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
You may be put on an emergency tax code if you change jobs. HM Revenue and Customs (HMRC) will correct it automatically after you’ve given your employer details of your previous income or pension.
Your employer will get these details from your P45 – if you don’t have one, they should ask you for further information.
HMRC will also update your tax code when:
After your tax code changes
HMRC will adjust your tax code so you pay the right amount of tax across the year. They’ll write to you or email you when your tax code has been updated.
They will also tell your employer or pension provider that your tax code has changed. Your next payslip should show:
- your new tax code
- adjustments to your pay if you were paying the wrong amount of tax
Find out more here
When to apply to register your charity
Usually, you must register with the Charity Commission if your charity is based in England or Wales and has over £5,000 income per year. The commission will take action to secure compliance if it identifies a charity which isn’t registered but should be.
If your charity is a charitable incorporated organisation (CIO) it must register whatever its income.
Charities that don’t have to register
Small unincorporated charities
If your charity is based in England and Wales and isn’t a CIO, you don’t have to apply to register it if its annual income is less than £5,000. But you can still apply to HM Revenue and Customs for recognition as a charity to get charity tax breaks and claim gift aid.
You can apply to the commission to register this sort of charity voluntarily, but the commission will only consider applications in exceptional circumstances. For example, if you can prove that your charity has been offered significant funds but has to provide a registered charity number before it can receive the funds.
More details can be found here
Happy New Year everyone! Now we are all back at work, maybe it’s time to clarify who is a ‘worker’ in your organisation
A person is generally classed as a ‘worker’ if
- they have a contract or other arrangement to do work or services personally for a reward (your contract doesn’t have to be written)
- their reward is for money or a benefit in kind, for example the promise of a contract or future work
- they only have a limited right to send someone else to do the work (subcontract)
- they have to turn up for work even if they don’t want to
- their employer has to have work for them to do as long as the contract or arrangement lasts
- they aren’t doing the work as part of their own limited company in an arrangement where the ‘employer’ is actually a customer or client
Workers are entitled to certain employment rights, including:
- getting the National Minimum Wage
- protection against unlawful deductions from wages
- the statutory minimum level of paid holiday
- the statutory minimum length of rest breaks
- to not work more than 48 hours on average per week or to opt out of this right if they choose
- protection against unlawful discrimination
- protection for ‘whistleblowing’ – reporting wrongdoing in the workplace
- to not be treated less favourably if they work part-time
More details can be found here
We received this cry for help recently – ‘My employee is entitled to Statutory Maternity Pay, but we can’t afford to pay it – what can we do?‘
Help is available from HMRC
If you can’t afford to make payments
You can apply for HM Revenue and Customs (HMRC) to pay you in advance if you can’t afford to make statutory payments.
How to apply for advance payment
Apply online to be paid in advance for:
- Statutory Maternity Pay (SMP)
- Statutory Paternity Pay
- Statutory Adoption Pay
- Statutory Shared Parental Pay (ShPP)
You can apply up to 4 weeks before you want the first payment
You can find more details here
The P45 is a certificate which contains earnings and tax payments over the financial tax year up until when an employee leaves a job, and it is issued to employees by the employer. Form P45 shows how much tax has been paid on their salary for the current tax year.
You must give all employees a P45 when they stop working for you. You can either:
You can’t download blank P45 forms
You can’t get a replacement P45. Instead, you can use a ‘Starter Checklist’ (link below) or ask your employee for the relevant details about their finances to send to HM Revenue and Customs (HMRC)
Use this form if you’re an employer and need to record information about a new employee for PAYE
You must tell HM Revenue and Customs (HMRC) when you take on a new employee and be registered as an employer.
Before you pay your new starter follow these steps:
Further information can be found here
With effect from the 2016 to 2017 tax year there are 2 plan types for student loan repayments:
- plan 1 with a 2016 to 2017 threshold of £17,495 (£1,457 a month or £336 per week)
- plan 2 with a 2016 to 2017 threshold of £21,000 (£1750 a month or £403 per week)
If you are unsure which plan to use, it is easy to find out by filling in the online survey here
More guidance for employers can be found here
If your employee’s tax code has ‘W1’ or ‘M1’ at the end
W1 (week 1) and M1 (month 1) are emergency tax codes and appear at the end of an employee’s tax code, eg ‘577L W1’ or ‘577L M1’. Calculate your employee’s tax only on what they are paid in the current pay period, not the whole year.
Updating for the new tax year
HM Revenue and Customs (HMRC) will tell you between January and March about any new tax codes to use for employees in the new tax year. This starts on 6 April.
If an employee’s tax code isn’t changing, HMRC won’t contact you and you should carry forward the employee’s tax code to the new tax year.
If your employee’s tax code ends with ‘M1’ or ‘W1’ (‘month 1’ or ‘week 1’), don’t carry this part of the code into the new tax year.
Click here for more information