Author: DCAS

Trial Balancing

No, it’s nothing to do with acrobatics!

A trial balance is a useful tool and the essential first step in developing your financial reports.

What is a ‘Trial Balance’?

Basically, a trial balance is a worksheet prepared manually or generated by your computer accounting system that lists all the accounts in your General Ledger at the end of an accounting period (whether that’s at the end of a month, the end of a quarter, or the end of a year).

If you’ve been entering transactions manually, you create a trial balance by listing all the accounts with their ending debit or credit balances. Then, you total the debit and credit columns. If the totals at the bottom of the two columns are the same, the trial is a success, and your books are in balance.

WARNING – A successful trial balance is no guarantee that your books are totally free of errors; it just means that all your transactions have been entered in balance. You still may have errors in the books related to how you entered your transactions

PAYE Forms: P45

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

Lost P45

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

Training Courses Feedback

Our training courses this year have again been very popular.

Cartoon of a man surrounded by iconsHere is some feedback from course participants in our recent

Business Planning Course

Business Planning Comments

We hope to resume our training courses early in 2018, so if you would like to be put on the waiting list, or have other financial training needs, please contact us here

What to include in the Trustees’ Annual Report

If your charity’s income is under £500,000 (and providing it doesn’t have assets worth more than £3.26million), prepare a simple report including:

  • your charity’s name, registration number, address and trustee names
  • its structure and details of how it is managed, including how it recruits trustees
  • its activities and objectives in the year
  • its achievements and performance, including reporting on its public benefit
  • a financial review including any debts and details of your reserves policy (if applicable)
  • details of any funds held as a custodian trustee

You can put more detail into your trustees’ annual report if you want to. You only have to send a copy to the commission with your annual return if your income is more than £25,000. But you need to send the commission a copy if it asks for it.

Click here for a template Trustees’ Annual Report for small charities

The Importance of Bank Reconciliation

One of the most important tasks in preparing accounts for Independent Examination is Bank Reconciliation

A Bank Reconciliation is used to compare your records to those of your bank, to see if there are any differences between these two sets of records for your cash transactions. The ending balance of your version of the cash records is known as the book balance, while the bank’s version is called the bank balance.  A monthly reconciliation helps you identify any unusual transactions that might be caused by accounting errors or fraud.

Mr ClawOur training manual “The Adventures of Mr Claw in the World of Charity Accounting” explains Bank Reconciliation and Statement production, and how to implement these procedures in to your organisation’s accounting procedures. Get your copy here

 

Summer 2017 Newsletter

Summer 2017Our Summer Newsletter 2017 is now ready, and those on our mailing list should have already received their copies.

If you want to read it online, click here Summer 2017 Newsletter

If you would like to be added to the mailing list, let us know here

Articles in this issue include:

  • Right to Work in the UK
  • The Andrew Buxton Memorial Award 2017
  • Inspiring Public Confidence in Your Charity
  • People and Skills – Vetting Potential Trustees

Sick Leave and Holidays

Sick leave and holiday

Statutory holiday sicknessentitlement is built up (accrued) while an employee is off work sick (no matter how long they’re off).

Any statutory holiday entitlement that isn’t used because of illness can be carried over into the next leave year. If an employee is ill just before or during their holiday, they can take it as sick leave instead.

An employee can ask to take their paid holiday for the time they’re off work sick. They might do this if they don’t qualify for sick pay, for example. Any rules relating to sick leave will still apply.

Employers can’t force employees to take annual leave when they’re eligible for sick leave.

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When an employee changes their holiday to sick leave they’re paid Statutory Sick Pay which will count towards the amount of holiday pay they’ve received. The exceptions to this rule are:

  • they don’t qualify for Statutory Sick Pay
  • they were off work sick and being paid ‘occupational sick pay’

Understanding Your Tax Code

Your tax code will normally start with a number and end with a letter

1150L is the tax code currently used for most people who have one job or pension

The numbers in your tax code tell your employer or pension provider how much tax-free income you get in that tax year

  1. HMRC works out your tax-free Personal Allowance
  2. Income that you haven’t paid tax on (such as untaxed interest or part-time earnings) and the value of any benefits from your job (such as a company car) are added up
  3. The income that you haven’t paid tax on is taken away from your Personal Allowance. What’s left is the tax-free income you’re allowed in a tax year
  4. The last digit in the tax-free income amount is removed

Letter

 What it means

L

You’re entitled to the standard tax-free Personal Allowance

M

Marriage Allowance: you’ve received a transfer of 10% of your partner’s Personal Allowance

N

Marriage Allowance: you’ve transferred 10% of your Personal Allowance to your partner

S

Your income or pension is taxed using the rates in Scotland.

T

Your tax code includes other calculations to work out your Personal Allowance, for example it’s been reduced because your estimated annual income is more than £100,000

0T

Your Personal Allowance has been used up, or you’ve started a new job and your employer doesn’t have the details they need to give you a tax code

BR

All your income from this job or pension is taxed at the basic rate (usually used if you’ve got more than one job or pension)

D0

All your income from this job or pension is taxed at the higher rate (usually used if you’ve got more than one job or pension)

D1

All your income from this job or pension is taxed at the additional rate (usually used if you’ve got more than one job or pension)

NT

You’re not paying any tax on this income

You can check your tax code here

Paternity Leave and Pay

Paternity Leave

You must tell your employer at least 15 weeks before the week the baby is expected:

  • the baby’s due date
  • when you want your leave to start, for example the day of the birth or the week after the birth
  • if you want 1 or 2 weeks’ leave

Work out when to tell your employer you want Paternity Leave online.

Your employer can ask for this in writing. You can ask for Paternity Pay at the same time, if you use form SC3 (or your employer’s own version).

Form SC3 can be accessed online here