Coming off Stepchange to self manage DMP

stu12345_2

DWP and HMRC are two separate departments 


yeah I get the £1000 limit now , it's for folks say doing an eBay business whilst they are employed 

yes get pen and paper and write key points from all the advice and create a flow chart and tick list for a to do list

thelibrarian11

Have I got the right idea here, would you say this is a good plan? I can afford it:

• Offer 600 a month to HMRC, will be clear in 11-12 months
• Carry on my contractual car payments for me and husband
• Offer 5 a month to our 17 unsecured creditors, until the above is paid, only after default 
• Also: put tax money away if I do more freelance, and learn more to reduce tax next time
• Once the tax for next year is away, anything freelance top of that will go to negotiated settlements, or if it's got to 2 years then it's DRO time

stu12345_2

how will you know when you have put enough away for next year's tax bill from freelance work if you won't know until the very end of the year.


claim every expense you can, laptop usage, fuel, lights, 
some even put their partner down as an employee, it's a regular tax usage by many, ahem as they say

my ex father in law had a sideline as a financial advisor, he claimed his wife was his secretary lol and put her "wages" in his tax bill as an expense 


is £600 a month doable , will it leave you short to live on basic bills and needs

you can  offer £1 a month if you explain you have HMRC debt, which gives you more cash to chuck into HMRC bill

thelibrarian11

Well I know now I only keep like 50-55% of what I earn, with my student loans and everything, so would guesstimate that and then this doesn't happen again. Yes I can afford 600 a month, that's what I'm paying on unsecured debt now about the same. 

I think this is an autism thing, that tax stuff seems so dishonest to me, it's a big shock for me to learn everyone is secretly doing it. My husband does the childcare while I work extra and I pay him, that would work for us and I think this is usual practice. This is massive for me and will take time to process!

I've done token £1 payments before in my past, so I will go for that, then I could offer 650ish to HMRC.

stu12345_2

my bro is a partner  as an architect, he claims lots of expenses, he has an office at home, well it's a fancy  room, he also visits clients in his car and claims the running of his car as an expense too.

i dont know his tax bill, but I'm sure he has lots of expenses

many years ago I was a taxi driver, the HMRC did not get to know about every fare I did. but of course it was all cash back then paying the fare., no debit cards, except for the school contracts which were on a fixed account 

all I had to keep was fuel and cleaning receipts, plus the rental I paid to the owner of car plus my radio rental price to taxi company  and add up the fares plus the school contract hires and I sent in my tax return, it all went accordingly and fine

as they say tax evasion is  very naughty, but tax avoidance is legal and allowed 

thelibrarian11

stu12345_2 said:

my bro is a partner  as an architect, he claims lots of expenses, he has an office at home, well it's a fancy  room, he also visits clients in his car and claims the running if his car as an expense too.

i dont know his tax bill, but I'm sure he has lots of expenses

many years ago I was a taxi driver, the HMRC did not get to know about every fare I did. but of course it was all cash back then paying the fare., except for the school contracts which were on a fixed account 

all I had to keep was fuel and cleaning receipts, plus the rental I paid to the owner of car plus my radio rental price to taxi company 

I think I need to hear a bit more of these stories to normalise it for me, I feel a bit teary with the shock of it and how naive I've been. I'll ask about it over on the tax forum, maybe I can get the HMRC debt down with some more amendments.

stu12345_2

tax evasion is not allowed, but tax avoidance is.

learn the difference  , maximise and claim your allowable expenses where you can see fit to do so

the key point is allowable  and legal and just worthy expenses
eg what% of car, heating, broadband, laptop, postage, stationery , liability insurance,  contents insurance,lighting, rent, can be claimed back


but don't get into the ridiculous stage.
there are rules which an accountant will tell you and via Google search



my self employment as a taxi driver had all my paperwork in a shoe box along with a little expenses/ income journal book I got from wh smith back then

it was fun filling it in, money in £100 a day, money out £50 a day.on average 

simple days, no internet back in the early 90s, didn't even own a computer 

thelibrarian11

After asking on the tax forum, what I need is an accountant, so I'm going to look into it, especially one that specialises in helping people like me.

thelibrarian11

Hi,

It's about 6 months since I posted this and you can see my progress so far in my little signature :-) I've been keeping a debt free diary as well, called A Lifetime of Debt.

I've been reviewing how I've been getting on over the 6 months, and I think I have a change of plan. What has prompted this is that I've had no freelance work in Jan and Feb which is unusual but always a risk, and I've had a bit of anxiety over it which I've channeled into looking again at solutions. I work full time and do freelance work on top of it which is how I've been servicing debts, until I underestimated my self assessment return and then ended up in a mess which I addressed 6 months ago.

Now I'm thinking I'd like to do a DRO as I think this is right for me, it might be best if I just say step by step what I'm planning. I've had a DRO before and it was more than 6 years ago.

1. I will have another year's self assessment come this April which will add to my overall debt. Currently I'm paying £400 a month towards what I already owe as self assessment to HMRC.
2. My car finance will be paid off in July, and my car is definitely worth less than 4K. I'm currently paying £300 a month for it.
3. I'm thinking a DRO in August, just for myself not my husband. If I stop paying the above that means an extra £700 spare a month.
4. With that extra £700 and some extra tweaks and reductions I can cover all our monthly household expenses from my full time wage + child benefit, and I have less than £75 available.
5. My husband usually gives me £1000 for household expenses and I try and make £1000 freelance to save for big things, birthdays, christmas, holidays etc. I won't need that £1000 for bills now because I can cover everything myself. I'm thinking he keeps it for those big purchases, and I won't need to work freelance.

So that's why I think a DRO is right for me now.

I have a few questions

1. If I wanted to work freelance during my DRO year (I don't, I've done 3 years of more than full time hours and I'm really tired), am I right in thinking I'd have to average out the money I get and if it means I've had more than £75 spare my DRO will fail? Could I do something like, say my expenses went up like a school trip here and an exploding washing machine there, and there's no overall difference?
2. If I did work freelance during that year, obviously I'm racking up a tax debt again for the next year - am I right that it's not included in the DRO because it's not been issued at the time I applied for the DRO? Could I say my freelance money during the DRO year will go towards that future tax bill and add that to the school trips exploding washing machine etc I'm still under £75 spare?
3. Is it really true that HMRC self assessment debt can be included in a DRO? It seems mad that I can earn the money and not be taxed on it. It all went into the air trying to keep up with unsecured debt and I didn't keep any aside for tax. 
4. I'm sure I did this last time, the DRO was for me only and my husband's finances and car weren't considered at all. Will they expect to see a contribution from him for the household expenses? I'm sure they didn't last time but it was so many years ago I can't remember. Does it being a tax debt change any of this at all?

Thanks for all your help again. Anything you can tell me is really helpful, I struggle with overthinking and I've made myself a bit anxious recently with this. I'd love to just be able to get this all straight in my head and then my brain can put it down for a bit.


 

EssexHebridean

thelibrarian11 said:

stu12345_2 said:

my bro is a partner  as an architect, he claims lots of expenses, he has an office at home, well it's a fancy  room, he also visits clients in his car and claims the running if his car as an expense too.

i dont know his tax bill, but I'm sure he has lots of expenses

many years ago I was a taxi driver, the HMRC did not get to know about every fare I did. but of course it was all cash back then paying the fare., except for the school contracts which were on a fixed account 

all I had to keep was fuel and cleaning receipts, plus the rental I paid to the owner of car plus my radio rental price to taxi company 

I think I need to hear a bit more of these stories to normalise it for me, I feel a bit teary with the shock of it and how naive I've been. I'll ask about it over on the tax forum, maybe I can get the HMRC debt down with some more amendments.

Going back to this subject from a few months ago - I don't think you've been naive. There is a difference between claiming the things that you should be claiming - so any actual expenses, the heat/light allowance etc, and then there is manipulating things which some people do, and consider completely normal. when I was self employed I claimed the genuine stuff - I was maintaining a home office for some stuff, did have some expenses which could be offset and so claimed those, but that was about it. If it leaves you feeling uncomfortable because you know it's a bit of a stretch, then probably best to leave it unclaimed - think about it in terms of this - if you get an investigation (not likely, but always possible) how comfortable will you feel explaining the things you've claimed? The things that leave you feeling a bit "squirmy"? Probably not really 100% honest to claim, eh? 

I bet if you look though you'll find there are perfectly legitimate things that you can claim and haven't been...HMRC used to do free workshops for self employed people to take them through all the various areas on tax and self assessment - might be worth checking if they still do?