A 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
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.
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
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
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
Is 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
Learn 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.
Minimum Contribution Rates for Workplace Pensions are changing
This table shows the minimum contributions you must pay and the date when they must increase
||Employer minimum contribution
||Total minimum contribution
|Until 5 April 2018
|6 April 2018 to 5 April 2019
|6 April 2019 onwards
More information can be found here, including a letter template to send to staff
Your rights – As an employee you’re allowed time off to deal with an emergency involving a dependant. A dependant could be a spouse, partner, child, grandchild, parent, or someone who depends on you for care.
How much you get – You’re allowed a reasonable amount of time off to deal with the emergency, but there’s no set amount of time as it depends on the situation. Example – If your child falls ill you could take time off to go to the doctor and make care arrangements. Your employer may then ask you to take annual leave or parental leave if you want to look after your child for longer. Tell your employer as soon as possible how much time you’ll need so it can be agreed.
Limits on time off – There are no limits on how many times you can take time off for dependants. Your employer may want to talk to you if they think time off is affecting your work.
Pay – Your employer may pay you for time off to look after dependants but they don’t have to. Check your contract, company handbook or intranet site to see if there are rules about this.
Exceptions – You can’t have time off if you knew about a situation beforehand. For example you wouldn’t be covered if you wanted to take your child to hospital for an appointment. You might get parental leave instead. Check your employment status to see if you’re classed as an ‘employee’.
Compassionate leave – If you aren’t given time off for dependants, your employer may allow you ‘compassionate leave’ – this can be paid or unpaid leave for emergency situations. Check your employment contract, company handbook or intranet for details about compassionate leave.
You can find more details here
Company Tax Returns
You must complete a Company Tax Return if your charity is a limited company or unincorporated association when this is required by HM Revenue and Customs. You need to include the supplementary pages for charities and community amateur sports clubs (CASCs).
A charity is a limited company if it was set up by a:
- memorandum and articles of association
- royal charter or Act of Parliament
Limited companies must also send annual accounts to Companies House. You must complete a tax return when HMRC asks you to, even if no tax is due. You may have to pay a penalty if your tax return is late or you don’t complete one when you should.
You can find more information about charities and tax here