The Wilsons - 875 buy to let property empire

GDB2222

I liked the happy smiling face. Isaac? Anyway, you've replaced him with a couple of smug predators.

Dithering_Dad

IveSeenTheLight wrote: »

There are still some major advantages being self-employed.
One for example is that you dont have to pay tax until after you submit your tax return. Then you get more than a year to pay it off i.e.: -

April 2008 Tax return submitted in July.
Letter from the government advising the tax owed and that half is payable by Jan 31 2009 and the other half by Jul 31 2009.

Remember that the April 2008 Tax Return includes earnings from May 2007, then you have 1 1/2 years of tax accruing interest (other investment) before you have to pay it.

**NOTE** If you plan to do this, I would strongly recommend you work out and deduct the tax from your earnings each month and put the tax part in an account where you do not access the capital and thus always have the tax available when required to pay off the tax.

The downside is that you have to pay 150% of your tax liability in January 2009, consisting of 100% of your tax bill for the tax year 2007-2008, plus a 50% advance payment for the following year. Then in July you have to pay the additional 50% advance. It's a hell of an overhead on a new business and not many people realise it when starting out. Little wonder that so many businesses fail in their first 12 months.

Lotus-eater

Dithering_Dad wrote: »

The downside is that you have to pay 150% of your tax liability in January 2009, consisting of 100% of your tax bill for the tax year 2007-2008, plus a 50% advance payment for the following year. Then in July you have to pay the additional 50% advance. It's a hell of an overhead on a new business and not many people realise it when starting out. Little wonder that so many businesses fail in their first 12 months.

Yes but if you are starting a new business, you should know this, I did when I started and I saved up for it.

neverdespairgirl

I've replaced it with two ickle wickle cutsie fluffy kitties, you mean?

I may change back to the laughing Isaac later (-:

Dithering_Dad

Lotus-eater wrote: »

Yes but if you are starting a new business, you should know this, I did when I started and I saved up for it.

Same here, but I do know of people who didn't and were a bit white faced when the tax demand arrived. Naturally their accountant received the blame :rolleyes:.

As with anything important, new business, pensions, house purchases, etc. make sure you do your adequate research and if possible find someone who has already been through the process so you can learn from their experience (and mistakes). I was lucky in this regard because I worked alongside a load of contractors during my permie days and picked up a few hints and tips.

neverdespairgirl

Every time i get a cheque, I transfer 1/3rd of it into my tax savings account, and any of hte rest I can spare into my general savings account. Then, if my account needs topping up, I can transfer back from my general savings as needed.

PasturesNew

neverdespairgirl wrote: »

Every time i get a cheque, I transfer 1/3rd of it into my tax savings account, and any of hte rest I can spare into my general savings account. Then, if my account needs topping up, I can transfer back from my general savings as needed.

That works if 2/3rds is enough to live off in the first place.

Dithering_Dad

chucky wrote: »

definately, but in the IT Contractor market it is usually common - one contract that I had would only pay my Ltd Company every 3 months, so looking to retain and stop you walking away somewhere else and indirectly forcing you to have a 90 day notice period. that was an exception to the rule though.

it's all dependant on the contract and even more important the market dmean and supply.

It'd be hard to escape from IR35 with that contract. My accountant doesn't even like me having 1 month's notice on mine - smacks of being a permie rather than a supplier.

PasturesNew

I've often been forced into self-employmnet. I sit there without a job and start to look for work. I phone around and somebody's got something they need doing ... "but you have to be self employed".

So you do it, anything to work. You've not chosen to be self-employed, nor had the time to do research, find out stuff etc. You just NEED to work TODAY and bring money in NOW.

And, usually, those jobs are short-lived and/or don't provide enough to live on. So you've got this tiny income coming in, not enough to live on, you still don't have a job - but you have this "work" that brings in something.

If your work is close to the breadline, short periods of not working have a knock on effect that can last well over a year even if you do find another job within a month.

neverdespairgirl

Dithering_Dad wrote: »

The downside is that you have to pay 150% of your tax liability in January 2009, consisting of 100% of your tax bill for the tax year 2007-2008, plus a 50% advance payment for the following year. Then in July you have to pay the additional 50% advance. It's a hell of an overhead on a new business and not many people realise it when starting out. Little wonder that so many businesses fail in their first 12 months.

Not necessarily, though.

My "year end" is 30th April each year. So next January, I will pay 150% of my tax liability for the tax year ending 5th April 2007, not 2008.