Avon Hints and Tips (Part 2)

katchambers

Mousie wrote: »

so who do i need to ring about the tax thing? will i have to pay tax on my avon earnings? cos i work does that mean i will get like a big tax bill at the end of the financial year cos of avon?

Newly self-employed tax helpline: 0845 915 4515

If you have been doing avon for 4 campaigns that's 12 weeks, which is exactly 3 months, so you will be fine.

My tax tips to follow...

katchambers

blackwidowz wrote: »

Update: My ASM just called me said sorry, gave me a proper area and is coming to see me on friday to talk about becoming a SL.
Any thoughts on this idea please..... Good or bad.

I guess it depends if you want to become an SL or not, it means a lot more work involving recruiting people and training them in your team, but of course you are compensated by getting around 3% upwards of their sales. I want to become an SL at some point so have been reading a lot about it. Best person on here for advice on that would be silvercharming as she has just become an SL herself, I think about 4 weeks ago

Good luck if you decide to go for it.

Kat x

Vickisaver

I'm considering the SL route too, although as I'm just getting through my first campaign think I'll leave it for a while!

Mousie_2

ok so i just rang that number, thanks kat. very nice man.
anyway he said to me we have you down as being incapacitated, i said excuse me? he said we have you down as being incapacitated, so i said erm excuse me what? he said its maternity leave, we have you down as being on maternity leave. i said thats smart my daughter is almost 3!
So then he said ooh this is from 2006, i cant do anything over the phone now we have to close this down i need to send you some papers in the post and then we can sort it out but i have it down now you have rung.

so, if the tax offiice have me down as having been on maternity leave since 2006 wheres the money ive been paying the last 18 months in tax gone to? very weird, especialy as they wrote to me and told me i underpaid tax last year and changed my tax code this year to take back the underpayments. how very very odd.....
anyway it will be sorted now, so thanks again ladies!

katchambers

If you are concerned about doing your self-assessment by yourself, there is an excellent free workshop run by the HMRC, they take you through the forms step by step, they let you know what you can deduct and what you can't and you can ask questions, very friendly and very helpful, you also have all the paperwork to take home that you can refer back to when you actually do it for the first time. Here is the website, type in your postcode to find you local business link, then search for courses, click taxes as the topic and you are looking for HMRC Workshop
http://www.businesslink.gov.uk

If you don't have time or don't want to attend here are some ideas of the things that you can deduct meaning you will pay very little, no tax or even get a tax rebate:

How does it work? There are only a few boxes on the forms that you have to fill out, the most important being your sales, so keep records of all your receipts, and your expenses, keep a record of all those receipts too.

Example (someone who only does avon and no other jobs)
Avon sales (Apr 2008-Apr-2009) = £3600
Avon expenses = £1600
Avon profit = £2000

Tax Owed:
Personal allowance = £6100
Profit minus personal allowance = £4100
Tax paid = £0

Why? No tax because you have a personal allowance that you can earn tax free.

What about if you already have a job? The personal allowance is likely to be used up which means in the scenario above you would pay tax on the £2000 profit, which equals £440. That tax will then have to be paid by the end of January, and they will also charge you for half of next year in advance, so be prepared for that.

To make sure you don't have such a large profit of £2000 and such a large bill there are a lot of things you can deduct that you probably don't know about.

So using the example above, lets get the £3600 down to a lower figure:
1. Stock costs (around 70%) = £2520
2. Brochure costs (approx 16p each x 50 brochures per campaign) = £144
3. Freezer bags to hold brochures = £10
4. Internet costs (£10 per month) = £120
5. Petrol costs (40p per mile x 500 miles over year) = £200
6. Stationary (pens, pads, stapler, paper, envelopes etc) = £70
Above are the basics, but to get it down to a much lower figure, if you use a room exclusively for avon, say a study, or spare bedroom, you can deduct a proportion of the costs of running that running that room including electricity, heating, mortgage interest. The way you work it out is, I will use my house as an example, we have 3 bedrooms, lounge and kitchen, that's 5 possible rooms that could be used, I use one of those room exclusively for my self-employment which means I can deduct 1/5 of all my costs of running the house.
Lets say my electric costs over the year are (£40 per mth) = £480
Gas costs over year (£30 per month) = £360
Mortgage interest over year = £9000
Total costs = £9840
Now 1/5 of that (20%) is = £1968
Now if you add up all the previous expenses your total expenses = £5032
That means you will actually get a tax rebate as you have technically made a loss of around £1500.

*Just want to make a point that these figures are fictional and also the personal allowance is different depending on what tax code you are on, and the amount you can deduct for things like petrol changes each year so check to make sure you have the right figures as I am not a tax professional, just giving my tips.

HTH!!

melvis

Thanks Kat! I think I understand it :rolleyes:

Does it work for rent or just mortgage interest?

katchambers

melvis wrote: »

Thanks Kat! I think I understand it :rolleyes:

Does it work for rent or just mortgage interest?

They only let you deduct interest not the payments, same with your bank, you can deduct the interest but not the loan payments or fines. Although I am not sure how you deduct something for the house running costs if you don't own your home, as that didn't apply to me, sorry. You can still deduct gas and electric though, and council tax but only if you speak to the council tax office in advance.

Kat x

Mousie_2

so any recipts for bags etc we have to keep for our tax return?
how does that work when they have been brought on ebay? does that meant the money i paid to buy a trolley to carry my avon in i can use that as well ?
and what do you mean by stock costs?

Mousie_2

do i need to tell tax credits im doing avon?

melvis

I assume stock costs is the amount we pay Avon for the products each month.