Employers’ Liability Insurance

Image result for employers' liability insuranceCharities which employ staff are required to take out employers’ liability insurance (EL)
Under the law, all employers are required to have a minimum insurance cover of £5 million for injury or disease suffered or contracted by employees while carrying out their duties
A charity must buy employers’ liability insurance from an insurer that is an individual or company working under the terms of the Financial Services and Markets Act 2000. The Financial Services Authority maintains a register of authorised insurers
You may not need EL insurance if you only employ a family member or someone who is based abroad

You can be fined £2,500 every day you are not properly insured.

The charity (as an employer) must prominently display a certificate showing that a valid policy is in force and the minimum level of cover purchased.

You can also be fined £1,000 if you do not display your EL certificate or refuse to make it available to inspectors when they ask.

Check to see if your insurer is authorised by looking at the Financial Conduct Authority register or contact the Financial Conduct Authority

Responsibilities of Trustees

Image result for duties of charity trustees ukYou and your co-trustees must make sure that everything your charity does helps (or is intended to help) to achieve the purposes for which it is set up, and no other purpose. This means you should:

  • ensure you understand the charity’s purposes as set out in its governing document
  • plan what your charity will do, and what you want it to achieve
  • be able to explain how all of the charity’s activities are intended to further or support its purposes
  • understand how the charity benefits the public by carrying out its purposes

Spending charity funds on the wrong purposes is a very serious matter; in some cases trustees may have to reimburse the charity personally.

More details can be found here

Spring Newsletter 2019

A Newsletter Spring 2019

Our Spring Newsletter should have arrived with you by post – if it hasn’t please let us know by emailing us here, or download it by clicking here:

Spring 2019 Newsletter

In this edition we cover changes to Income Tax, National Insurance and Statutory Payment rates; Setting Objectives the SMART way; Restricted, Unrestrictes and Designated Funds for Charities; Automatic Enrolment and Opting Out of Workplace Pensions; Honorary Presidents of Derby Community Accountancy Service

Qualifying for Statutory Maternity Pay

Image result for statutory maternity pay do i qualifyIf you need to check whether or not an employee qualifies for Statutory Maternity Pay, SMP, they need to have been earning on average at least £118 a week, before any deductions, in the qualifying weeks depending on when the baby is due.

You can use the government website calculator here

For example, if the baby is due on 30th September 2019

When does the employee want to start their leave?  14 July 2019

Did the employee have a contract with you covering 29 December 2018 to 16 June 2019?  Yes

What was the last normal payday on or before Saturday, 22 June 2019?  21 June 2019

What was the last normal payday before Saturday, 27 April 2019?  26 April 2019

How often do you pay the employee?  Weekly

What were the employee’s total earnings between Saturday, 27 April 2019 and Friday, 21 June 2019?  £944

How many weeks’ pay did the employee get between Saturday, 27 April 2019 and Friday, 21 June 2019?  8 payments or fewer

How do you want the Statutory Maternity Pay calculated?  weekly starting 14 July 2019

Based on these dates and pay figures, the entitlement would be £106.20 per week, beginning on Friday 20th July and ending on Friday 11th April 2020

If you need any further help, please contact us here

Paying Trustees for Services

Trustee ExpensesMost trustees are unpaid, but all trustees can claim reasonable out-of-pocket expenses. 

A charity can pay a trustee for the supply of any services over and above normal trustee duties.

The decision to do this must be made by those trustees who will not benefit. They must decide that the service is required by the charity and agree it is in the charity’s best interests to make the payment and must comply with certain other conditions

Examples of services that may be provided by a trustee in return for payment under the power in the Charities Act include:

  • the delivery of a lecture
  • a piece of research work
  • the use of a trustee’s firm for a building job
  • the occasional use of a trustee’s premises or facilities
  • entering into a maintenance contract with a trustee’s firm Trustee expenses and payments (CC11) 12
  • providing curtains or decorating materials for hall premises
  • providing timber for a building
  • providing specialist services such as estate agents, land agents, management and design consultants, computer consultancy, builders, electricians, translators, and graphic designers

The power cannot be used to allow payment for auditing services as a trustee cannot legally act as an auditor for his or her charity

Recording the proposed arrangement in the charity’s minutes will not be enough to meet the conditions for an agreement. There must be a separate written agreement which must cover certain issues, but there is no set format. This will depend on the nature of the service being provided, and the level of detail needed to cover it.

More detailed guidance can be found here in document CC11

Selling or Leasing Charity Property

Image result for selling charity propertyThere may be various reasons for disposing of your charity land. You may, for example, want to relocate the charity to more appropriate premises or release some cash that you can apply to other projects.

Before you start, you and the other trustees must be sure that:

  • you have permission to sell or lease the property – either in your governing document or in the law
  • there is nothing in your governing document that prevents you selling or leasing the property
  • your charity actually owns the title to the property
  • the sale or lease is in the charity’s best interests
  • if the property is designated for a particular purpose, such as a recreation ground, that the sale or lease doesn’t go against this

It’s usually straightforward to sell or lease charity land and property – most charities don’t need Charity Commission approval.  You must try to get the best deal for your charity and follow any rules in the law and your governing document.

More detailed information can be found here

For free property advice, guidance and workshops visit the Ethical Property Foundation

Making Tax Digital

Image result for Making Tax DigitalMaking Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs.

HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is:

  • more effective
  • more efficient
  • easier for taxpayers to get their tax right

VAT-registered businesses with a taxable turnover above the VAT threshold are now required to use the Making Tax Digital service to keep records digitally and use software to submit their VAT returns for VAT periods that started on or after 1 April 2019.

HMRC provides a wide range of digital services and support for businesses and the self-employed.

Qualifying Earnings Pension Schemes

Image result for pensions schemesEvery year, the Department for Work and Pensions (DWP) reviews the earnings thresholds for automatic enrolment pensions. The changes take effect from the start of the next tax year following the changes on 6 April

If you’re using qualifying earnings, you’ll contribute a percentage of your worker’s gross annual earnings that fall between £6,136 and £50,000. The first £6,136 of their earnings isn’t included in the calculation. For example, if a worker earns £20,000 their qualifying earnings would be £13,864.  This means that qualifying earnings can’t be more than £43,864 (£50,000 minus £6,136) for the 2019/20 tax year

Earnings thresholds for 2019-20

Pay reference period
2019 – 2020 Annual 1 week Fortnight 4 weeks  1 month  1 quarter Bi-annual 
Lower level of qualifying earnings £6,136  £118  £236  £472  £512  £1,534  £3,068
Earnings trigger for automatic enrolment £10,000  £192  £384  £768  £833  £2,499  £4,998
Upper level of qualifying earnings £50,000  £962  £1,924  £3,847  £4,167  £12,500  £25,000

More information can be found here

Pension Wise

Image result for pension wise hm governmentPension wise is a free and impartial government service that helps you understand the options for your pension pot.

Who?

Pension Wise can help if you:

  • are aged 50 or over
  • have a personal or workplace pension
  • want to make sense of your options

What?

What is a Pension Wise appointment?

  • Specialist pension guidance
  • 45 to 60 minutes
  • Over the phone or local to you

How?

How to book an appointment?

More information can be found here

Debtor, Creditor, Accrual, Prepayment

Debtors and CreditorsSometimes it is difficult to know how to account for transaction invoices that have been issued and not paid by the end of the financial year, either to your organisation or from your suppliers.

Your accounts are not based on the money that was actually paid or received in the financial year, they are based on what should have been paid or received.  

The following definitions may help you as you prepare your accounts for the Independent Examiner.

Debtors – A debtor is one party who owes money to another – for example, clients or customers who have not yet paid in full for any goods or services that your organisation has already supplied to them, are debtors to your organisation.

If this debt occurs before the end of one financial year, but is then paid in the next financial year, it should be included in first financial year’s accounts and recorded as a debt.

Creditors – A creditor is one party who is owed money by another – for example, suppliers who have provided your organisation with any goods or services that have not yet been paid for in full are creditors of your organisation.

Prepayments – A prepayment is when you pay an invoice or make a payment for more than one period in advance. For example, you may pay for your rent for three months in advance but want to show this as a monthly expense on your profit and loss.  Prepayments are a type of debtor.

Accruals – An accrual is when you pay for something in arrears. For example, you may receive an invoice for your electricity at the end of a quarter but want to record the payments before this. An accrual is usually based on an estimate. Therefore, when the invoice is received, you may need to make an adjustment to the final amount. An accrual is a type of creditor, money that you owe.