How much holiday pay to give your staff

For a 5-day week worker, the entitlement is 5.6 paid weeks or 28 days per annum which can include public holidays. In the case of 6 days per week workers, it is capped at the 28 days. It is calculated from the first day of employment. For those working less than a 5-day week, it would be pro-rata.

Coming from old EU law which still applies in the UK, a worker must take at least 4 weeks holiday per leave year, If less is taken, it cannot be carried over. You are not permitted to “buy” unused statutory leave.

The amount payable per week is obvious where pay is fixed. If it is not, then a 12-week average is used.

When planning holidays, consider employees on irregular hours. For those with variable work patterns, holiday pay must reflect the average weekly pay over the previous 52 weeks, including any overtime or commissions. This ensures fairness and compliance with regulations.

Additionally, clear policies should be in place to manage holiday requests, preventing understaffing and ensuring smooth operations. Encourage staff to plan holidays early, balancing business needs with employee well-being.

Moreover, keeping accurate records of leave taken and remaining entitlements helps avoid disputes and ensures legal compliance. Remember, a transparent and fair holiday policy fosters a positive work environment, enhancing employee satisfaction and retention.

Here is a link if you need more information.

https://www.gov.uk/calculate-your-holiday-entitlement

If you’re interested in this week’s topic but not sure what to do next, contact us via the link below. We’re always trying to help businesses to succeed, so, by working with them, we can help them to reach their goals. Just give us a call or an email via the information on our contact page.

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STARTING A FOOD BUSINESS?

When you start a new food business or take over an existing business, you must register with your local authority. You should do this at least 28 days before food operations start.

This applies to food businesses trading:

• from physical customer-facing premises
• from home
• from a mobile unit or temporary premises
• online (for example via social media or a website) or through distance selling (distance selling means any selling that happens without face-to-face contact with the consumer)

You will need to register if you:

• sell food.
• cook food.
• store or handle food
• prepare food.
• distribute food.

Companies involved with food distribution, brokerage or food supply that operate from an office should also register as a food business.

Additionally, registration is free and cannot be refused. It’s essential to keep your registration details up to date, notifying the local authority of any significant changes to your business, such as a change of address, business activities, or ownership.

Failing to register can result in fines or other legal consequences, so ensure compliance to avoid disruptions. Registration helps local authorities conduct necessary inspections and provide support to ensure your business meets food safety standards.

For more detailed information and assistance with the registration process, contact your local authority or visit their website for guidelines and resources.

This applies even if no food is kept at the premises. If you operate in more than one location, you need to register each premise with the local authority in which they are located.

You can register here: https://register.food.gov.uk/new

Baxterworld offers accounting and financial guidance to companies in both the UK and Ireland. If you’re unsure of this week’s topic or you’re interested in learning more, feel free to contact is today!

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How to Distinguish Between a Budget and a Business Plan

Budget

In simple terms a budget is a financial forecast for you to use internally as a base point against which future results can be measured, it’s created based on what you and your team can commit to. It can be a best estimate of what will happen given some reasonable assumptions, or, it can be a target which will stretch all involved. If all the team agree to work towards it, then it is a viable plan.

It consists of:

• A Profit & Loss forecast.
• A Balance sheet and cash flow forecast based on the above.

You may need several variations to test what will happen to cashflow if circumstances are worse than planned. The main variable is usually sales value. Comparing future actual results with the budget will allow you to see where reality differed from your original plan. If you did worse than planned, this does not mean your budget was wrong. This was just a measuring point. It is usually calculated on a spreadsheet with columns for each month, 12 to 18 months ahead. It can be revised annually if outside factors change significantly so as not to keep repeating known variances in your reports. Most accounting systems now have the ability to work with budgets.

Business Plan

A business plan is much more comprehensive than a budget and is usually used for external purposes such as fund raising from lenders or investors. It includes a description of the business, its history, its products/services and its marketing strategy. Its time horizon is usually from 3 to 5 years. While it contains a financial forecast like a budget its purpose is different and therefore it can be based on different assumptions. A forecast of sales in 4- or 5-years’ time is obviously a complete fiction and the readers will understand this. You must therefore show them that the predictions are plausible by providing enough data to help them judge the risk involved. Avoid hype. Professionals will spot this and lose confidence in the proposal. We hope this blog post has helped you understand how to distinguish between a budget and a business plan. If you need any assistance to distinguish or to review documents for your business, please contact me at [email protected]. There are many free and paid for templates on the internet. AI creation tools can help with the text, so its never been easier.

Company Law Changes on the horizon The white paper on reform to the Company Register, sets out a series of adjustments for businesses for 2023 to “safeguard our national security and reduce the economic and social costs of fraud,” the white paper laid out that small and micro businesses will potentially have to publicly file their profit and loss accounts which they are exempted from at present, having only to file a simplified balance sheet. Most of our clients are happy with this potential change as it makes their business more transparent and easier to keep suppliers onside. Those who value their privacy however have strong objections and are considering their options before the reforms kick in. The only real option available is to disincorporate, which means transferring the business assets to one or more individuals as a Sole Trader or a Partnership. In that way, public filing of accounts is not required. This is a big step and not many will want to do it.

View the white paper here, take a look: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1060726/corporate-transparency-white-paper.pdf

 DIRECTOR’S LOAN ACCOUNT, WHAT IS IT?

If your business is set up as a Company rather than a Sole Trade or Partnership, it is important to remember that the Company is a separate legal entity. It is “Corporate” from the Latin “corpus” meaning body and has its own legal existence. It can own property, be sued, or sue others through the Courts and pay its own type of tax (Corporation tax). To “incorporate” a business means to give it an independent legal standing as a Company.

An individual can have three types of relationships with a Company.

They can be a:

• • SHAREHOLDER – they own all or part of a Company

• • DIRECTOR – a person legally appointed to direct and safeguard a company’s affairs

• • EMPLOYEE – a person with an employment contract with the company

A person can wear one, two or all three hats and in small companies the “owner” is usually all three.

A person is entitled to be paid by the company in different ways depending on the hats they wear as follows:

• • Shareholder – Can be paid a share of the profits by means of a Dividend

• • Director – Can receive remuneration for acting as a director, normally via PAYE

• • Employee – Can receive a salary for work performed, always via PAYE.

It is probably clear by now that money in a company’s bank account, unlike a sole trade, belongs to the company, not the individual. If therefore money is taken out of a company other than by the above methods, it’s a loan. Therefore it will eventually have to be repaid to the company. The Directors Loan Account (DLA), sometimes called the Directors Current Account (DCA), is the interface between the human and the company. Any transactions of a personal nature are recorded in the Company’s books in an account with that name.

Some typical transactions in this account would be:

• • Expenses paid by the company which are personal rather than business. For example in a restaurant, the value of food or beverages removed for personal use, or the cost of travel for a partner on a business trip.

• • Money taken from the business to cover an emergency personal expense.

• • Money taken over and above the Director’s PAYE salary with the intention of repaying this out of profits (via a dividend) later. This is the most common entry in a small business DLA because, unlike a PAYE salary, there is no National Insurance charge on dividends. This can therefore be a more tax efficient means of remuneration as opposed to paying a higher salary. This however is not always the case and depends on may factors. Your accountant will advise HMRC will frown on monthly drawings which are salary in disguise.

• • If a director pays the company an amount of money as a temporary loan (as opposed to an investment in shares) then this will appear as a credit in the DLA.

• • When a dividend is declared at the end of a year when the profits are known, this is usually credited to the DLA. The director can draw on any DLA credit balance without any further tax, funds permitting

Cont…

There is a tax law called section 455 of the 2010 Corporation Tax act. This which charges 33.75% tax on any DLA balances not repaid within 9 months of the company’s year-end. This s455 tax is refundable when the loan is repaid. If the directors loan increases the following year, only the increase will be subject to the 33.75% charge. Any partial repayment will allow part of the s455 tax to be refunded. The rate was 32.5% up to 5.4.22.

Another tax issue to consider is that if the Director’s loan is interest free and exceeds £10,000, then HMRC will demand tax on the benefit-in-kind. Ensure that the company charges the participator a reasonable amount of interest on the DLA balance if it exceeds £10,000.

If you have any questions about a potential director’s loan,  Baxterworld is always happy to help. Contact – [email protected].

#accountant #dla #director #directorslife #businessandmanagement #hospitalitymanagement #businessowner #savetax #lowercosts #help #tax