Author: Amit Roy

Training Costs: employees, directors and self employed

Employees and Directors: BIM 47080

Usually all expenses are allowable as revenue1 expense, except where employee and employer has some link outside work e.g. employee is son/daughter of the employer.

In such cases it should be ascertained whether the expenditure would have been incurred on an otherwise unconnected employee doing the same job.

 

Self-employed: BIM 35660

Expenditure is revenue expenditure if the course merely updates existing expertise or knowledge. Expenditure on a course which provides new expertise or knowledge is capital.

Capital expenditure makes it an intangible asset. Self-employed are not allowed capital allowance on Intangible assets. Only companies are allowed capital allowance on intangible assets.

 

Notes:

  1. Considered revenue as an employee can resign anytime.

PAYE and Payroll IDs:

Which payroll ID to give a old employee joining back.

Sometimes clients re-employ a person who use to work for them. The question crops up about payroll Ids. Below is the extract from HMRC guidance.

  • If an employee leaves and is re-employed you should use a different payroll ID and start their year to date information again – do not report the pay and tax figures from the earlier employment.
  • You should never re-use a previous payroll ID. A different Payroll ID must be used even if the employee is re-employed in a different tax year.
  • If you change an employee’s payroll ID, on your next submission use the indicator that the payroll ID has changed this pay period and also use the field to report the old payroll ID.

 

Source: HMRC Employer’s Bulletin : December 2017

Leases under FRS 105

How to account for a hire purchase lease in case of a Micro company – FRS 105

Background

Client a freight company bought couple of trucks on Hire Purchase. This compelled a visit to FRS 105 (Client Company being a micro entity).

First step in lease accounting is classification of lease either as operating or finance lease. Hire purchase is clearly a finance lease. So we move forward.

Lease classification is made at the inception of the lease and is not changed during the term of the lease unless the lessee and the lessor agree to change the provisions of the lease (other than simply by renewing the lease), in which case the lease classification shall be re-evaluated.

Now to bookkeeping:

Initial recognition:

Recognized as an asset and liability.

Subsequent measurement:

A lessee shall apportion lease payments between interest (PL) and principal (BS).

A lessee shall also depreciate the asset.

If there is no reasonable certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated over the shorter of the lease term and its useful life.

Now we turn to our case.

I wrote a long blog but then found a better example. See link below:

AAT Website

Business Rate: Local discretionary relief

Local Councils are helping small businesses with business rate relief

Since April 2017 business rates in London have increased significantly.

Local Borough Councils are helping businesses by giving a discretionary relief.

Each Council have their own eligibility criteria.

Relief can be worth c£2,000 or more for eligible businesses.

Restaurant trade is one of the eligible businesses.

You will need visit your Council website for more information and details of how to apply.

We have given below links to two council websites, with which we had recent interaction on this matter,

Westminster

Kensington & Chelsea