What employee perks will the taxman help you fund?

We all love a perk of the job, and a major industry has built up around the types of employee perks companies are able to offer. The best news of all is that most of these will be tax deductible, which means the taxman will fund at least part of them.

Everything from free snacks to mental wellbeing support are now a regular part of the employment landscape, among other employee benefits, as companies push to make themselves the best choice for the top employees, especially in specialist sectors where there is a labour shortage.

What perks and benefits should my company offer?

Choosing the right perks to keep your existing employees happy and to attract high-quality new staff is the Holy Grail, and a lot will depend on the industry your business is in, the age group of your workforce and any specific requirements your staff have. One of the best ways to choose the right perks is to canvas your existing employees and ask them, that way you are going to be more likely to give them what they really want and value.

Alternatively, you could ask one of the employee benefit specialist companies to do the work for you, and give you access to the kind of benefits your staff are asking for. There is a cost involved in this, so make sure you are happy to pay the fee and that you will get the benefit of providing the perks.

What are some of the most common benefits?

There are some pretty standard benefits on offer, including private healthcare, dental care and even optician services. But there are some other benefits that may be less usual that could be good for your business. These could include unlimited and unmonitored flexitime, paying a joining bonus for new staff and/or an annual bonus, or negotiating discounts for staff at local pubs, clubs or gyms.

This last suggestion is one you may be able to deal with yourself, especially if your company employees a relatively high number of staff within the local area. There are lots of other businesses that will see the benefit of encouraging your staff to use their services, so it is always worth asking.

We can help you meet your obligations

If you are unsure about what kind of perks your business should offer, then please get in touch with us and we will help you choose the best options and route to delivery for you.

Why you must keep Companies House data up-to-date

When your business was registered at Companies House, you would have provided lots of detail about the business and the people who run it – including who are your directors, company secretary, the breakdown of share capital, and the type of business your company does. But failing to keep this information up-to-date could land you in hot water with the authorities.

Each year, you are required to file your Confirmation Statement to inform Companies House about any changes that have been made to your company in the previous year. Failing to do this within the allotted time will lead to sanctions, which could include your company being struck off the register if you continually fail to comply.

You must tell companies house about any changes, such as the adding or removal of directors of the business, a change of business or personal address, and any changes to the business sectors your business operates in.

Articles of Association and Memorandum of Association

You also need to sign up to an ‘Articles of Association’ and ‘Memorandum of Association’ when your business is formed, which you can choose to write yourself or you can use the model version from Companies House.

The Articles of Association is a longer document which sets out your company’s constitution, so even if you do use a model version of these, you need to check it carefully to ensure it meets the needs of your business, especially if this changes over time. You can amend these to keep them current.

The Memorandum of Association is a single page document which outlines each person who is going to be a part of the company at the start. This cannot be changed even if the people within the business come and go. It is a historical record of how your company was formed at the time, and by whom.

Even if you think everything has been correctly filed at Companies House, it is always worth checking periodically to make sure, as you might be surprised what may have been done incorrectly without your knowledge.

Let us help you

If you think you may need to amend any details held by Companies House about your business, then please get in touch and discuss this and we will do what we can to help you.

Reduce your company tax bill by doing a good turn

Charitable giving is something many organisations might not be considering in the current climate, especially as everyone is struggling to pay their bills. But if you have money to spare within your business, then charitable giving is a great way to reduce your tax bill on company profits while simultaneously helping a good cause.

The rules around charitable giving for companies are similar to those for Gift Aid for individuals. For companies, the maximum amount of Gift Aid that can be claimed is equivalent to the amount of tax you would have had to pay on the profits made by your business in a single tax year. There are special rules for companies that are wholly owned by charities which your accountant can help you with if you are in this position. But this article is focusing on general companies looking to make charitable donations in a tax-efficient way.

How does a charitable donation reduce Corporation Tax?

If your company has a particular affinity with a specific charity, then not only will your chosen charity benefit from your largesse by making a donation, it can reduce the amount of Corporation Tax you pay too. Gift Aid relief is applied to what the Government terms “qualifying donations” which need to meet certain conditions.

A payment is not a qualifying donation, according to Gov.uk, if:

• It’s a dividend or distribution of profits.
• It is made subject to a condition as to repayment.
• The company or a connected person receives a benefit which exceeds the ‘relevant value’in relation to the payment.
• It’s made by a charity or community amateur sports clubs.
• It’s conditional on the charity acquiring property that has not been gifted to them.
• It’s part of an arrangement whereby the charity acquires property that has not been gifted to them.

There are various ways that you can make your donation, but in each case, you must keep proper records of what was donated and when.

What ways can my business make a donation?

There are a number of different ways that your company can make a donation to a charity. The most obvious is by giving money directly to the charity of your choice. But you can also donate equipment or trading stock, land, property or shares in a company that isn’t your own – your own company’s shares don’t qualify – provide employees on secondment to the charity, and through sponsorship payments.

To claim the relief, you would need to ask your accountant to make sure the donation is listed in the company tax return for the relevant period that the donation was made.

How do I make the claim?

The way you make the claim depends on how you have made your donation. For example, if you have donated money or given or sold land, property or shares to the charity, then you would enter the total value of your donations into the ‘Qualifying donations’ box on the ‘Deductions and Reliefs’ section of your Corporation Tax return.

If you have seconded employees to work with the charity or sponsored the charity, then these would be deducted from your company profits as a business expense.

In both cases, the charitable donation would be paid out of your gross profits, so there is no need for any Gift Aid to be reclaimed by the charity. Remember, you cannot donate more than the profits generated in a single accounting period. The most your profits can be reduced to is ‘nil’, you cannot donate to make your company make a loss for tax purposes.

If you have given or sold land, property or shares to a charity, then there are special rules which apply to how you calculate their value. Your accountant is best placed to help you with this.

We can help you

If you need help to decide whether you should make charity donations from your business, and if so, how much they should be, then please get in touch with us and we will help you understand what you need to do.