Charity Trustees and Liability

Charity Trustee Liability InsuranceAbout corporate structures

Some charity structures are corporate bodies. If you choose a structure that forms a corporate body, the law considers your charity to be a person in the same way as an individual.

This gives your charity the legal capacity to do many things in its own name that a person can do, such as:

  • employing paid staff
  • delivering charitable services under contractual agreements
  • entering into commercial contracts in its own name
  • owning freehold or leasehold land or other property

If a charity structure is a corporate body, generally its trustees aren’t personally liable for what it does.

If your charity isn’t a corporate body (‘unincorporated’):

  • the trustees are personally liable for what it does
  • it won’t be able to enter into contracts or control some investments in its own name
  • two or more trustees, a corporate custodian trustee or the charities’ land holding service will have to ‘hold’ any land on your charity’s behalf

More information can be found here

Receipts and Payments Accounts

Image result for receipts and payment accountsReceipts and Payments Accounts is the simpler of the 2 methods of accounts preparation and may only be used where a non-company charity has a gross income of £250,000 or less during the financial year. Receipts and payments accounts contain a statement summarising all money received and paid out by the charity in the financial year, and a statement giving details of its assets and liabilities at the end of the year. Charitable companies are not allowed by company law to adopt this method.

Templates are available to help eligible non-company charities prepare their trustees’ annual report and receipts and payments accounts. When fully completed these meet the requirements of the law and can be used for submission to the Charity Commission.  The pro forma receipts and payments accounts can be used in one of two ways:

(i) where trustees do not wish to design their own annual accounts they may enter the relevant details and amounts from the cash book (and other) records of the charity on to the forms

(ii) trustees who want to produce their own form of receipts and payment accounts can use the forms as a checklist.

Very useful Receipts and Payment Accounts Introductory Notes can be found here

Templates for preparing Receipts and Payments Accounts can be found here

Cashflow Forecasting

CashflowA cash flow forecast is an estimate of the amount of money you expect to flow in and out of your charity and includes all your projected income and expenses.  A forecast usually covers the next 12 months, however it can also cover a short-term period such as a week or month.

The most important reason for a cash flow forecast is to make sure that the charity can afford to pay suppliers and employees. Suppliers who don’t get paid will soon stop supplying the charity – it is even worse if employees are not paid on time.

A cash flow forecast can help you:

plan out how much income you expect to have this year

plan how much you expect to spend in costs

understand when cash will come into your bank account and leave it

Armed with this knowledge, you will be well placed to make important decisions about your charity. Here are some questions that a cash flow forecast can help you answer:

Could you offer a new service?

Could you start providing services in a different location?

Can you afford to employ new members of staff?

Should you outsource some of your day-to-day tasks?

If you need more space for your charity, can you afford to rent an office rather than working at home?

Are you at risk of running out of cash? Should you look at borrowing money?

If you require further help with this subject, please contact us here

Understanding Cumulative Tax Codes

Tax codes that are applied on a cumulative basis means that tax calculations look at the entire tax year when performing the tax calculation. Using a tax code on a cumulative basis means that every payday, the calculation performed is to work out the tax due on an employee’s earnings for the (tax) year to date then deduct from it the tax they have already paid on their earnings that (tax) year. The remaining figure is the tax due for the pay period.

A Cumulative Tax Code allows for an individual’s weekly / monthly Tax Free Allowance to be carried forward if it is not used. As an example – if an individual were to have a break from work (for example, due to unpaid leave or sickness etc), when they resume, it is often the case that they will pay little or no Tax until they have caught up with their Tax Free Allowances.

A non-cumulative tax code would be signified by an “X” or “W1/M1″ following the code. In these cases the tax would be worked out purely on the taxable pay for each individual pay period. Each payday is treated as if it is the first week or month of the tax year. Previous pay and tax details are ignored.

Spring Newsletter 2018

Spring Newsletter 2018

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 here:

 Newsletter Spring 2018

In this edition we cover HMRC Rates and Threshold Changes, Independent Examination of Accounts, Charity Governing Document, Claiming Tax Back on Donations, Gift Aid

How to Register as an Employer with HMRC

You normally need to register as an employer with HM Revenue and Customs (HMRC) when you start employing staff, or using subcontractors for construction work.

You must register even if you’re only employing yourself, for example as the only director of a limited company.

You must register before the first payday. It usually takes up to 5 days to get your employer PAYE reference number. You can’t register more than 2 months before you start paying people.

If your business starts employing people on or after 6 April, you’ll get your employer PAYE reference number by 17 May.

To pay an employee before you get your employer PAYE reference number, you should:

  1. Run payroll
  2. Store your full payment submission
  3. Send a late full payment submission to HMRC

More information and help can be found here

Getting Financial Help With Statutory Pay

What you can reclaim

As an employer, you can usually reclaim 92% of employees’ Statutory Maternity (SMP), Paternity, Adoption and Shared Parental Pay.

You can reclaim 103% if your business qualifies for Small Employers’ Relief. You get this if you paid £45,000 or less in Class 1 National Insurance (ignoring any reductions like Employment Allowance) in the last complete tax year before:

  • the ‘qualifying week’ – the 15th week (Sunday to Saturday) before the week of the due date
  • the ‘matching week’ – the week (Sunday to Saturday) your employee was told they’d been matched with a child by the adoption agency
  • the date on the official notification if your employee is adopting a child from another country

How to reclaim

Calculate how much you’ll get back using your payroll software. To reclaim the payments, include them in an Employer Payment Summary (EPS) to HM Revenue and Customs (HMRC).

You can write to the PAYE Employer Office to ask for a repayment if you can’t set off the payments against the current year’s liabilities. You can’t do this until the start of the next tax year.

National Insurance Contributions and Employers Office 
HM Revenue and Customs 
BX9 1BX 

Complete and return an SP32 form to HMRC if you didn’t submit your PAYE information in real time (RTI) for a previous tax year.

You can find out more information here

Accounting for Voluntary Groups

Related imageIs your group run by a management committee? Then you need to be aware that you hold the same responsibilities as a charity trustee when handling money that does not belong to you personally.

Well regulated accounts will show all day-to-day entries for all money received or spent, showing what the money was spent on, or received for, during the group’s financial year. 

Many groups run their financial years to begin on April 1st and end on 31st March the following year, but different dates may be chosen if more appropriate to your group’s activities (eg matching the season if a sports group, or school year if it involves young children)

All financial records should be kept for six years

If you need help in setting up or modifying your accounting system, please get in touch here

Improving Digital Skills – Learn My Way

Image result for Learn My Way digital skillsLearn My Way is the online learning platform built by Good Things Foundation to make getting online easy. 

The website contains over 30 free courses designed to help beginners get started with the online basics – using a mouse, keyboard, setting up email accounts and using internet search engines – while also offering plenty to help people continue their journey to develop their digital skills further.

Learners can try the free online courses at home, work their way through with a friend or family member, or go to their local Online Centre for some tailored help and guidance.

The site offers more advanced learners the opportunity to progress on to further skills, including courses to help them become confident users of online health services, manage their finances, and a guide to use Universal Jobmatch and gain skills for employment. 

Pension Contribution Rate Changes

Related imageMinimum Contribution Rates for Workplace Pensions are changing

This table shows the minimum contributions you must pay and the date when they must increase

Date Employer minimum contribution Staff contribution Total minimum contribution
Until 5 April 2018 1% 1% 2%
6 April 2018 to 5 April 2019 2% 3% 5%
6 April 2019 onwards 3% 5% 8%

More information can be found here, including a letter template to send to staff