We first started Zyla Accountants by working from home, coffee shops and meeting clients at their offices. As our client base has grown we have seen the value in joining a co-working space so that we have a place to meet our clients and to be involved in the co-working community.

We started our co-working journey at wework in Hammersmith and Brook Green but soon moved as we did not find a sense of community and the beer on tap was not a deal breaker for us. The idea of wework is great but unfortunately the execution of wework doesn’t quite match.

Next we moved East to Plexal City in the Olympic Park and we loved it there! The layout of the workspace itself is what drew us so far East and being surrounded by innovative tech startups was a perfect mix for us. In the end we decided to move because the commute become too long for us as we live closer to West London.

This brings us to our first private office at The Workary Avonmore as part of Wimbletech, who have transformed under-utilised library + public space in partnership with local Councils to ‘make it possible for entrepreneurs to live good lives, to grow their businesses within spaces that they love, around people they care about, whilst contributing and giving back to their local community.’ We are proud to have moved into our first private office as we expand the team and we love the community environment at The Workary. We also feel that we are far more productive and focused having our own private space.

Key points for us when picking a co-working space have been:

  • Environment / productivity
  • Community
  • Location

As always, there are tax implications to consider when switching to a co-working space.

The tax implications of a work space depend on the amount of time spent there and also the duration, for limited companies the questions to consider:

Are you going to spend more than 40% of your time there?

Are you going to be going there for more than 2 years?

If both of these conditions are met then this constitutes ‘ordinary commuting’ and your travel and associated costs ie food & drink expenses are not tax deductible.

1) Working from home

Obviously you will have no travel costs and the expense of working from home can be tax deducitble. As a sole trader you’re allowed to take a proportion of all your home running costs prorated for number of rooms used for business and numbers of days worked from home. Or alternatively you can claim a flat rate allowance per month for your light, heat and power. The flat rate allowance is set by HMRC and depends how many hours you work from home each month:

  • 25-50 hours: £10 per month
  • 51-100 hours: £18 per month
  • 101 hours or more: £26 per month

As a director of a limited company you cannot claim any fixed costs and the HMRC flat rate allowance for use of home is £4 per week.

2) Working & meeting clients at coffee shops

This will be deemed a temporary workplace therefore expenses are tax deductible.

3) Hot desk at a co-working space

If you use a co-working space occasionally and pay a daily rate every time you do so, this will still be classed as temporary. For a limited company if you only spend roughly 2 days a week there and do not plan to be there for more than 2 years, expenses are tax deductible.

4) Fixed desk / private office at a co-working space

As your usage of the co-working space becomes more permanent your travel and food expenses may not be tax deductible. As a sole trader if you’re working there on a regular and predictable basis, you can’t claim back the associated travel costs. For a limited company if the company directors and employees in question expect to be at the space for two years and spend at least 40% of their time there, you can’t claim back the associated travel costs.

If you need any further guidance on your current workplace situation and travel expenses get in touch [email protected]

Employee Share option schemes for Small Business and Startups

Employee Share option schemes for Small Business and Startups

Awarding staff shares in your company creates a real sense of ownership and loyalty.

How do you offer shares to employees and consultants?

Employee share option schemes are a clever and innovative way to recruit and retain key talent which are also tax efficient for you and your employees. You can also give share options to consultants and non-executives who need the incentive to contribute to your growth.

Main advantages of giving share options to employees

  • motivating your employees to be more productive
  • increasing staff loyalty and reducing key staff turnover
  • raising working capital for your business
  • remunerating employees in a tax efficient way
  • recruiting new talent that is important to your business

Employee share schemes are split into

  • approved schemes that are recognised by HMRC having tax advantages
  • unapproved schemes that are not recognised, having fewer tax benefits

Approved share option schemes that are most popular

  • Save as you earn scheme (SAYE)
  • Share Incentive Plans (SIPs)
  • Company Share Option Plans (CSOPs)
  • Enterprise Management Incentives (EMI)

Of the above four, top three are more popular with large companies due to the cost of creating and maintaining the schemes which might be a burden for small businesses.

There are some qualifying conditions to be eligible to have an EMI scheme in place for your company.

Qualifying companies are those:

  • with gross assets less than £30 million
  • having fewer than 250 employees
  • that have a permanent place of business in the UK

If you tick all the above boxes, then you can set up an EMI scheme for your business.

Qualifying employees are those:

  • who are an employee of your company or a subsidiary company
  • work for your company for a minimum of 25 hours a week or 75% of their working time
  • part time workers who do not work more than 25% of their time elsewhere
  • who already do not hold more than 30% of the shares of your company or subsidiary

Unapproved share options are ideal if you have contractors, advisers or consultants who are not employees to qualify for EMI scheme but who you would like to retain and reward. They do not enjoy the same tax advantages as approved share option schemes but they do not have to meet any statutory requirements and do not need HMRC approval which is attractive for small business and startups.

You can set targets and milestones that need to be achieved or period of time they need to stay with the company in the form of a shareholders agreement.

EMI tax benefits summarised below

  • no Income tax or National Insurance to be paid by employee who accepts the initial grant of the EMI options
  • no Income tax or National Insurance to be paid by employee where exercise price is below the market value of shares
  • employee can also avail the 10% entrepreneur’s relief which will reduce the Capital Gains at the time of sale of shares to 10% rather than the normal 20%
  • your company can also deduct as business expense the difference between the market value at the time of exercise of options and what the employee pays for the shares

Contact [email protected] who can take the stress away from the whole process and make setting up an EMI scheme or an unapproved share scheme that is ideal for your business. We can guide you all the way from meeting you to discuss your requirements to setting up the right share scheme for your business.

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