Author: DCAS

Informing HMRC about a new employee

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:

  1. Check you need to pay them through PAYE.
  2. Get employee information to work out their tax code – if you don’t have their P45, use HMRC’s ‘starter checklist’ (which replaced the P46).
  3. Find out if they need to repay a student loan.
  4. Use these details to set up your new employee in your payroll software.
  5. Register your employee with HMRC using a Full Payment Submission (FPS).

Further information can be found here

News from the Charity Commission

Do small charity annual reports and accounts meet the reader’s needs?

We are reviewing small charities’ annual reports and accounts because they are the prime means by which the trustees are publicly accountable to donors, beneficiaries and the wider public for the charity’s activities and how they have used the charity’s money.  Good reporting is important to public trust and confidence in both the reporting charity and the wider charity sector.

We were led us to focus on the following criteria:

  • have the trustees provided us with both an annual report and accounts?
  • does the annual report explain what activities the charity had carried out during the year to achieve its purposes?
  • do the accounts contain both an analysis of receipts and payments and a statement of assets and liabilities and are these consistent with each other?

You can find out more details here

Your Rights If Your Employer Is Insolvent

If your employer is ‘insolvent’ this means it can’t pay its debts. You have rights if this happens and can make a claim for money you’re owed.

What you can claim

The money will be paid to you by the government. It’s not guaranteed that you’ll get everything your employer owes you but you can claim for:

  • statutory notice pay
  • redundancy
  • up to 8 weeks’ wages, including a payment for a protective award if your employer has failed to consult collectively with staff
  • up to 6 weeks’ holiday pay
  • unpaid pension contributions – get in touch with the insolvency practitioner to claim this for you
  • a basic award for unfair dismissal

You can get up to £479 a week for each claim. For example, if you’ve claimed for redundancy and loss of notice you can get payments for both.

You can find more detailed information here

Starting the New Financial Year on the Right Foot

Robust financial management is vital so charities can protect themselves against financial difficulties or abuse, and meet the needs of their beneficiaries.

There’s no better time than the start of the new financial year to assess your charity’s financial situation and financial controls, to see how you can improve them. Doing this is key to making sure that your trustees are able to protect the charity’s assets and resources.

The Charity Commission has recently updated their Charity finances: trustee essentials (CC25) guidance to help trustees and charity staff get to grips with the basic areas of financial management. It also links to more detailed guidance on a number of areas.

Charity Reserves

What Are Reserves?

Reserves are that part of a charity’s unrestricted funds that is freely available to spend on any of the charity’s purposes. This definition excludes restricted income funds and endowment funds, although holding such funds may influence a charity’s reserves policy. Reserves will also normally exclude tangible fixed assets such as land, buildings and other assets held for the charity’s use. It also excludes amounts designated for essential future spending.

Reserves also exclude funds which have particular restrictions on how they can be used. Trustees should consider for what purpose restricted funds are held and how they are being used in order to identify those resources that are freely available to spend.

You can find out much more about Reserves here

Payroll – End of Year Tasks

As an employer running payroll, you need to:

  • report to HM Revenue and Customs (HMRC) on the previous tax year (which ends on 5 April 2017) and give your employees a P60
  • prepare for the new tax year, which starts on 6 April 2017
What you need to do   When
Send your final payroll report of the year   On or before your employees’ payday
Update employee payroll records   From 6 April
Update payroll software   From 6 April
Give your employees a P60   By 31 May
Report employee expenses and benefits   By 6 July

More details can be found here

Preparing for Audit

As we approach the end of the financial year, it is time to prepare the accounts for examination.

You can make your yearly audit as painless as possible by making certain that your financial statements are complete and accurate.

The most crucial step towards this is Bank Reconciliation.

Most adjustments that are discovered during audit relate to inadequate or inaccurate preparation of the Bank Reconciliation process.

This process is thoroughly explained in our book ‘The Adventures of Mr Claw in the World of Charity Accounting’.  If you would like a copy, please contact us here