Suggestions for Osborne's July budget

NICHOLAS_2

caronoel wrote: »

Regular commuting costs and a whole lot more goodies can be claimed:
http://www.contractoruk.com/expenses/contractor_expenses_what_can_and_cannot_be_claimed.html

As for only 20% - How I would love a 20% reduction on my £5k annual travel card but I don't think Mr Osborne would be that generous

:rotfl:

Ok, maybe this will help you a bit more.

Last year i probably spent 5k on advertising, not sure of the exact figure because i am sloppy with my accounting.

Now, that was an expense because i needed to do that to earn more money, just as i needed a new laptop to earn more money.

20% of that went to the VAT man, i can't claim that so 1k was basically flushed down the drain or put towards paying off tony blairs illegal wars.

That leave 4k expense, i minus that 4k expense from my taxable income and it reduces my tax due because my profit is smaller.

If i could have spent 2.5k on adveritsing instead of 5k i would, because that would mean i would have made more profit, even though i would have paid more tax.

This is the same for all expenses, the average micro business / self employed person buys the cheapest suitable option so that they have more cashflow.

I used to be employed, i couldn't claim for my bus fair, nope, but i got holiday pay! sick pay, paid lunch breaks, toilet breaks, a pension if i wanted one with 100% matched contribution from the employer, it was easier to get credit, your income is more regular and set so life can be a little less stressful.

If i was you, paying 5k a year on travel, i'd find a job closer to home, how much do you earn a year? 5k must be a big percentage of it :eek:

cells

caronoel wrote: »

You dont need to pay £2k accountancy fees for a simple one man band company. It is relatively simple, and something you should be able to do yourself.

I'd imagine that the Chancellor will revisit this exemption on the likes of commuting costs, and work meals as it is inequtable.

The other wheeze he needs to look at is the flat rate VAT scheme, which allows contractors to charge 20% VAT to their supplier but only pass on a much smaller amount to the taxman:
http://www.contractoruk.com/vat/flat_rate.html

thats about what i pay my one but im not a contractor.

as for...you should do it yourself...sure you can value your time at £0 if you like. Maybe you should have to come in after work and do your own payroll and part of the companies accounts at where you work? how would you like that?

and yes claiming food is stupid that should go but i doubt many people claim food. commuting to a temporary place of work is ok in my books but a long term place should not be...maybe a cut off period of 6 months.


how do you charge VAT to your suppliers? you can only charge vat to your customers.

caronoel

I would agree with you that advertising is a legitimate business expense, but regular commuting costs, lunch costs, new iPads, setting the missus up as an employee, etc etc etc are all things that should not be allowable against tax.

It seems odd that you are not passing your input VAT on to your customer. Are you not registered for the flat rate VAT scheme? That's another great wheeze to avoid tax

cells

caronoel wrote: »

Dont forget that if your hubby or missus or an elderly relative doesnt have any earned income, you can also set them up as a director and employee of your company thereby doubling the PAYE applicable amount you can take out of the company tax free or at standard rate.

There are too many tax avoidance schemes for contractors that need to be closed out

yes this is true if you are happy for grandpa to own your company or have director and employee rights and he has no pension or income of his own

so its true, only it isn't, not often anyway

caronoel

cells wrote: »

yes this is true if you are happy for grandpa to own your company or have director and employee rights and he has no pension or income of his own

so its true, only it isn't, not often anyway

True also for the hubby / missus. This is really a classic one to set your non-earning other half up as an employee and a director to get their TFA on top of your own.

All these tax loopholes should have been closed out years ago

caronoel

Any thoughts on the flat rate VAT scheme, which allows contractors to charge 20% VAT to their customer but only pass on a much smaller amount to the taxman:
http://www.contractoruk.com/vat/flat_rate.html

Surely you agree that this is patently unfair, and should be closed or, at the very least, severely limited?

cells

caronoel wrote: »

I would agree with you that advertising is a legitimate business expense, but regular commuting costs, lunch costs, new iPads, setting the missus up as an employee, etc etc etc are all things that should not be allowable against tax.

they are not allowable against tax

they are costs so allowable against PROFIT
which means if you buy an IPAD for £500 you don't get to pay £500 less tax, you get to pay 20% of £500 = £100 less tax

also you seem to be defining what is and what isn't acceptable. You don't say that they shouldn't be able to buy a dell desktop PC or a nokia you state no ipads or iphones. so you are making a judgement on a brand rather than even the taxes and rules

caronoel wrote: »

It seems odd that you are not passing your input VAT on to your customer. Are you not registered for the flat rate VAT scheme? That's another great wheeze to avoid tax

He is probably below the vat limit as most micro businesses probably are. You also nicely ignore or don't know that most businesses fail so you really should give at least some advantage to try and counter that risk somehow


The only point you have is that some people will use their unworking wives/husbands and pay them some of the profits which will save ~£2k in tax bills....but IMO there should be the ability to do that for salaried workers rather than not for micro businesses. also there is absolutely no way you can stop that. They can literally have their wives work 1 hour a month and pay them whatever they like and the truth of the matter is that most micro business have family help in some form or another often completely unpaid so i dont think this is as you describe it a wheeze

ukcarper

How does income tax and corporation tax interact. If you are are director and pay yourself £10,600 then take money out of company after corporation tax what tax do you pay on it.

cells

caronoel wrote: »

True also for the hubby / missus. This is really a classic one to set your non-earning other half up as an employee and a director to get their TFA on top of your own.

All these tax loopholes should have been closed out years ago

what makes you think its a tax loophole?

also how do you know that the people who do that, which are rare because most wives and husbands do work or have other income, don't actually have their partners do actual work?

it does not matter if they do 40 hours a week work or 1 hour a week work a company is free to hire people for any number of hours and pay them any sum of money. even doing basic admin work like checking receipts is work.

cells

ukcarper wrote: »

How does income tax and corporation tax interact. If you are are director and pay yourself £10,600 then take money out of company after corporation tax what tax do you pay on it.

if you get dividends from a company, any company be that a big FTSE 100 or your own little company you are charged effectively nothing until the 40% income tax band. but the company already paid 20% (or more) so in truth you pay 20%...on the 20% band....so there is nil advantage there

The treasury isn't as stupid as some posters like to think it is