Keeping an eye on your business via the cloud

One of the great advantages of cloud accounting is that your professional adviser is there with you in real time, writes Natalie Goodall of accountancy firm Barnett & Turner

While it’s true that the key driver for using cloud accounting systems has been the government’s Making Tax Digitalprogramme, we’d usually advise all our clients to work in this way, even if they’re not VAT registered.

From our point of view, there are a number of advantages, if we notice for example, that profitability is healthy, we can work proactively to manage tax liability. On the other hand, if a client’s figures are not looking so rosy, there may be another conversation we can have, which gives us the chance to offer some specific advice or recommendations.

A key advantage is the ability to spot problems before they get out of hand. Keeping accounts in the cloud means that your professional adviser is able to log on at any time and see exactly what’s going on. While some businesses joke about ‘Big Brother’, the reality is that they soon see the advantages.

As cloud accounting became more commonplace, we started checking in on client accounts on an ad hoc basis, but we are now putting systems in place to ensure regular monitoring.

In terms of practical impact it can make, think about notification of your corporation tax bill. Would you rather have an idea of the figure eight months in advance or just a week before it became due?

Most accountants will be happy to offer some training to clients, depending on their level of confidence with software such as Xero, Sage or QuickBooks. Inevitably though, queries arise from time to time and we find that this serves as a useful communication channel. When a client calls up to ask for advice on the software, there’s always an opportunity for a five-minute chat to get up to date on their business and accounting issues.

We work closely with the leading providers, Xero and QuickBooks, and are cloud certified advisers. If you haven’t yet taken advantage of the new technology, make sure to have a chat with us to see how we can help with a stress-free demo and set up options.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at

Online support that helps charities tackle fraud writes Yvonne Lovett of Barnett & Turner accountants.

Cyber fraud is sadly on the increase and it’s an issue charitable trustees simply can’t afford to ignore. In fact, the government estimates that 70% of all fraud is now committed online.  These scams can be complex and difficult to detect.  They normally involve hacking into your system or taking your identity.  

Here are 10 steps to protect yourself in cyberspace:

1.    Make sure that your network is protected by a suitable firewall and malware protection is kept up-to-date (cyber criminals are constantly attempting to defeat protective defences)

2.    Apply updates and patches at the earliest opportunity to limit exposure to software vulnerabilities

3.    Make sure that all access to your programs is protected by strong passwords, and these are known to only essential personnel and frequently changed

4.    Use a hierarchy of passwords, so – for example – only the financial controller may access the accounts system and bank account

5.    Make sure that all users are trained to accept (and open) emails only from known sources;

6.    Remove unnecessary software and default user accounts (these are often supplied with the software and often no attempt is made to prevent access by their removal)

7.    Restrict access by mobile devices such as tablets and mobile phones to critical services such as the accounting system or online bank accounts

8.    Make sure that the network configuration is secure to restrict system functionality to the minimum required for operational needs, and apply this to every device that is used to conduct business

9.    Make sure that staff are trained to prevent and recognise cyber fraud activity

10.Impose “perimeter defences” to block unnecessary access to insecure websites, or only allow permitted websites to be accessed

The Charity Commission is aware of trustees’ vulnerability and there is a useful website at improve awareness of trustees and trust directors.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at

A Free Gift from The Taxman

In the run-up to Christmas, it’s normal to see plenty of national charity adverts tugging at our heart-strings and asking us to donate to various worthy causes. Everyone will ask the giver to gift aid their donation. Yvonne Lovett of Barnett & Turner Accountants expresses astonishment at how few of her own charity clients take advantage of the scheme.

It never ceases to amaze me that when we first meet a new charity client, how many are not making Gift Aid claims.

Why wouldn’t you? It’s free money and a no-brainer!

Charity trustees should always seek to maximise income for their charity, but we are often given excuses that it’s ‘too difficult to make a claim’, it’s ‘not worth it’ or there is ‘not much money involved’.

Here’s a reminder. For every £100 donation from an individual that a charity receives which can be gift-aided by the giver, the charity can reclaim back £25 from HMRC (while the basic rate of tax is 20%).  Just think. £2,000 in gift-aided donations yields £500 tax back. Surely that’s easier than organising a coffee morning or table top-sale?

So, what’s involved with making a Gift Aid Claim?

Gift Aid Declarations: To claim Gift Aid, every donation must be supported by a declaration. There’s no need to reinvent the wheel here, as model declarations and guidance are readily available from HMRC’s website or from charity support websites. If you are a church charity, for instance, then the Parish Resources website is a great help.

Gift Aid Claims: Before your charity can claim Gift Aid, you must register with HMRC by completing and submitting the online application CHA1. If it’s a requirement that you are registered with a charity regulator (such as the Charity Commission or OSCR), you must have done so before registering with HMRC.

There are three ways to claim Gift Aid:

·       Online claims through the Charities Online Service;

·       Use of compliant donor management software; and

·       Paper Claims (it’s still possible to claim using paper forms contrary to popular belief).

 As you would expect, there are some time limits to consider and rules regarding certain types of donations where the donor might receive some benefit, but these are not too onerous and they don’t apply to most straightforward monetary gifts.

Record Keeping:Charities must maintain auditable records of declarations and of receipt of donations on which Gift Aid has been claimed. Most charity’s accounting systems should be able to provide the audit trail required

Oh, and there are more freebies to be had under the Gift Aid Small Donations Schemeor GASDS for short. 

A charity can claim a Gift Aid-like top-up payment on small cash donations (notes, coins and contactless card payments) of £20 or less, a figure which will rise to £30 at the start of the 2019-2020 tax year. There is no requirement to obtain and store Gift Aid declarations. The scheme does not extend, however, to card payments, cheques and bank transfers. The top-up is calculated in the same way as Gift Aid. This means, with basic rate tax at 20%, the top-up payment is worth 25% of the value of the donation. The total value of donations eligible for the top up payment is capped at £8,000.

There we have it. Gift Aid is not too difficult, is it?  So speak to your accountant about it and get claiming! 

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at

Ransomware - are your systems protected?

Ransomware is a word that can strike fear into businesses and individuals alike, especially after the recent news articles about the NHS infection and other global attacks from WannaCry and its derivatives.

So what exactly is ransomware?

It’s a malevolent piece of software which goes through your computer files and ‘encrypts’ them so they cannot be opened or ‘decrypted’ without a special unlock code.  Once the files have been altered, the ransomware then displays a message explaining how much it will cost to obtain the unlock code and how long you have until the files are destroyed.  Some users have reported that even though they have paid the fee, they’ve not received the unlock code and lost their files.

Ransomware is not a new thing; it has been around in various forms since 1989. It’s only recently been making the headlines due to the untraceable nature of new payment methods, such as Bitcoin.

How is it spread?

The most common method of transmission is through email attachments sent to you (eg inside Word documents, pdfs, spreadsheets etc), although your machine can also be infected by other machines on the same network already infected by the ransomware.  This can even happen at home if you have multiple computers connected to the internet at the same time.

There are many types of malware all working in different ways to achieve the same result, blocking you from your files.  Once you are infected, your options are limited: you either pay to release your files, pay a specialist to try to recover them (not normally successful) or lose all the data.

What can you do to reduce your risk or the impact of infection?

There are a number of simple and inexpensive ways to stay clear of ransomware

·      Keep your antivirus and Windows Defender updated

·      Keep your machine updated with the latest Windows updates issued by Microsoft

·      Review all emails and their attachments before opening them.

If the email is not from a sender you expect or recognise (ie a friend, bank, gas/electric supplier, online shop etc), then delete it.  If it is from a known source, don’t just open it, as people can fake where emails are from. Have a look at the content and the attachment name and see if they are related. Just as importantly, ask yourself whether you expected an email from the sender. If you are at all concerned, delete the email.

Make a copy of your files to a portable storage device, such as a USB stick or a USB hard drive which is only connected to your computer to back up your files. Alternatively, you could use a DVD/Blu-ray disk or one of the many cloud storage options available on the internet. You should also create a factory reset disc or learn about ‘Restore Factory Settings’.

If your computer is running a version of Windows pre 8, 8.1 or 10, then you can create a factory reset disc/ USB drive.  For Windows 8, 8.1 or 10 users, you have the facility to ‘Restore Factory Settings’. In both cases, this wipes all information from your computer and reinstalls Windows to its original factory configuration.  Once complete, you will need to reinstall your software and upload your files from the location in which you stored them.

While ransomware can be disastrous for the unprepared, following these straightforward suggestions can alleviate your main fear: the loss of business or personal data.

 If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at

Your shares are worthless? Things may not be as bad as you thought...

It’s a nightmare scenario. You’ve invested in a company and then discover that it has collapsed and that its shares have become worthless. 

Imagine, for example, owning a slice of Carillion – which went from being one of the UK’s largest construction businesses to a company revealed to have £1.5bn in debt and whose shares were suspended.

If HMRC declares shares to have ‘negligible value’ (as they have in the Carillion case), you’re entitled to capital gains relief, which will help you to reduce your tax liability. 

Here are some commonly asked questions:

How does it work in practice?

In effect, you can set the original cost of the asset against other capital gains in the current tax year or even carry it forward against gains in future years. 

Can I backdate a claim?

Yes. You can treat it as a loss arising in either of the two preceding tax years.

Can I claim loss from unlisted, negligible-value shares against income?

In theory, yes, but you’ll need to consult your accountant as you’ll need to meet a significant number of conditions.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at

Businesses prepare for tightening of data rules writes Jono Wilson of Barnett & Turner Chartered Accountants.

Next year’s General Data Protection Regulation (GDPR), which comes into effect on 25th May 2018, is causing quite a lot of angst among IT professionals, marketers and other business people. And the UK’s exit from the EU isn’t necessarily going to change things. Whatever your personal view on Brexit, you might be forgiven for thinking that British businesses are no longer going to have to worry too much about EU regulations.

The reality, however, is that directives from Brussels are still going to be a fact of life until the point of formal departure.

There is a further reason, however, to take note of the GDPR.  According to the trade magazine and website Computer Weekly, the rules will affect any UK business which offers any type of service to the EU market, ‘regardless of whether your business stores or processes data on EU soil, and whether the UK stays in the EU or not’.

The UK Information Commissioner’s Office describes GDPR as operating on similar principles as the Data Protection Act, but with an added layer of detail and an additional concept of accountability. So what are the key issues you’re likely to confront?

Lawful processing

If you are processing personal data, you need to have a legal basis for doing so and must be able to document it. Relying on someone’s consent? Well, you may be find that they have greater rights in future – particularly to have their data deleted.


People need to take affirmative action to give consent to their data being used. If they are silent or you have pre-ticked boxes for them, that won’t count.  You need to record when and how the consent was given. What’s more, it can be withdrawn at any time.

The rights of individuals

The GDPR gives a number of protections to individuals that your organisation must observe:

The right to be informed – you need to provide ‘fair processing information’, which will usually involve a privacy notice. It’s important to be transparent over how you use data.

The right of access – individuals will have similar rights to those under the Data Protection Act. They can ask you to confirm you hold data and request access to that data.

The right to rectification – if information you hold is incorrect or incomplete, an individual has the right to demand that you correct it.

The right to erasure – also known as ‘the right to be forgotten’. Someone is entitled to request that you delete or remove personal data if there is no compelling reason for your continuing to process it.

The right to restrict processing – if an individual asks for the processing of their data to be blocked, you must respect their request. You are only allowed to store the data and retain enough information to ensure their wish is respected.

The right to data portability – this allows people to obtain and then reuse their data – transferring it from one IT environment to another.

The right to object – an individual can object to profiling conducted in the public interest or for direct marketing purposes. They can also object to the use of data for scientific or historical research and statistics.

The detail of the regulations is understandably complex, so if you feel that you are likely to be impacted, it’s important that you read more online or take professional advice on how to prepare.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at


Jono Wilson of Barnett & Turner looks at the tax implications of the Summer or Christmas bash you hold at your workplace. If you’re looking to the summer and planning a party for your employees, it’s worth bearing in mind the potential tax implications. The good news is that, unlike entertaining customers, the costs of entertaining employees are generally allowable against the profits of the business.

But what about the consequences for the employees themselves? Will they have to pay tax on the benefit?

The general rule is that as long as the total costs of all employee annual functions in a tax year are less than £150 per head (VAT inclusive), there will be no tax implications for the employees themselves. In considering this limit, it is necessary to include all the costs of an event including any food, drinks, entertainment, transport and accommodation that you provide.

If the total costs are above the limit of £150, the employee will have to pay tax on the full cost of the benefit. In that scenario, it should be reported on each employee’s P11D or, alternatively, you may choose to enter into a PAYE Settlement Agreement with HMRC to cover the tax.

It is also worth noting that a new exemption in relation to employee entertainment was introduced on 6th April 2016.  From this date, a benefit provided by an employer to an employee was made exempt from tax and need not be reported to HMRC on a P11D if all of the following conditions are satisfied:

  • The cost of providing the benefit does not exceed £50;
  • The benefit is not cash or cash vouchers;
  • The employee is not entitled to the benefit as part of any contractual obligation; and

Where the employer is a close company and the benefit is provided to an individual who is a director or other office holder of the company (or a member of their family), the exemption is capped at a total of £300 in the tax year.


A company holds two annual functions open to all its employees in the tax year – a summer party and a Christmas party.

The total costs of the summer party, including transport and accommodation, are £10,000 including VAT. The total number of attendees was 100, so the cost per head was therefore £100.

The Christmas party cost £8,000 including VAT, and 100 people attended this. The cost per head is therefore £80.

The total cost per head for both functions is £180, so they cannot both qualify for an exemption. As the cost per head of each party is not more than £150, either event can qualify on its own, however it is more beneficial overall for the costlier summer party to be exempted.

If an employee attends both events, they will be taxed only on the benefit of £80 for the Christmas party. If they only attend the summer party, there will be no taxable benefit because that event is exempt. If they only attend the Christmas party, they will be taxed on the benefit of £80.

Both functions would be taxable if the average cost per head of each of the events exceeded £150. This limit is not an allowance to be set against an amount that exceeds that figure.

It’s worth talking to your accountant if you have any concerns about the tax implications of the summer party season ahead. That way, everyone can enjoy the event without a financial hangover.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at

Build up your funds for future generations

Barnett & Turner partner Jonathan Wilson considers how life insurance can become an investment. For a number of years, we have had the option of using what are called “Whole of Life” insurance policies to help to fund potential inheritance tax (IHT) liabilities.

Put simply, these policies are a form of insurance where annual premiums are paid in return for a guaranteed payment on death. They are structured in such a way that the proceeds do not form part of the deceased’s estate and therefore escape IHT.

In reality, this means the IHT liability is potentially reduced to the total cost of the premiums.

Traditionally, clients have taken out life insurance for peace of mind, so they know their beneficiaries’ inheritance tax bill will be met. They haven’t necessarily considered whether the policy proceeds represent a good return on the premiums paid. With interest rates falling to record lows, it is now more appropriate than ever to view life policies as investments.

At the time of writing, the post-tax return for a 45% taxpayer, on a very long-dated UK government gilt (49 years to redemption), is only 0.8% per annum.

A couple aged 60 can obtain £1m of second-death, last-survivor, whole-of-life cover for an annual premium of £11,700, assuming standard health terms apply.  If we were to assume that one of the policyholders lives to age 109 (a very cautious assumption to match a 49 year old gilt), the return on the total annual premiums of £573,300 is just under 2.2% per annum net of tax.

To continue with this example, we could assume, more realistically, that the life expectancy of the last survivor is 95.  In our scenario above, the effective return on the total annual premiums is £409,500 – a relatively attractive 4.73% per annum net.

However, these figures also ignore the fact that the proceeds will generally fall outside of the estate, due to the policies being held in trust.  The actual return on the policy payer is effectively enhanced further by 40% (representing the IHT that would have had to be paid had the proceeds remained within the estate) in most cases.

Therefore, life policies not only provide a lump sum for your beneficiaries, but they also provide a comparatively excellent return over the period until the beneficiaries receive the money.  Life policies can be a good-value option for building up funds for the next generation. You may benefit from advice from your IFA or Accountant tailored around your own personal circumstances.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at

Could your generosity end up costing you? - Make sure you don’t lose out writes Jono Wilson of Barnett & Turner.

If you’ve given some money or household items to a charity recently, the chances are you’ve been asked whether you’d like to ‘Gift Aid’ your donation. The representative of the charity will have told you that this claim increases your gift by 25%.  So, for every £80 donated, the charity receives £100 – made up of your own donation of £80 and £20 of tax reclaimed from HMRC.

On the face of it, the Gift Aid option may seem like an obvious choice, but there is a potential downside.  If you have not paid sufficient income tax or capital gains tax during the year to cover the reclaimed tax, HMRC will require you to make up the difference, which may result in an unexpected tax bill due to your generosity!

It’s an issue which is likely to take on a greater prominence, as recent changes to the way in which investment income is taxed will result in many individuals ceasing to be taxpayers:

  • Prior to 6 April 2016, dividends were received with a notional credit which was included when calculating tax paid for Gift Aid purposes, but the notional credit has now been abolished and the first £5,000 of dividend income (decreasing to the first £2,000 from 6 April 2018) is taxed at a rate of 0%; and


  • The savings rate of income tax offers another 0% tax band available to individuals with interest income falling within the first £5,000 in excess of their personal allowance.

These changes will disproportionately affect pensioners with modest incomes and owners of companies who remunerate themselves in the most tax-efficient way.

Many of the individuals that will be impacted by this change are not required prepare tax returns each year. It does seem likely, however, that because of HMRC’s digital and information gathering powers, they will soon be able to identify non-taxpayers who have made Gift Aid donations and pass on an unexpected bill to the donor.

It’s therefore worth considering your own position, as well as that of those close to you. You may have some options to ensure that neither you nor the charity lose out.

If you feel that you might be caught out, but your spouse would not, it’s worth considering getting them to make the donation instead.

If you are the owner of a small company, it may be possible to make the charitable donations through the business, rather than on an individual level.  Although a company cannot make donations through the Gift Aid scheme, it should receive corporation tax relief on the donations and there may be scope to increase the amount you give to reflect this.

If you believe that you may be adversely affected by these changes, it’s worth having a chat with your accountant.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at


Whatever the level of your tax liability, there are some simple ways you can minimise the pain. Here are 10 suggestions from Jonathan Wilson of Barnett & Turner, Chartered Accountants & Chartered Tax Advisers, for making your next bill slightly more manageable.

  1. Check your tax code each year. Your tax code is used by your employer or pension provider to work out how much income tax to deduct from your pay.  If your code is wrong, you may be paying too much (or too little) tax.  Your tax code can be found on your payslip and a breakdown of how it has been calculated will have been sent to you by HMRC.


  1. Claim the marriage allowance. The marriage allowance lets you transfer 10% of your tax- free personal allowance, or £1,150 in 2017/18, to your spouse, if they earn more than you.  To benefit as a couple, the lower earner must have income of £11,000 or less in the tax year.


  1. Make the most of each personal allowance and basic rate band. The personal allowance is £11,500 and the basic rate tax limit is £33,500 in 2017/18. If you are married, it may be possible to transfer income-generating assets (e.g. rental properties) to a spouse to take advantage of their lower tax brackets.


  1. Take advantage of the CGT annual exemption. Capital gains under the annual exemption (£11,300 in 2017/18) are tax-free.  Where you have already used up your annual exemption, you may wish to consider deferring any further disposals until the following tax year if practically possible.  If you are married, owning assets jointly also ensures that each spouse’s annual exemption is used (assets can be transferred tax free between spouses).


  1. Claim tax-deductible expenses. If you are self-employed, you can claim a tax deduction for expenses which are incurred “wholly and exclusively” for the purposes of your business.  This includes office running costs and the salaries of any employees, including your spouse.


  1. Use the annual investment allowance. If you are self-employed, the annual investment allowance currently provides a 100% tax deduction on the first £200,000 spent on eligible plant and machinery.


  1. Consider incorporation. The corporation tax rate, of 19% from 1 April 2017, (previously 20%), is significantly lower than income tax rates, which are currently up to 45%.  You will of course need to pay income tax when you take money out of the company, in the form of salary and/or dividends.  However, if you don’t require the income, you have the opportunity to accumulate profits within the lower corporate tax environment.


  1. Take advantage of the dividend allowance. The recent changes to the taxation of dividends saw the introduction of a £5,000 tax-free dividend allowance, which reduces to £2,000 in April 2018.  Whilst there will be winners and losers from the new dividend regime, this allowance should not be overlooked.


  1. Maximise pension contributions. If you contribute to a workplace pension scheme, any pension contributions you make will be deducted from your salary before income tax is calculated.  If you contribute to a personal pension scheme, your pension provider will claim tax relief at 20% on your behalf and add it to your pension pot.  If you are a higher or additional rate taxpayer, you can then claim tax relief on the extra 20% or 25% in your self-assessment tax return.

You currently pay tax if savings in your pension pot go above the annual allowance of £40,000 a year.  However, this limit has recently been reduced for those with income (excluding any pension contributions) over £110,000, and there is doubt over the future of pension tax reliefs, so they should not be taken for granted.


  1. Use your tax-free ISA allowance. From 1 April 2017 you can save up to £20,000 (previously £15,240) a year tax-free in an Individual Savings Account (“ISA”).  This can be saved as cash, shares, or a combination of the two. 

If you’re interested in investigating any of these suggestions and how they could fit in with your own personal circumstances, make sure to speak to your accountant.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at