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Charity audit threshold increase

Posted by: edwinsmith on April 22nd, 2015

The government has increased the income threshold for the statutory audit of charity accounts from £500,000 to £1 million. This comes into effect for charity accounts with accounting periods ending 31 March 2015 onwards.

Also where gross assets of a charity exceed £3.26 million then if the income exceeds £500k (from £250k) a statutory audit will still be required.

Charities that can take advantage of the audit threshold increase will still require an Independent Examination if their gross income is over £25,000. With an Independent Examination there is less work involved than a full audit (although there are still Charity Commission Directions that need to be completed/followed as part of examination work). Unlike a full audit the internal financial internal controls operating within the charity would not be checked. Compared to an audit report the examination report will provide a more limited form of security but the report must still, as quoted from guidance below.

‘● confirm that no evidence has been found that suggests certain things have not been done by the charity, such as not maintaining proper accounting records; and

● provide a statement on specific matters that have come to their attention as the result of the examination procedures specified in the Directions.’

Please contact us  for further advice on charity accounts etc.

Filed under: Audit, Charities

Tax tables 2014-15

Posted by: edwinsmith on May 9th, 2014

The latest version of our tax tables document has been published on the publications and useful links page.


PAYE RTI end of tax year 2013/14 and changes for 2014/15

Posted by: edwinsmith on March 10th, 2014

End of tax year 2013/14

One of the changes that arose from the introduction of PAYE Real Time Information (RTI) for 2013/14 was the ending of the requirement for employers to submit forms P35 and P14 following the end of the tax year. The payroll details are now submitted in real time under RTI.

However there are questions similar to those included on the P35 declaration that need to be answered and submitted with the final submission - HMRC - Final  submission what to report

For many employers the final submission will be the final Full Payment Submission (FPS) informing HMRC of the last employee payment in the tax year ending 5 April 2014.

The software used by some employers may be prompted to submit the answers to questions on the declaration for ‘Final Submission for the tax year’ using the Employer Payment Summary (EPS). Employers who have not made any employee payments in Month 12 (6 March 2014 to 5 April 2014) will need to use an EPS anyway to make the final submission for the tax year.

The final submission should be made on or before the date of the employer’s last employee payment or by 19 April 2014 if sending an EPS. Penalties may be charged for late submission.

Forms P60 should be provided to employees who are still working for their employer at 5 April 2014. The employer has until 31 May 2014 to provide this form.

If employers have any expense payments or benefits to declare for 2013/14 then Forms P11d, P9d and P11d(b) should be submitted to HMRC by 6 July 2014 to avoid possible penalties.

2014/15 (from 6 April 2014)

There are some changes under the PAYE/NIC and RTI regulations that will apply from 6 April 2014 as follows:

Employment Allowance - The Employment Allowance will be introduced on the 6 April 2014 and will give eligible employers a reduction of up to £2,000 in their employer Class 1 NICs liability for 2014/15 ( Edwin Smith article -  Employers Allowance ).

Change of bandings for Reporting ‘hours worked’ for employees -

From 6 April 2014 there will be an increase to the number of bandings from 4 to 5 relating to normal weekly hours worked by employees. The revised bandings will be:

A) up to 15.99 hours

B) 16 to 23.99 hours

C) 24 to 29.99 hours

D) 30 hours or more

E) Other.

It is very important that an accurate figure is provided as the number of hours is used to support claims to benefits and Tax Credits. The employer needs to make sure that they do not simply carry forward previous selections made into 2014/15 ‘hours worked' bandings which may no longer be appropriate due to the changes.

Micro employers’ concession – the concession that applied in 2013/14 for employers with less than 50 employees will end on 5 April 2014 but will be replaced by a new concession applying to existing micro employers with less than ten employees. The concession will continue the relaxation of the RTI reporting rules for these employers until April 2016 so that FPS reports can be made on or before the last payday in the tax month.

From 6 April 2014 all other employers including new employers (with less than ten employees) will be expected to report each time they pay their employees.

Late reporting - From April 2014, it will be possible to tell HMRC the reason why a particular payment is being reported after the payment date by making an entry in the new ‘Late Reporting Reason’ data field on the FPS.

There is one change for 2014/15 that takes effect this month and it is for:

Employers running payrolls in advance of paydays in new tax year – HMRC have made changes to their software to enable employers who run their payroll in advance of actual payday to make a submission (either FPS or EPS) from 6 March in respect of payments to employees on or after the commencement of the new tax year on 6 April 2014.

If you require further information or assistance regarding PAYE (RTI) or payroll then please contact us.

The Gift Aid Small Donations Scheme (GASDS)

Posted by: edwinsmith on August 23rd, 2013

HMRC have introduced a new scheme from 6 April 2013 for charities and Community Amateur Sports Clubs (CASCs) to claim top-up payments from HMRC on small cash donations of £20 or less. This is in addition to the Gift Aid scheme which has not changed. The Gift Aid Small Donations Scheme  or GASDS could apply for example to cash collected in street collections or at religious ceremonies by charities or CASCs.

A charity or CASC will be able to use the scheme if it:

  1. is a charitable trust or a charitable company, recognised by HMRC as a charity for tax purposes or a CASC;
  2. makes claims under Gift Aid;
  3. has existed for at least the last two complete tax years (6 April - 5 April);
  4. has made a successful Gift Aid claim in at least two out of the last four tax years, without a gap of two or more tax years between those Gift Aid claims or since the last claim made; and
  5. has not incurred a penalty on a Gift Aid or GASDS claim made in the current or previous tax year.

Claims can only be made for small cash donations in notes or coins of up to £20 – donations by cheque, credit card, text or bank transfer do not count.

The amount a charity or CASC can claim depends on the amount claimed under Gift Aid and is subject to a maximum of £5,000 of donations which would produce a top-up payment of £1,250. For every £1 of Gift Aid donations that a charity or CASC claims on, they can claim on £10 of GASDS donations up to the maximum of £5,000. This is called ‘matching’. The top-up rate is based on the basic rate of tax income tax, currently 20%, and is calculated at 25% of the qualifying small donations up to the limit of £1,250.

GASDS is not a tax relief, so higher and additional rate taxpayers will not be able to claim tax relief on their GASDS donations.

More information can be obtained from HMRC.

If you require further help please contact us.

Filed under: Charities

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

Charity accounts requirements

Posted by: edwinsmith on May 30th, 2013

The financial reporting requirements applying to charities vary depending on their legal form. A charity may be

  1. Unincorporated and set up under a trust deed or constitution
  2. A registered company under the Companies Acts
  3. Incorporated by Royal Charter or under other legislation such as the Industrial and Provident Societies Acts
  4. Incorporated under the Charities Act 2011 – a Charitable Incorporated Organisation (CIO) available from December 2012.

A charity with a gross income of over £5,000 must register with the Charities Commission. All charities with an income over £25,000 must file financial statements with the Charities Commission within 10 months of the year end. Charitable companies set up under the Companies Act are also required to file their accounts with Companies House within 9 months of the year end. The new CIOs benefit from incorporation status but are only required to deliver one set of financial statements complying with charity law with the Charities Commission rather than with Companies House under company law as well.

The accounting requirements under charity law for registered unincorporated charities vary according to their size as follows:

Gross income Accounts   format Report on the accounts
Under £25,000 R&P None
£25,000 - £250,000 R&P Independent examination report (no qualification required of examiner)
£250,001 - £500,000 and gross assets under £3.26m Acc Independent examination report by a qualified examiner
£250,001 - £500,000 and gross assets over £3.26m Acc Audit
Over £500,000 Acc Audit

NOTES: R&P = Receipts and payments, Acc = Accruals accounts

However, the trust deed or constitution or a donor to the charity may require that the accounts are examined by an independent person or that a full audit is required.

Read more ›

Filed under: Audit, Charities

Charities Online – Gift Aid and tax repayments

Posted by: edwinsmith on May 14th, 2013

HMRC have made available a new online service from 22 April 2013 for Charities and Community Amateur Sports Clubs (CASCs) to make Gift Aid tax repayment claims electronically.

The new service has built-in checks to prevent mistakes and should be faster to process the repayment. When you submit a claim successfully online you will get an on-screen confirmation reference number and you will also receive separate confirmation when the payment is made into your bank account.

Changes have also been made to the rules for sponsored events and aggregating donations. More information can be obtained from HMRC where you will also find the link to register for Charities Online and a demonstrator.

If you require further help please contact us

Filed under: Charities, Tax