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We’ve all heard the stereotypes about accountancy – it’s boring, you have to be a math genius, all they do is sit at a desk… the list goes on.

The truth is – Accounting is a well-respected and in-demand profession, where no day is the same and you are an integral part of your client’s business. Yes, having an interest in numbers and and being good at math has its advantages in a career in accounting, but so does a keen interest in problem solving and thinking outside the box! Like the sound of that? Read on!

With a new school year fast approaching, you might be at a point of considering your future and your career choice. If that is you, a career in Accounting is something you should seriously consider and the good news – there is not just one path to take!

 

Exploring your options

University

If you enjoy studying and have your heart set on going to University to gain a degree, this might be the right path for you. As we said earlier, an interest in math’s is good but it doesn’t mean you have to study this or indeed accounting or economics (though advantageous), any degree can be useful and gives you good experience in taking exams. Once you’ve graduated, you can then pursue professional qualifications like the ACA, ACCA or CIMA to become a fully-qualified accountant.

You can also take an undergraduate course – there are many universities in the UK that offer undergraduate programs. These are typically courses in financial accounting, managerial accounting, auditing, and taxation. You’ll learn about different types of businesses and how they operate. You’ll also learn to develop skills in financial analysis and reporting.

 

Apprenticeship

Some people learn best by taking on a more practical, hands-on approach. If this sounds like you, then an apprenticeship might be the best path for you! Apprenticeships offer an excellent way to gain practical experience whilst working towards a professional qualification. You’ll typically work for a company or organisation that offers accounting services. You’ll learn about the different aspects of accounting by working on real-world projects, and you’ll also receive formal training from your employer.

 

Professional Qualifications

Maybe you don’t want to study accounting at university or take an apprenticeship, and yet accountancy still attracts you. In this case, you can become an accountant by taking professional qualifications. There are many available, some of which are recognised by the Institute of Chartered Accountants in England and Wales (ICAEW).

If you opt for this route, you’ll study at home or through a distance learning program. You’ll learn about the different aspects of accounting by taking courses and exams. You’ll also be able to gain practical experience by working on real-world projects.

 

The decision is yours!

If accountancy appeals to you, then there are many different routes that you can take. Which is best for you will depend on your individual circumstances and preferences. No matter which route you choose, you’ll need to be prepared to work hard and to be committed to your career.

At Elsby, our team have different experiences and career paths – no journey is ever the same.

We have several of the team who went to University, with degrees ranging from Oceanography, Criminology to Business Studies and Business Economics. More than half of the team didn’t take the University route and instead did an AAT Apprenticeship. A few of the team are even career changers – going from careers in Marketing or in Adult Social Care before switching to Accounting!

Watch our career videos on our website to see that not all journeys into accountancy are the same and each member of our team has their own story.

 

If you were interested to learn more, you can also drop us a line to find out more about what’s involved – we can offer valuable insights and advice based on our own experiences. Email help@elsbyandco.co.uk

This week at Elsby, we have had the pleasure of welcoming a work experience student from local school, Rushden Academy.  Maya joined us in the Rushden office after contacting us and organising her own placement, having an interest in Accounting as a future career choice. Ann Phillips, Training and Development Manager, organised a jam-packed week of learning for Maya, where she would get the opportunity to work in various different departments, in order to get a true understanding of what life is like working at a thriving and busy firm.

Here, in Maya’s own words, is how she got on during here work experience placement.

My Story

I was informed by my school in February 2023, to find work experience for the week commencing 3rd of July. Following this, as a year 10 student, I had to create a CV to show to our desired company we had chosen, with a cover letter too. Knowing that we had to find a few companies to email / contact to see if they offered work experience to students, I started to have a think about what I wanted to do. The following evening, I spoke to family and friends about what I want to be when I am older, I was quite set on the idea of being an Accountant. A family friend told me to contact Elsby and Co (their office in Rushden) as she had used them previously so I created my CV and sent a cover letter with it on an email to Elsby.

Elsby were the only company I had heard about at the time, I looked at other accountancy firms in the area, and then sent out emails to them too. However, Elsby and Co were the only company to email me back and were very quick with their response. They told me that they would be very happy to take me on for work experience. I was very pleased with the response given and how quickly I had got it back. Close to my starting date, Elsby and Co sent me a welcome pack containing a notepad and pen, post-it notes, wireless charger, a letter with information on dress code and timings to arrive and when I finish. Another thing in the pack was a laminated sheet with information on where I would be on each day with who I’ll be working with and timings for my daily overviews.

My week

Although I originally said in my email to Elsby that I would like to gain experience in accounting, they then set up for me to go in different departments of the services they offer to see what they do and how their work then benefits other departments within the company. The departments I worked in were – Admin on Monday, Payroll and Bookkeeping on Tuesday, Marketing on Wednesday, and Accounts on Thursday and Friday.

During the days, I was talked through on how to use Elsby’s different software and were able to use them for things like agent authorisation, billing decisions (raising invoices on their software and sending them to clients to bill them), booking in meetings for staff to meet clients, checking and publishing invoices, learning about the different types of accounting (cash and standard), learning about VAT, completing bank reconciliation and many other sectors.

What I like about Elsby & Co

From my time at Elsby & Co, I have thoroughly enjoyed every aspect of the week as I always had something to learn or to do which thoroughly interests me. During my week, everyone was very polite by holding doors open for others, saying hello and asking how people are, and even just smiling at each other when walking past – it seems like a great place to work.

With my daily overviews at the end of each day, I was asked everyday how I found things and how the team I worked with that day showed me information and if they went through things in detail for me to understand. At the end of the day, I was also asked about what I had learnt which to me, showed that they have a genuine interest in what I had learnt that day and how I felt by also asking me for a rating on how I felt about that sector to see if it was something I was really interested in and if it is something that would suit me in the future.

All of these small touches made me feel really welcomed at Elsby’s and made me feel very comfortable when asking questions and going through things. With these touches, I was very pleased by the end of the day, and this made me very motivated into learning what was to come throughout the week.

Overall, I would highly recommend Elsby & Co to family and friends or anyone that needed help with accounts, bookkeeping and management accounts, tax returns and planning and the many other services they offer!

Maya – Year 10, Rushden Academy

 

Within limits, businesses are entitled to tax relief on equipment for the financial year in which they purchase it. However, purchases through HP and similar contracts are exceptions to this rule. How can you ensure the earliest tax relief for these?

AIA and full expensing 

The annual investment allowance (AIA) entitles business up to £1 million of tax relief (capital allowances (CAs)) for purchases of plant and machinery (equipment), with a few exceptions. On top of this, businesses operating through companies qualify for relief on similar terms to the AIA on all purchases of new and unused equipment until April 2026 (see The next step ). You might therefore think the timing of equipment purchases is largely irrelevant as far as tax relief is concerned, but there’s a catch.

Hire Purchase

A special rule applies where payment for equipment is spread under an HP agreement. It means your business isn’t entitled to CAs until the equipment has been brought into use in the business. For example, if your business signs an HP agreement for equipment in one financial year but it isn’t used until the next, CAs are delayed until the later year (see The next step).

Other delayed payment arrangements

A delay in CAs also can occur where you commit to a purchase but payment isn’t made immediately.

Trap. Where the purchase agreement allows for all or part of the cost to be paid later than four months after the purchase becomes unconditional, i.e. the date you’re contractually committed to go through with the purchase, CAs can only be claimed for the financial year in which payments for the equipment are made.

Example. Acom’s accounting year end is 31 December. On 1 December 2023 it commits to buying new machinery for £100,000. The purchase contract requires Acom to pay £15,000 at the time of the order and the balance within 30 days of when the machinery is installed. The installation is completed on 30 April 2024. Acom can claim CAs of £15,000 in its financial year to 31 December 2023 but isn’t entitled to CAs on the balance of the cost until the following financial year, thus delaying tax relief by a year.

Tip. When agreeing terms for large purchases of equipment near the end of a financial year, keep in mind the four-month rule. If the timing of the payment is going to cause CAs to be delayed to the next financial year, ask the supplier to advance the payment so it’s within four months. Even if you actually make payment later than this, CAs can be claimed in the financial period in which the purchase contract is signed.

Tip. If this isn’t possible, avoid making this type of purchase close to your financial year end.

Purchase Planning

The message is that planning your equipment purchases around the tax rules is important. It can mean a difference to when your business obtains tax relief of almost a year. Planning can ensure you receive the tax relief sooner and therefore also improve your cash flow.

There’s no entitlement to tax relief through capital allowances (CAs) for purchases made by HP until the financial year in which the equipment is first used. For other purchases where payment occurs more than four months after the purchase agreement, CAs apply in the financial year in which payment is made. Plan your purchases accordingly to improve your cash flow.

 

Credit – Indicator – FL Memo Ltd 

You’ve been an owner manager of a company for some years. Recently, you have set up a new company with a work colleague. Are both companies entitled to the employment allowance (EA) and if not which of them is?

What is Employment Allowance (EA)?

The employment allowance (EA) has been with us since 2013 but has been tweaked and tinkered with along the way. The effect of the EA is to reduce employers’ NI bills by £5,000 (since April 2022) per year. For many smaller businesses it completely eliminates an NI bill.

Claiming the allowance

While most smaller employers are eligible to claim the allowance, there are exceptions. The main two are where:

• a business’ employers’ Class 1 NI liability in the previous tax year exceeded £100,000; and
• Companies have only one employee and that person is a director.

Claiming the EA

Claiming the EA just requires a tick box on the first payroll submission to HMRC in the tax year, declaring that your business meets the eligibility conditions. The EA is given by allowing employers to keep the first £5,000 of any employers’ NI due instead of paying it over to HMRC. Trap. If you own, or partly own, two or more businesses, they may have to share one EA between them.

Sharing the EA

The Trap above applies:

• if you’re self-employed in two or more businesses, even if they are entirely separate, e.g. if you’re a hairdresser and own a cattery. Any of the £5,000 EA not used by one business can be set against the NI liabilities of the other(s)
• where two or more companies are connected and interdependent, i.e. they use common resources such as premises or staff, or have common customers. With one exception, explained below, connected means where one company controls the other or the same persons control both; or
• where two or more limited liability partnerships are connected. Broadly where one has the right to more than 50% of the other’s assets or income.

Connected companies

The condition which limits connected companies to one EA between them applies only at the start of each tax year. So where you already own one company, and either start or acquire another company later in the tax year, both can claim the EA for that year, but for the following and later years they must share one EA.

Tip. Even where you would expect the Trap to apply because two or more businesses are connected, loopholes in the rules mean that each is entitled to claim the EA.

Different business structures

The Tip above applies if you own two businesses through different structures. For example, if you are self-employed and own or control a company, each businesses is entitled to its own £5,000 EA. The same applies if, say, you’re a sole trader but are also a partner in a business.

 

Companies and limited liability partnerships under common ownership or control must share a single EA. However, this rule doesn’t apply to unincorporated businesses, i.e. sole traders and partnerships. This means you can own two businesses with different ownership structures, e.g. a company and sole trader, and both can claim a full EA.

One of the biggest problems faced by accountants everywhere is work overload. You never hear an accountant saying that they aren’t busy. The problem is – if you’re good, word gets around and people come to you. Our product is our time (and expertise), we can’t just crank up the production levels – there is only one of each of us.

This problem is particularly acute now because of a series of unfortunate events. It actually started with the financial crisis of 2008 because afterwards, accountancy firms seemed to significantly reduce their investment in trainees. The timing coincided with significant improvements in tech, which meant that you needed less unskilled labour, but more of the skilled advisory accountants. There became a severe shortage in experienced, skilled accountants, because of the reluctance to invest in trainees after the financial crisis. Before that could improve, along came Brexit, followed by the Covid pandemic. The combination served to further reduce the availability of skilled staff. But at the same time, there was a huge amount of work pressure in helping business clients deal with the pandemic, and dealing with legislation changes on an almost daily basis, at times.

At Elsby’s, we’re lucky to have such a great team, who are committed to helping our clients (and each other) when they need it, and especially when they need it the most. During the pandemic, our payroll team pulled out all of the stops, doing whatever it took to help our clients sort out their payroll and furlough, often dealing with highly complex matters at the drop of a hat, with a matter of urgency. They did this without complaint – they even seemed to relish it! Our accountancy team was the same, dealing with grants, clients having all kinds of problems, in addition to the normal work. The rest of the office supported and it was great to see the team effort. After the pandemic, the same spirit has continued, but the partners have seen evidence of mental fatigue amongst everybody, ourselves and clients included!

Now that normal (ish) times have returned, we’ve experienced significant increases in demand for our services, at a time when our team have been shattered after their huge commitment. We have a great team, provide a great service, and we go the extra mile to help our clients, and this leads to more demand. It is a huge danger that as this happens, there is a natural increase in the amount of work pressure that everybody experiences.

This pressure can easily lead to stress, which has a bigger impact on the individual and the business. The most common cause of stress in the UK is work-related stress with 79% saying they frequently felt it. When stress becomes unmanageable, it becomes an issue which can damage both performance and health. The workplace health report states that a staggering 13.7 million working days are lost each year in the UK because of work-related stress, anxiety and depression – costing £28.3 billion yearly (NICE). Of the causes of stress at work, workload was found to be the biggest cause with 73% in 2023.

I’ve been asked to explain what we Partners have done to help alleviate this problem. The biggest thing we have done, and continue to do, is to recruit ferociously. My main responsibility is the strategic direction of the firm, and my top aim is to consistently be ahead in terms of staff capacity, ie to have more staff in place than we need to carry out our work. I want all of our team to continue carrying out their brilliant work, but to be able to do it in an unpressured way, and to have time to do those extra things that progress their learning and development. It is unbelievably difficult to achieve this! What you find is that as you approach that position of utopia, people do an even better job, and then even more work arises! This is what is happening at the moment, and is why we always seem to be recruiting for high quality people.

The long term solution is to invest in trainees so we are looking at an intake of 6 – 8 trainees this year. This process again needs a massive commitment. It isn’t just about the recruitment of trainees, but we are also implementing a much improved formal training structure. This removes much of the responsibility from our accountants and puts it in the hands of people whose passion is training, who love to see the growth and development of our trainee intake.

At the same time, we invest heavily in training and development of the soft management skills of our accountants. Management is very different to being an accountant, and we recognise this, and provide a huge amount of support in this area, which is showing through in the way our teams are working together. We recently invested in recruiting the hugely experienced Ann Philips as Learning & Development Manager. This move is already paying dividends as improvements in our systems, procedures, skills and practices, are making everything more efficient, and this is reducing the work pressure!

I’m pleased to say that I THINK we’re in a position where we’ve achieved my aim of being ahead in terms of staff capacity, meaning less work pressure. But as I say that, the commitment of our team is incredible! We’re entering a new financial year, traditionally our quieter period, and the team are going full throttle in getting organised and getting ahead – their appetite is insatiable, and I love it! I’d like to have a month of rest myself, but if I stop trying to recruit, I know we’ll revert back to a pressure situation. The team is driving me, not the other way around!

It would be fair to say that managing work pressure is a constant discussion point at partner meetings. We take it very seriously and there are a whole range of different measures we’ve implemented. But in terms of what makes the biggest difference, it is definitely the huge amount of effort that goes into recruitment and retention of staff – and getting ahead, rather than being reactive.

 

Carl Elsby

Money purchase input sub-total

An individual’s money-purchase input sub-total is the total of:

• the pension input amounts for each money purchase arrangement the individual has under a registered pension scheme of which the individual is a member; and

• the pension-input amounts for each hybrid arrangement the individual has under a registered pension scheme of which the individual is a member and which offers money purchase benefits.

Pension inputs into a money purchase arrangement, other than a cash balance arrangement, are simply the total of relievable pension contributions made by or on behalf of the individual and employer contributions in respect of the individual.

If the individual has no hybrid arrangements, therefore, the money purchase input sub-total will simply be the sum of employee and employer contributions to the scheme.

The alternative chargeable amount

For 2023–24, the alternative chargeable amount is the total of:

• the amount by which the money purchase input sub-total exceeds £10,000; and

• the amount (if any) by which the defined benefit input sub-total exceeds £50,000.

The defined benefit input sub-total is the total of:

• the pension input amounts in respect of each defined benefits arrangement the individual has under a registered pension scheme of which the individual is a member; and

• the pension input amounts in respect of each hybrid arrangement the individual has under a registered pension scheme of which the individual is a member and which offers defined benefits.

Calculation of the pension input amount for a defined benefits arrangement is quite complicated, but, very broadly, it is the difference between the opening and closing values of the expression

(16 × expected pension) + lump sum (LS),

where LS is the expected lump sum (if any) the individual may take otherwise than by commuting the pension.

When does alternative chargeable amount apply?

The alternative chargeable amount, including the MPAA, applies only where it would exceed the ‘default chargeable amount’.

Thus, if the excess of all the individual’s pension input amounts over £60,000 is greater than the alternative chargeable amount, the default chargeable amount applies.

Tapering the annual allowance

As we have seen, an individual member of a registered pension scheme who has an ‘adjusted income’ for the tax year greater than £260,000 and a ‘threshold income’ greater than £200,000 faces a reduced annual allowance. Such an individual is referred to as a ‘high income individual’.

Broadly speaking, ‘adjusted income’ is an individual’s net income after all reliefs except those for pension contributions, and it also includes employer pension contributions. An individual’s threshold income for the tax year is their net income after all pension contributions have been deducted, unless salary sacrifice or flexible arrangements are in place.

Where an individual is a ‘high income individual’, meeting the conditions described above, the annual allowance is tapered down by reducing it for the year by £1 for every £2 by which the individual’s adjusted income exceeds £260,000.

The amount of the reduction is rounded down to the nearest £1, but may not be less than £10,000.

Artificial manipulation of adjusted or threshold income

There is an anti-avoidance rule to counter avoidance schemes that are intended to prevent any reduction in the annual allowance or to reduce the amount by which it is reduced for high income individuals. Its effect is, quite simply, to restore the reduction to the allowance that would have been made if the arrangements had not existed.

The anti-avoidance rule applies to arrangements where each of three conditions, A to C, is satisfied.

Condition A

Condition A is that it is reasonable to assume that the main purpose or one of the main purposes of the arrangements is to reduce the reduction required by the taper for the tax year or for two or more tax years that include the tax year.

Condition B

Condition B is that the arrangements involve reducing the individual’s adjusted income or threshold income for the tax year.

Condition C

Condition C is that the arrangements involve redressing that reduction by means of an increase in adjusted net income or threshold income for a different tax year.

Carry-forward of the annual allowance

Where the annual allowance for a tax year exceeds the pension input amount for that year, a limited form of carry-forward is available.

Where, in a tax year (the ‘current year’), an individual has ‘unused annual allowance’ available, the individual’s annual allowance for that year will be increased by the amount of that unused annual allowance.

An individual has ‘unused annual allowance’ where:

• in the immediately preceding tax year (Year −1), the individual’s annual allowance (ignoring any amounts brought forward under these rules) was greater than the individual’s total pension input amount; and/or

• in the two years immediately preceding Year −1 (Years −2 and −3) the individual’s annual allowance for one or both of those years (ignoring any amounts brought forward under these rules) exceeded the individual’s total pension input amount for either or both of those years and that excess or those excesses are not ‘used up’ (ie, already applied under these rules to increase the annual allowance in a following year).

An amount of annual allowance is ‘unused’ to the extent that, ignoring the effect of any carry-forward, it exceeds the pension input amount for that year and, where that excess arises in Year −2 or Year −3, that excess has not been ‘used up’.

An excess is ‘used up’ if there is an excess of pension input amount for an ‘intervening year’ (ie, one between the year in which the excess arose and the current year) and that excess has been used under these provisions to reduce an annual allowance charge for that intervening year.

In any year, unused annual allowance brought forward is used up on a ‘first-in, first-out basis’, ie, the allowance for earlier years is used in priority to that for later years.

Lifetime allowance

The lifetime allowance charge will be removed from April 2023 before the allowance is abolished entirely from April 2024.

The current limit is £1,073,100, which caps the total amount of tax-free savings which can be held in an individual’s various pensions.

These reforms are designed to ensure that highly skilled individuals such as NHS clinicians are not disincentivised from remaining in the workforce by reducing the risk of incurring significant pension tax charges.

This measure will cost the Treasury £2.75bn over the next five years until 2028.

The lifetime allowance, the maximum amount you can hold within a pension during your lifetime, was introduced in 2006 and at the time the limit was nearly £2m but this has been reduced by successive Chancellors.

Under the current rules, exceeding the standard lifetime allowance of £1,073,100 will lead to additional tax charges on the excess when you come to take your pension benefits or turn 75.

Now that the limit on the lifetime allowance is being removed, high earners will have the opportunity to save unlimited funds in pensions. In future, pensions could also be used for effective inheritance tax planning as under current rules, most pension pots are inherited free of inheritance tax, and are taxed at the individual’s effective tax rate.

Most pensions are set up under a discretionary trust and the pension holder must name the beneficiaries of their pensions for this to work. It is not clear whether the government will introduce some anti-avoidance rules to address this issue. This will be clearer once the full legislation is available later this year.

Conclusion

The 50% increase in the annual allowance announced by the Chancellor, together with the increase in the money purchase annual allowance to £10,000 has undoubtedly opened the way to increased pension savings for those with the means of making pension contributions of this order, and must be seen in the light of the concomitant abolition of the lifetime allowance charge.

For the highest earners the removal of the lifetime allowance will be a welcome move, but will benefit under 10,000 high income individuals a year.

 

Get in touch today if you need advice about your pension!

In a departure from the recent norm, this Budget was delivered with an objective to not spook the markets and cause economic chaos. Although unusual, I quite liked that.

 

I always think the Budget is over-egged by us Accountants – it’s apparently the most interesting thing that happens to us in the course of a year. But there’s not normally much I get excited about. I like to focus on the important matters, and for me, that is some good news that I read with regard to the economy in general. Inflation is predicted to reduce to around 4% by the end of the year, which is not a surprise as the starting point for the statistic are prices already inflated by two years of very high inflation. It had to come down. But also that interest rate predictions have calmed from 6.5% to 4.5%. These two factors are very good news for all of us, in terms of our day to day lives.

 

The big budget news is additional childcare support. The UK has one of the highest childcare costs in the world and this is clearly a big barrier to work, and availability of labour is a significant factor dampening down growth prospects, so this is very welcome. Elsby will publish a Help Sheet about Childcare in the very near future, explaining the current system, and the changes.

 

Controversially, the Chancellor also announced two significant measures on pensions (from 6/4/23):
– the removal of the lifetime allowance (£1.07m) which implemented a significant tax charge on pensions above that amount, so this change gives much more flexibility for pension investment. This can be very tax efficient and also can be used to protect wealth from IHT.
– and the increase in the allowable annual pension contribution from £40,000 to £60,000 which is also helpful for tax planning.

Labour have denounced the move as a break for the ‘wealthy few’ – which I can’t deny – and have pledged to reverse the move if they win election.  Although these changes are ‘good for business’ (for an accountant), I’m frankly astonished at the poor prioritisation, and it just reinforces the view that politics is a shady power game. One of Elsby’s core values is ‘to do the right thing’ and this is the exact opposite, in my view. However, please talk to us if you wish to re-evaluate your pension tax strategy and we will do the right thing for you 😊

 

There are some changes to R&D:

• Reduction in relief rate from 230% to 186% for SME’s
• RDEC credit (non SME) to increase from 13% to 20%
• Changes where there is a loss position
• New claimants need to inform HMRC of intention to claim within 6 months of the end of the accounting period

 

Other important changes have already been announced:

• Corporation rates will go up to 25% for businesses with profits above £250k, tapered down to 19% for businesses with profits below £50k.
• Super deduction on asset purchases ends on 31/3/23
• CGT annual exemptions reducing
• Personal Allowances being held
• VAT registration threshold frozen at £83k which is a real disappointment given high inflation – this is a real burden for some small businesses.
• Improvements to the Seed EIS scheme

 

I think that sums up the main points that will affect our clients. As ever, we’re all happy to discuss any of these changes with you. Here’s to a successful 2023!

 

You can read our full Spring Budget 2023 Summary here

Claire Emery, Partner at Elsby & Co, has praised Elsby for giving her the freedom to ‘perform’ in all areas of her life.

Speaking on International Women’s Day, ‘Dancing Queen’ Claire Emery says the flexible approach of Elsby & Co, has not only helped her reach her career goals but to successfully juggle life as a wife, mother and one half of Abba tribute act Honey Honey. Attracted by the company’s commitment to staff training and development, Claire first joined Elsby & Co 11 years ago.

She said: “From the moment I joined the company I received support and encouragement to further my career. Already a mother, I remember thinking I would just be happy to stay at the management level I entered at. I was encouraged to reach the next level. In the January I qualified as a Chartered Accountant; in March I gave birth to my second child.”

Claire wondered if she would be able to continue in her professional life.

She added: “I had a meeting with the company partner Carl and I had my notice in my bag. I thought I would have to leave as I wanted to work part-time, half days – it was important that I would be home with my children and involved in their bedtime routine. I was ready to leave, but he listened and just said, “that’s all fine”. Because of that I gave even more back. I worked hard and wanted to improve, to show I could make a success of being a working mum.”

Together with colleague Leona, Claire was put in charge of the firm’s office in Wellingborough Road, Rushden, following her promotion to Partner.

She added: “Leona is also a mother and we were able to job share and help each other.”

Currently juggling motherhood of a 20-year-old daughter, sons aged 13 and 10 and a four-year-old daughter – plus the management of a team of 60 people across the company, including a direct team of eight, Claire’s working arrangement allows her to fulfil all her roles successfully. She added “I work 4 days in 3.5, have a son in a football academy and one that swims 10 hours a week and competes for the East Midlands Regionals in Water Polo. I also perform as ‘Agnetha’ in Honey Honey every other weekend. My children will always come first, and I just wouldn’t take on a job anywhere that didn’t provide the flexibility that Elsby & Co does. Here, as long as people work their hours, complete their jobs, it’s fine to work outside of the ‘normal’ working hours and I am passionate about helping the members of my team to reach their own goals using this same approach.”

Elsby & Co provides a range of accounting services including management accounting and auditing, assisting businesses with making tax digital and specialist advice for business owners across Northamptonshire. With offices in Sywell and Rushden, the company employs 60 accounting professionals including 43 women and 17 men who have access to a range of supportive initiatives including flexible working, hybrid working and private health insurance. Co-founder of Elsby & Co and Head of People and Culture, Clare Elsby said: “By supporting International Women’s Day, we’re committing to creating a workplace where all voices are heard, all talents are recognised, and all opportunities are within reach.

 

“Empowering women in the workplace through training and flexible working arrangements not only benefits individual employees, but also leads to a more inclusive and successful company culture and it is something we are proud to support.”

This is an abridged version of the Elsby article featured in the Northampton Chronicle – Mamma Mia! Northamptonshire accountant praises employer for giving her the freedom to ‘perform’ in all areas of her life | Northampton Chronicle and Echo

A good, balanced approach to financial planning can mitigate or minimise the effects of Inheritance Tax. Claire Emery, Partner at Elsby & Co believes it’s your accountant who may be best placed to act as the important link between your business affairs and wealth and estate planning.

Many SMEs using accountancy firms build their businesses diligently over many years, but rarely do they look at themselves and analyse the protection they have in place, where their pensions and investments are, or the succession plan for their business. Just as (if not more) important is what happens in the event of death.  Are your loved once catered for with clearly laid plans, or is your estate likely to be something of a minefield?

The link with tax planning, exit planning and estate planning is so strong that it can easily be argued that financial services and estate planning should be a natural domain of the accounting profession. As accountants, we’re blessed with a very holistic view: we have all the relevant information from company accounts, tax returns and client interviews. What we can input into the overall wealth management and asset protection process is so much more important than any other professional adviser. An IFA has to ask for all the documentation that we already hold – a strong argument as to why your accountant should be the first port of call to help make the necessary arrangements for your wealth management needs and wider succession and estate planning.

 

How can we support you?

As accountants, we can do so much more than complete your tax return or provide a set of year-end numbers. We can help to protect clients against future liabilities and financial pitfalls. It’s true that many accountants prefer to stick to compliance work such as accounts, audit and tax return, where there’s less scope for using professional judgement. At Elsby, we’ve taken steps to position the business as a true one-stop-shop for clients.

With the launch earlier in the year of Elsby Wealth Management we’re able to not only advise on the accounting needs of clients, but with a simple introduction to our Wealth Management arm, we can ensure our clients can make the most of such things as dividend payments and tax planning to maximise their investment options.

Using a range of pensions, investments, funds and financial planning techniques to maximise the value of your assets can help you manage your finances to ensure you’re meeting your business and personal wealth needs both now and in the future.

Many companies provide pensions and investment advice, but few companies are as uniquely placed as Elsby to deliver a consultant-led approach towards your planning, delivering accountancy and advisory support with the integration of wealth and asset management solutions.

Accounting advice and wealth management are perfect partners and so much more so if the information and knowledge can be factored into the estate planning process. With the imminent launch of Elsby Estate Planning, there has never been a better time to review your accounting arrangements to ensure you can benefit from a holistic ‘360 degree’ approach to your accounting, wealth management and estate planning needs.

 

If you would like to hear more, please e-mail claire.emery@elsbyandco.co.uk or Andy Kennedy (Director of Elsby Wealth Management) andrew.kennedy@elsbywm.co.uk.

With recent tax changes and more coming in 2023, Leona Bateman, Partner at Elsby & Co examines whether tax motivated incorporation tax still has a place.

Historically, tax and national insurance (NI) savings could be made by transferring a sole trader business to a limited company. In 2016 a sole trader with profits of £100,000 would keep just over £66,200 after tax and NI, however a director shareholder of a single person company would keep just over £71,000, a near £5,000 saving. As accountants our advice was simple and straightforward.

In 2022/23 a sole trader would keep £66,800 and the director shareholder would keep £68,600, but the saving has been reduced.

In 2023, corporation tax increases to 25%, though companies with profits of £50,000 or less will continue with the 19% rate. Where profits don’t exceed £250,000, marginal relief can be deducted to reduce the effective rate of tax. This change has a significant impact on the decision to incorporate.

Assuming the accounting period falls wholly after 1 April 2023, the sole trader is in a similar position as 2022/23, keeping just under £67,000 after tax and NI. This makes sense as sole trade profits are not subject to corporation tax.

However, the director shareholder’s position is affected as profits after deducting the director salary of £12,570 (the optimum position due to increases in the primary threshold) fall into the marginal relief band. The corporation tax bill increases, leaving less distributable profits to take as a dividend. The result being our director shareholder keeping £67,000, putting them on a par with a sole trader.

 

The future for incorporation

When considering whether to incorporate following the 2023 rate increase, it’s unlikely to be worth doing from a tax angle alone, unless there’s certainty that profits will remain around £50,000 to £75,000.

The tax efficiency could increase depending on circumstances. If the director shareholder doesn’t require all the profit to be extracted every year, profits can be left undrawn as dividends, but won’t be subject to income tax until withdrawn. If this takes place in a later year, when profits are lower, they could be subject to a lower rate of dividend tax.

The company could also use any undrawn profits to make investments in its own name. This doesn’t solve the tax efficiency issue but could increase the distributable profits going forward. Another option is using undrawn profits to make pension contributions as the employer. These would be deductible for corporation tax, but the downside of money being locked away.

If these options aren’t suitable, a good strategy is to bring a spouse or civil partner as a second director shareholder. This would eliminate secondary class 1 NI contributions and would have a big effect on the corporation and income tax charged.

Assuming no other income, both directors would withdraw a salary, saving corporation tax of up to 25%, with income paid enjoying the benefits of two personal allowances, basic rate bands and dividend allowances.

In a company with profits of £100,000 and assuming director salaries of £12,570, corporation tax falls by over £3,000. Assuming an equal dividend split, neither director shareholder breaches the higher rate threshold, and the income tax bill is less than £5,000. Overall, the change to a two-person company saves over £12,000, leaving our happy couple with £79,200.

The days of the old ‘one-man (or woman) band’ companies may be numbered, but there’s still a place for incorporation with tax savings in mind.

For a free consultation or to hear how Elsby can help mitigate your tax, please e-mail leona.bateman@elsbyandco.co.uk

If you seek out the right support early on and put in place the best structure, you’ll be in a better place in the long term. This is easy to say after the event, but because you never did it, doesn’t mean to say you can’t do it now.

At Elsby, we’ve met plenty of clients who were honest in admitting it was time to move on from their existing accountants. Unfortunately, some decide to stick with the status quo for reasons we understand.

‘Moving on’ isn’t always easy, perhaps the existing accountant is a family friend or someone that supported them in the early days. As the business grows it becomes clearer that their accountant doesn’t always have the right level of expertise, or they may be too busy to give them the time because they’re a team of one.

Staying with an accountant out of displaced loyalty is an honourable sentiment but if you are not getting the best service for your business, your accountants won’t be the ones who suffer.

At Elsby, we believe there is more to accounting than a set of books, non-compliance elements such as business strategy, growth, funding, and wider business development advice are just as important. Your accountant should be an important resource for this type of expertise, giving you the time and freedom to work on the business, rather than in it.

With many subject experts within the business, we’re well-placed to cater for the growing needs of SMEs. It’s true that some small business owners are unaware of the tax reliefs they could be claiming to reduce their tax bills, we like to think outside of the box, and work hard to understand the business, claiming any available tax reliefs.

It’s something of a myth that changing accountants is difficult, it can be simple and straightforward. We provide a free meeting (in person or virtual) where prospective clients can bring in their accounts or tax returns, we can probably even make some suggestions there and then. For those choosing to change, we’ll e-mail the existing accountants requesting a few items and some forms to complete. It’s straightforward and quick and means the business will be in a better place moving forward.

It never hurts to get a second opinion and a conversation cost nothing. If you’re reading this and nodding, we hope you’ll take the plunge and invite Elsby to be a part of your future and provide a level of advice and expertise which can help you reach your business goals.

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This is an abridged version of the Elsby article featured in the Business Times A good accountant matters more than ever – Business Times (business-times.co.uk)

Events of the last couple of years have put considerable pressure on many relationships, resulting in an increase in separation and divorce amongst married couples. The tax consequences of separation are often overlooked.

Most separations result in a transfer of assets between the married couple. Typically, these assets would be a family home, buy-to-let properties, business assets or investments. For the wealthy, there can be significant exchanges of capital sums which are likely to have increased in value over the course of the marriage.

In most circumstances, there is no capital gains tax liability when assets are transferred between married or civil partnership couples. In effect, there is a no gain, no loss position. This being the case, it seems logical that there is no capital gains tax between divorcing couples if they transfer the assets before the divorce is formalised. Unfortunately, this is a common misconception.

Many couples appreciate that they must pay some capital gains tax on the transfer of assets after the partnership has been legally dissolved. They might not however realise that there could be a capital gains charge on separation before the formal divorce.

Where a couple have lived together at any point in the tax year in which assets have been transferred, the married couple do not have to pay capital gains tax. However, if a couple have separated in the previous tax year, then capital gains tax will be owing on the transfer of assets.

This can have an important tactical, timing impact on separation and divorce agreements and the transfer of assets. It also suggests that separating is best done on the 6th of April (earlier in the tax year), rather than the 31st of March (at the end).

There are potential issues for the main home around gifting or selling and exemptions of principal private residence which need to be assessed individually. A spouse moving out of the family home may lose a portion of their principal private residence relief without realising. In short, there are many considerations which have a bearing on the financial outcome.

A tip to consider when supporting individuals is ‘Can assets be transferred in the tax year of separation or within 9 months of separation?’

At Elsby we review the capital gains implications of any transfers of assets, additionally considering if there are any mitigations for the tax amounts due. This can maximise the pool of funds available to be shared between the parties. By undertaking this, both parties are jointly aware of the tax implications, allowing for communications to be improved when negotiating the financial settlement.  After all this, we then support individuals with their reporting requirements to HRMC once assets have been transferred.

Separation is never easy, but steps can be taken to ensure couples don’t make an awful year even worse.

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