A Payment A Day - Part 8!

angelicmary85

Paulgonnabedebtfree wrote: »

I never saw this before but have had a bit of time to skim through posts this morning.

Bear in mind I'm no accountant but the stuff below is just a rough guide. No responsibility taken for any errors OK? I'll pretend I didn't read that part and blame you when it all goes wrong!

Firstly, if you go self-employed you should tell the HMRC within three months or you can get fined (£100 I think).

If your profits are less than about £6k a year, you shouldn't pay any tax - though bear in mind that on your first year your PAYE income will also be taken into account. As it's only mid April, if you were to go self-employed shortly, this wouldn't have too much effect. PAYE income to date (since 6/4/10) would be taken into account when assessing your tax bill though this probably wouldn't make much difference to the bill as the PAYE is taxed at source anyway (assuming you earn enough). O.k so I'm aiming for August time, by then I'll have only earned a wee bit and I don't pay tax or NI as I earn peanuts. I would love to tell you all what my annual income isbut you'll laugh me out the door!

If your profits are less than about £5k a year, you will not have to pay NI. I think you still have to register though - but claim exemption. If you do end up paying NI, this is charged at about £2+ per week (billed quarterly or by monthly direct debit). Also, there is further NI on profits above about £6.5k or £7k. This is charged at around 8 or 9%. So once your profits go over around the £6.5 or £7k mark, you are effectively paying nearly one third to the state. This is because profit above £6k ish is taxed at 22% (or thereabouts). I will assume that you won't be reaching the higher taxation thresholds where the tax rate goes up to 40%. That kicks in around the high £30k's. No I won't be anywhere near the 30k mark...would love to be though but sadly, the possible new job will only pay the same as my current job.

How much to put aside for the bill can be tricky as you need to estimate what you will earn before you have earned it.
It is possible to set up a direct debit to pay the tax on a monthly basis. If you would feel under pressure to meet these payments, you can instead set up a bill payment facility on your internet/telephone banking to pay varying amounts as and when you are able. I do the latter - though there is always some left to pay when the bill comes in as so much of my income is used to pay other debts. Also, you can go directly to their website and makew a payment by debit card. I don't do this as it takes several days or it to leave my account and if there is a lot happening, I can lose track.

Now when I say profit, I mean profit - not turnover. There are things that are business expenses that you couldn't offset against the tax bill if you were on PAYE. Depending on what you do these may include things such as:

running costs of a vehicle (or a proportion of)
telephone charges (or a proportion of)
work clothing (this is normally restricted to safety clothing and clothing with company logos. Nothing to stop you buying the logos separately I suppose with the intention of stitching then on one day)
a small proportion of heat and light in your home if you do any work from home. This cost may also include the washing/ironing of work clothes. Even keep receipts for stuff like washing powder, washing machine repairs, iron replacement. Obviously you can't put these things down as total business expenses but if anyone ever wants to take a look, you can throw them into the mix as part of your home costs associated with your business.
gifts (aka bribes ) to customers (I believe this was clamped down on many years ago. The last time I looked it had a maximum of £10 per customer per year.) This one used to be badly abused many years ago but I think it was stamped on by Nigel Lawson in the Thatcher era. However, it is perfectly reasonable to offset the costs of say a Christmas card (incl. postage) to each customer. It would also probably be OK to wine and dine a few customers in the hope of securing a larger contract (subject to a maximum of £10 each) - not that I've ever done any of this.
Medical expenses are excluded but medical appliances are permitted. I once needed something to wrap around my lower back for a while and I legally offset that against tax.
Any stationery you need for your work. Possibly computer costs including internet (or a proportion thereof). O.k so the job isn't fancy but I'll have to do some paperwork from home which would mean using a computer - I wonder if I could claim for a new laptop?!

Some items are part work/part personal. It's up to you to make a reasonable guess at the proportions but always keep it to a level you can justify in case they ever investigate your affairs.
Always keep all receipts for 7 years minimum (that's 6 years + the current one). This also applies to bank statements and credit card bills. If you receive money that is not part of your taxable income, always keep proof of where it came from.

It is usually a good idea to enlist an accountant. For simple businesses you can probably get one for £200 a year. If not, the taxman is obliged to provide the service for you. However, although they have a legal duty to behave honestly, where a grey area crops up, they might favour themselves rather than you.

The general rule is to keep it reasonable and never claim for anything (or a proportion of) that you couldn't reasonably justify in an investigation. Even if a few items were disallowed as expenses, if they feel that you're not taking the pee, they are usually easier on you. Bear in mind that if you get caught doing outrageous stuff, they don't just claim the extra tax from you, they can also impose extra penalties and even bill you extra for previous years as they will assume that you pulled similar stunts in earlier years.

Not a technical answer and probably some inaccuracies but that's the general gist of it.
Might be a good idea to get an accountant. Accountancy fees are also tax deductible BTW.

Well you answer may not have been 'technical' to you but it was a very good, detailled reply so Thank You for taking the time to post! :A

Between you and Scooby..I'll be a pro in no time!

angelicmary85

Flower08 wrote: »

I hope everyone is enjoying the sunshine

What sunshine would that be? We've got hail!!

angelicmary85

Good Evening Padders!!

Could you put me down for another £5.00 please Sashy!

Hope you've all had a fab day! x

Flower08

angelicmary85 wrote: »

What sunshine would that be? We've got hail!!

Are you sure you dont live in the North Pole?! You never seem to have any nice weather!

PigginSkint

Hi All

I have been having internet problems all weekend - connecting generally and real problems getting onto FV! - so I didn't manage to PAD yesterday.

Today's PAD is £2.18 to Evil Egg

angelicmary85

Flower08 wrote: »

Are you sure you dont live in the North Pole?! You never seem to have any nice weather!

:rotfl::rotfl::rotfl:

We had 3 days of sunshine last week and were apparently the hottest place in Britian on 1 of those days...Summer is over now though, it's back to Winter for us

angelicmary85

PigginSkint wrote: »

real problems getting onto FV! - so I didn't manage to PAD yesterday.

Bet you were screaming and got the shakes becasue you couldn't get on...oh no, wait...that's DT! :rotfl:

Greenbynature

Hi all

Didn't post my pad yesterday (but did pad) as was with OH.

I managed to slightly burn my face and chest yesterday while weeding and planting in the garden! Am still trying to figure out how I got burnt when I had my head down all the time! where's that confused smilie when you need it??? Luckily I was only slightly red but still felt like I was on fire last night!!!:rotfl:

We got invited to one of his bandmates house for a meal last night bloody hell I think I put on a stone :eek::rotfl: 3 courses we had!! and home brewed booze. I was sensible and was fine this morning but OH was dying :rotfl::rotfl: to be honest I think I ate that much it soaked up all the booze :rotfl: Best of all her hubby made it all while she sat on her bum! and he's a good cook! I asked him if he had a single brother Had a really good night.

Then today OH took me out for lunch :T first time in ages. So much for my diet


yesterday's total was shocking btw :eek: :rotfl:


Pad for yesterday and today is £10 egg, £5 cap1, £7OH, £3.88 tin and 50p jar

£26.38

angelicmary85

Greenbynature wrote: »

Then today OH took me out for lunch :T first time in ages. So much for my diet

Sounds like a good night followed by a good afternoon!

It's just a little set back...when you jump back on the 'diet' wagon, you'll be strutting your sexy stuff in no time! :rotfl:

Greenbynature

angelicmary85 wrote: »

Sounds like a good night followed by a good afternoon!

It's just a little set back...when you jump back on the 'diet' wagon, you'll be strutting your sexy stuff in no time! :rotfl:

Strutting???? more like wibble wobble :rotfl::(