Each individual is entitled to a personal allowance each year. This allowance is the amount of income, currently £6,475, you can receive without having to pay any tax, and for taxable income of up to £37,400, the tax rate is currently 20%.

Therefore, 20% of your annual income after the deduction of your allowance will be your tax liability, e.g. annual income of £16,000 – £6,475 = £9,525 x 20% = £1,905 (your tax liability for the year).

The PAYE scheme (pay as you earn), was introduced to spread the tax charge monthly so that no further tax liability is due at the end of the tax year (as it would be with other types of income). This system means that the majority need not bother with personal tax returns as the correct tax is calculated for you through PAYE.

HMRC provide your employer with a tax code based on your details regarding income and employment, this code can be found on your payslip.

For the basic rate taxpayer with a standard personal allowance you are likely to have the code 647L. They take the basic personal allowance and divide by 10 – do not ask why, it is an anachronism. To summarize, if your yearly allowance is £6,475 then a month’s proportion of this would be £6,475/12 = £539.58. If you earn £1,000 a month gross, you deduct your month’s worth of allowance; multiply this by the 20% tax rate and that should be the tax figure showing on your payslip.

Should you receive a bonus, extra pay or overtime the allowance will remain the same and you will be taxed on anything above this.

Your tax code should correspond to your allowance e.g. £6,475 is 647L. Next year with the £1,000 increase in allowance it will be £7,475 code 747L. The ‘L’ in your tax code indicates that you are entitled to the personal allowance. Allowances are individual to each person and as such if yours varies from the standard £6,475 you can still use the basis above to calculate your payments by multiplying the number in your tax code by ten and inserting your specific allowance into the example, where the standard personal allowance would be, as long as you are under the £37,400 basic tax rate band. Those earning above the basic rate threshold will be taxed 20% to £37,400 and 40% on anything above up to the higher rate of £150,000.

Although a bit more time consuming than just putting your slip in the drawer, once you have  checked it the first time, you can be sure that your other slips will be correct just by checking they are similar (maybe a couple of pennies different) figures. It is also useful to know that you are not under, or over paying your tax therefore avoiding any future problems.

Please note these calculations are based on the basic rate tax payer for the financial year 2010/11. Work place benefits like private medical, company car benefit and higher earnings will all change these percentages and allowances. Should you be concerned that your code may be incorrect speak to your employer or HMRC to resolve the issue as soon as you are aware of a potential problem. Our website contains a simple UK payslip calculator if mental arithmetic is not your forté. It also calculates the national insurances amount for you.

It is not commonly known that HMRC bank accounts cannot receive the Faster Payment Service that the majority of other banks have now adopted.

You make an online payment, your bank says that it is being made under the faster payments system, and should be there same-day but unfortunately, this is not the case. The change to using Citibank for receiving tax payments now seems like a backward step as Citibank accounts, like some ex-building societies turned into banks, cannot accept faster payments. A cynic might argue that this is designed to enhance bank profits (the amount still leaves your account immediately, but does not arrive for 3 days), and also enable HMRC to charge fines and penalties for those payments being received a day or two late.

HMRC warn to make sure these payments are made in plenty of time to allow them to clear. Understandably employers making electronic payments under the faster payment system would think that with the advancement in banking technology that this warning would now be unnecessary.

The HMRC website states that this situation, which applies to all tax payments, will be reviewed in 2010, but as yet no update has been issued.

So as a general rule, make sure your payments get there early, and until HMRC themselves state otherwise, keep on doing so! HMRC suggest three days, however for a cautious move we would suggest four.

Late payments, penalties and interest charges are all a nightmare best avoided. The Kevin Beare & Co bulletin gives handy calendar dates and deadlines for all UK tax payments should you need them.

UK

• Gross Domestic Product (GDP) increased 1.1% in the second quarter of 2010, compared with an increase of 0.3% in the previous quarter.
• Year on year, overall production output in June 2010 was 1.3% higher than in June 2009.
• Year on year, output of the Service sector for May 2010 rose 2.1% compared with May 2009.

LONDON

• London’s annual growth in output increased to –2.6% in Q4 2009 from -4.8% in Q3 2009.
• London’s annual employment growth remained at –2.4 % in Q4 2009 (the figure for Q3 2009 has been revised down from -2.2% to -2.4%).
• The percentage of the resident working age population who are unemployed and claiming Jobseeker’s Allowance in London was 4.2% in June 2010. There were 213,000 unemployment claimants in London in June 2010 compared with a downwardly revised 215,600 in May.

US

• Real gross domestic product (GDP) grew at an annual rate of 2.4% in the second quarter of 2010, following an increase of 3.7% in the first quarter of 2010.
• The U.S. current account deficit increased to $109.0 billion, or 3.0% of GDP in the first quarter of 2010, up from $100.9 billion in the fourth quarter of 2009, or 2.8% of GDP.
• U.S.-owned assets abroad increased $300.8 billion in the first quarter of 2010 after increasing $8.7 billion in the fourth quarter of 2009. Foreign-owned assets in the United States increased $332.1 billion in the first quarter of 2010 after increasing $103 billion in the fourth quarter of 2010.

NY

• Private employment rose by 5,000 in May 2010, after an increase of 15,300 jobs in April. (Source: New York State Dept. of Labour)
• The unemployment rate fell to 9.6% in May 2010 from 9.8% in April. (Source: New York State Dept. of Labour)
• The Manhattan hotel occupancy rate in May 2010 was 92.0 %, up from 84.7% in May 2009. (Source: New York State Dept. of Labour)

Transatlantic Investments

US Investments into the UK

• ServiceSource Launches Service Centre in UK
• Mission Workshop Sets Up Base in London
• Volante Expands Operations Into EMEA & Opens London Office
• Infegy Expands Global Operations with New European Office
• Contour Energy Systems Establishes Subsidiary in UK
• Avista Capital Partners Opens London Office

UK Investments into the US

• PNMsoft Opens Office in California
• ClinTec International Launches New York Office
• Tate & Lyle Focuses on US HQ Relocation
• Intertek Launches Pennsylvanian Laboratory

Figures generously provided by BritishAmerican Business

As the great business thinker Peter Drucker said, ‘No institution can possibly survive if it needs geniuses or supermen to manage it. It must be organised in such a way as to be able to get along under a leadership composed of average human beings.’

There is much discussion about the difference between leadership and management, and whether certain personality types are more suited to be leaders or managers, but from the point of view of running a small or medium sized business, leadership should be regarded as part of management.

Good leadership is not so much about who you are as what you do and how you do it. Anyone capable of managing a business is also capable of developing basic leadership skills.

The elements of good business leadership

The following is a list not of personality traits but of actions that characterise good leadership. They are useful criteria by which we can measure and improve our leadership skills.

Focus on people

Leaders lead people. Realising that the greatest asset of any organisation is its people, a leader will empower them and help them to realise their own potential within the organisation. As Jack Welch famously said, ‘Before you are a leader, success is all about growing yourself. When you become a leader, success is all about growing others.’ Put another way, leaders create leaders.

Vision

To lead, you have to know where you are going; and to know where you are going you have to look ahead. Leadership means seeing future potential in the present and anticipating how it might unfold. Sometimes the potential looks good, sometimes bad, but either way a leader will be ahead of the game planning how to avert or mitigate potential dangers and how to seize and maximise potential opportunities.

Keeping an eye on the big picture

But leaders do not just look ahead; they also look around. It is all too easy when running a business to be so focused on your own operation that you do not see what is going on around you. And yet external factors such as the wider economy, technological innovation, market trends, competitor activity, and social developments can often have a significant impact on your operation. Keeping an eye on the big picture and adjusting your plans and activities accordingly is an important part of leadership.

Setting the direction

Probably most of us have heard the joke about the driver who stops to ask directions to a particular town only to be told, ‘If that’s where you want to go I wouldn’t start from here.’ But, of course, we always start from here! The art of leadership is not just having a vision of where you want to be in the future, but also understanding how to get there from where you are now. In other words, leadership is about understanding and giving effective directions.

Risk management

It is said that a leader’s job is to take people where they have not been before. Leaders often have to take risks – leading their organisation into unfamiliar territory – but the risks are always calculated and the decisions always informed. Wanting always to play safe and not risk making any mistakes does not sit comfortably with good leadership. As Drucker says, ‘People who don’t take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.’

Effective communication

However great a vision we might have, it is worth very little if we cannot effectively communicate it to others. Taking the time and trouble to share your vision and your values, allowing discussion of big ideas, and giving people an opportunity to adopt the vision as if it were their own are all essential qualities of good leadership.

Team building

Another essential function of leadership is encouraging team spirit. There is a saying that if you have a handful of dry grass you can use each individual blade to sweep a floor but it is much more effective to combine them into a brush. In the same way individual employees working alone, however motivated they might be, are nowhere as effective as when they work as a team.

Inspiration

Finally, perhaps the most important quality of a leader is his or her ability to inspire and motivate others. In some ways all of the above serve to do this, but the most inspiring quality of all is to practise what you preach. Leading by example is the most effective way to convey integrity, commitment, and vision – and to transmit enthusiasm and loyalty to others.

As St. Francis of Assisi put it so elegantly over 800 years ago, ‘It is no use walking anywhere to preach unless our walking is our preaching.’

Conclusion

These are just some of the elements of good business leadership. The list is probably endless, and each person will want to compose it differently, but hopefully this guide will go some way to helping you develop and improve your own leadership potential.

The last word must go to the ancient Chinese philosopher, Lao-tsu, whose insights are so often pertinent to our situation today:

‘To lead people; walk beside them. As for the best leaders, the people do not notice their existence. The next best, the people honour and praise; the next, they fear; and the next they hate. When the best leader’s work is done the people say, “We did it ourselves!” ‘

A few years ago, we used to belong to a group called Affilica, but they had limited coverage and we ceased being associated with them.

As we are ever growing, it is time again to look for a suitable network to join.

We are looking for a group made up of members (either accountants and lawyers or just accountants) who are willing to make referrals to a firm of chartered accountants (based in London and Thames Valley/Berkshire area) whose sole focus and experience is supporting overseas companies starting up and operating in the UK.

It needs to be a group that we feel we can contribute to and add value in some way, and feel comfortable in passing on our current and prospective clients to.

I would welcome any such suggestions either here below, or emailed to me paul.beare@kevinbeare.com