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Reward Your Employees Through an Employee Management Incentive Scheme

10 July 2014 •

As the economy starts to recover the job market will pick up; for the first time in six years increases in  earnings have finally caught up with inflation. As an employer and the owner of a business now could be the time to consider ways of trying to lock the talented employees you have into the company. Suddenly giving everyone a pay rise may not be financially viable but there are a number of financial incentive plans you can implement that are designed to help retain key members of your team.

Warrener Stewart has recently been helping several businesses implement an Enterprise Management Incentive scheme (EMI), even for companies with just one to two employees. An EMI scheme is a recognised HMRC initiative specifically intended to help companies to recruit and retain employees by rewarding them with options to acquire equity shares.

Reward key employees 

An EMI scheme gives employers a controlled way to reward those employees who are central to the business and who have remained loyal to the company with the possibility to acquire equity shares. Under the scheme an employer can grant key employees the option to purchase small numbers of shares in the company at a predetermined price.

However, employees can only convert these options into shares at certain trigger points. Working with the business owner, Warrener Stewart will help decide what these key trigger points are for each business, for example it could be meeting particular business targets, the sale or flotation of the company or even to have stayed with the company for a predetermined number of years.

Buying into company

The ethos of the scheme is to reward employees who work within owner managed businesses by allowing them the opportunity to become more involved in the business by owning a slice of the company. Options can be granted to anyone in the company providing HMRC limits are adhered to and that no one member of staff (including their close relations) holds more than 30% of the company’s shares under option.

Built in safety net

One of the key attractions of an EMI scheme is that it has a built in safety net whereby the options can only be converted into actual shares at the specified trigger points. In addition, options would lapse if the employee left the company, plus there are overriding limits from time to time which restrict the total value of options that company is allowed to allocate.

Setting up an EMI scheme

Warrener Stewart can arrange the strategic and tax aspects of the entire scheme on your behalf. The first step is to organise a business valuation, then agree the terms of your scheme with HMRC and gain their approval for the scheme. Once this has been done, a firm of lawyers will be needed to draft the option documents and confirm the trigger points.  

Tax Free

The grant of the option to employees is tax-free, also when it is exercised employees are not liable for tax or National Insurance. This makes it a perfect scheme to give employees an incentive to help grow the company and engender in them a genuine feeling of business participation and ownership.

There is a further tax saving for the company once the options are exercised, because it will be entitled to tax relief on any uplift in value on the shares between the time of the grant of the option and the date on which it is exercised.

Most owner-managed companies will qualify for EMI, although there are some exceptions. If you would like to find out more about implementing your own EMI Scheme and find out if your company qualifies, speak to Colin Edney on 020 7731 6163

The requirement for filing a self-assessment tax return

09 July 2014 •

Why the reminder?
Many UK tax payers are unaware that they are required to file a tax return.  There are considerable penalties for failing to file and the late filing of a tax return.  

The process
Registering for Self-Assessment can either be completed online or by post using a Form SA1.  Once this form is filed, HMRC will issue the taxpayer with a unique tax reference known as a UTR.  This 10 digit number is required to file a tax return.  If the taxpayer has completed tax returns in the past the previous UTR must be used.  The UTR can be found on most correspondence from HMRC and if lost you will need to phone them.  HMRC will not divulge the UTR over the phone and the letter can take up to 3 weeks.

The requirement for filing a self-assessment tax return
The main reason for filing a tax return is to account for income which is not taxed at source such as a self-employment, joining a partnership or accounting for rental income from a buy-to-let property.  However there are a number of other circumstances where a tax return needs to be filed which include:

- becoming a director of a UK company;
- where annual income exceeds £100,000;
- receiving foreign taxable income over £300;
- receiving income from a trust or settlement;
- where untaxed income cannot be collected through a PAYE tax code;
- if income is over £50,000 and child benefit payments are received and
- having a capital gains tax liability.

The registration process can take up to 4 weeks and the filing deadline for the 2013/14 tax return is 31st October 2014 for paper returns and 31st January 2015 for those submitted online.

The above highlights some of the less known reasons for filing a UK tax return.  Given the penalties for failing to file a tax return it is important to check whether one needs to be filed.  If you have any queries about any of the tax issues raised please do not hesitate to contact our Tax Team on 020 7731 6163

Tax Team celebrates!

04 July 2014 •

When the Thirteen American Colonies broke from the British Empire on July 4th back in 1776 forming Independence Day paying tax was one of the key reasons for their independence. 

Now over 238 years later, American citizens resident in the UK are now caught paying taxes to the Mother Country for which they are no longer resident. Instead of revolt many turn to Warrener Stewart for help filing their US tax returns.  To cope with the growing demand the Fulham based Tax Team of Warrener Stewart has recently recruited Ashleigh Molton to take on the responsibility of ensuring all their American clients are up to date with their reporting requirements.

Ashleigh, a mathematics graduate, will be working closely with Damian Talbot who is Warrener Stewart’s Enrolled Agent, licensed by the US Federal Government.  Commenting upon her appointment Damian said; “Ashleigh has an excellent academic record and is a welcome addition to the tax team.  We are looking forward to her completing Enrolled Agent exams this autumn and taking responsibility for our growing number of American clients.”

Warrener Stewart Pedalling to Prosperity for charity Shooting Star Chase

26 June 2014 •

Two of Warrener Stewart’s directors, Nick Morgan and Jon Last, accompanied by colleague Ariane Cole have entered the Prudential Ride London-Surrey 100 mile bike race due to take place on Sunday, 10 August. 

This road race celebrates the legacy created by the Olympic Games.  It starts in the East of London at Queen Elizabeth Olympic Park, taking riders on a 100 mile trip on closed roads through the capital, out to Dorking down in darkest Surrey, over the Downs a couple of times for good measure, before heading back to cycle up the Mall to the finish line. 

The route passes close to Warrener Stewart’s offices in Fulham which was all the inspiration Nick, Jon and Ariane needed to ride for the charity, Shooting Star Chase.  All the money that the intrepid three raise will be used to support families needing hospice care for children at two hospices; Shooting Star House in Hampton and Christopher’s in Guildford.

Over the past few years Nick Morgan, together with Tony Addinall, Chairman of long standing Warrener Stewart client Badger Holdings (parent company of the Townends & Regents property services group), have completed a number of ‘ultra’ events to raise money for Shooting Star Chase.

“We said we’d retired two years ago?” says Nick. “However, early in February we ran a 10k race along the Thames though Fulham and Putney organised by Shooting Star Chase.  When the opportunity came up to take to our bikes it seemed like a good idea! After this weekend’s practice session however, we are not so sure! We are really not looking forward to cycling right over Leith Hill in Dorking - at nearly 1,000ft it is the highest point between London and France!”

Reporting Foreign Financial Accounts

19 May 2014 •

The Financial Crimes Enforcement Network, or FinCEN Form 114, formerly known as the FBAR, is used to report financial interest or signature authority over foreign financial accounts with an aggregate balance in excess of $10,000 at any point during the tax year.

Form 114 now has a mandatory electronic filing requirement as of 1 July 2013 which can be fulfilled via the BSA efiling system.  The Form can be completed independently, or by authorizing a preparer be means of Form 114a.

Form 114 must be submitted via the BSA efiling system no later than 30 June following the tax year end.  No extensions are available for the submission of this form.

Additional Requirements for Foreign Financial Assets

In addition to FinCEN Form 114 reporting, the IRS also requires reporting of foreign financial assets on Form 8938 as part of the Federal tax return.   This report extends to include financial accounts, securities, interest in a foreign entity such as a corporation, partnership, or trust and any financial instrument with an issuer or counterparty that is not a US person.

US citizens residing abroad must report these assets on Form 8938 if the market values of the foreign financial assets are greater than $200,000 on the last day of the tax year, or $300,000 at any point during the year.   These thresholds relate to individuals with a single filing status, and should be doubled for married filing joint returns.

Conclusion

It is important to note filing Form 8938 does not alleviate you of your FinCEN Form 114 requirement.
Each form carries a hefty fine of $10,000 for non or incomplete reporting, with a potential for these penalties to be higher.

It is always advisable to keep on top of your US tax affairs to avoid penalties and administrative problems, as the IRS is becoming increasingly stringent on reporting especially in respect of foreign financial accounts and assets.  For any help on this or any other American tax related issues please do not hesitate to contact Warrener Stewart for further clarification.
 

An opportunity to train with Warrener Stewart

08 May 2014 •

Current vacancy : ACA Training Contract

Warrener Stewart is offering the opportunity for a recent graduate or AAT qualified individual to join their audit and accounts team on a three year ACA training contract.

This is an opportunity to gain valuable on-the–job training whilst undertaking the professional study required to qualify as a Chartered Accountant.  Speaking about the current vacancy Jon Last, the Director who oversees training, commented;

“Undertaking a recognised training programme like that of the ICAEW not only develops the technical skills required of a Chartered Accountant but, at Warrener Stewart, also provides a valuable insight into the work of an accountancy practice and helps foster an appreciation of the incredible range of work that is involved from technical aspects of auditing through to offering business and tax advice to small and medium sized companies.

We welcome applications from graduates or from those who’ve already studied accountancy and are AAT qualified.”

The anticipated start date is 1 October 2014. To apply please send your CV together with a covering letter to Jon Last either by post or email jlast@warrenerstewart.com.

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James Beagrie - Meon Valley Travel Group