you will need to complete the stock transfer form J30 and since 5 April 2012 there has been a new version of the form.

If you buy shares valued above £1,000 using a stock transfer form then unless the share transaction qualifies for a relief or exemption then you will need to get the form stamped by HMRC and pay stamp duty. Stamp duty is charged at the rate of 0.5 % of the value of chargeable consideration.

The stock transfer form should be sent with the payment to HMRC for stamping within 30 days of the effective date of transfer to the address detailed on following link HMRC Applying to get stock transfer form stamped which has further details on payment methods and information to provide. Penalties and interest may be charged for sending the form late.

If you buy shares for £1,000 or less then you don’t have to tell HMRC about the transaction. Normally no stamp duty will be payable on the transaction. However you do still need to complete the stock transfer form with the usual information (detailed below) together with following.

  1. Making sure the first exemption certificate is completed on the back of the form (if you have not paid anything for shares then certificate does not need completing).
  2. Send the stock transfer form and old share certificate to the registrar of the company shares bought regardless of how much paid - it would normally be the registered office address of the company.

When completing the stock transfer forms there are two certificates on the back of the form that need to be considered. The front page will need completing with all the details of the sale including consideration, buyer, seller and date of transfer. There are two certificates on the back of the form.

  1. Certificate 1 – This should be completed if the consideration you give for the share is £1,000 or less and the transfer does not form part of a larger transaction or series of transactions that exceed £1,000.
  2. Certificate 2 – The second exemption certificate should be completed where the transfer exempt or the consideration given is not chargeable consideration. Exempt transfers include transfers in connection with divorce or dissolution of civil partnership HMRC - Stamp Duty reliefs or exemptions and how to apply
  3. No certificate is needed if no consideration is paid for shares or a claim for relief from stamp duty is being made.  If claim for relief then details of claim needs to be sent to HMRC with stock transfer form (see HMRC link above for reliefs).

Please contact us  for further advice on stock transfers and form J30.

Filed under: Tax

PAYE Settlement Agreements (PSA)

Posted by: edwinsmith on June 7th, 2013

Are you preparing your P11d forms for 2012/13? Have you incurred expenditure on an annual event(s) for your employees but went over the threshold of £150 per head for tax exemption and you do not want your employees to suffer tax on the event? If so, a PAYE settlement agreement may be for you.

What is a PAYE settlement agreement or PSA?

A PAYE settlement agreement or PSA is a flexible scheme an employer can use to settle any PAYE tax and NICs due to HMRC on three groups of expenses and benefits:

  1. Minor items: e.g. a small present for an employee in hospital or an employee's use of a pool car where the conditions for tax exemption don't apply; or
  2. Irregular items: e.g. expenses of a spouse occasionally accompanying an employee abroad, or relocation expenses in excess of the £8,000 tax exemption threshold; or
  3. Impractical items: e..g items where it is impracticable to operate PAYE on or determine a value for P9D or P11D purposes, such as shared benefits (like shared cars or taxi journeys, for example) that are difficult to attribute to individual employees.

If HMRC agrees to include an expense or benefit in a PSA, you will not have to include the item on an employee's form P11D or P9D and pay Class 1A NICs on the item at the end of the tax year, or put the item through your payroll to work out any PAYE tax or Class 1 NICs due. Read more ›