Clean It Up
UK Window Cleaning Forum => Window Cleaning Forum => Topic started by: williamx on September 28, 2007, 10:27:57 am
-
There have been questions from members concerning Tax and National Insurance; here are a few guild-lines that might be of interest to you.
All off the information that I have gathered has been from attending courses that the Inland Revenue and Customs offer to anyone who wants to be self-employed or run their own business.
Here are a few other things that was covered on the course.
National Insurance
Everyone has to pay Class 2 which is £2.20 per week
Everyone has to pay class 4 if their profits go over £5225.00 for the year 5 April 2007 to 4 April 2008. The rate is at 8% so if you have a gross profit of £10000.00 you will have to pay £10000.00 - £5225.00 = £4775.00 x 8% = £382.00.
Your class 2 payments are collected every quarter or monthly by direct debit, you need to register for this.
Your class 4 will be billed by the Revenue and Customs after you have filed your tax return.
Income Tax
If you have profits over £5525 you will have to pay income tax, at the moment there are 3 band rates 10% - 22% and 40%.
There are several dates you need to be aware of.
4 April is the end of the tax year
5 April is the beginning of the tax year and also the first day that you can file your tax return
31st July is the date that you second payment for tax is to be paid by.
30th September is the last day your tax return has to be at the tax office for them to work out your tax bill.
31st January is the last day that the tax office receives your tax payment.
There are 2 ways of filing your tax return. You can file it on-line or by post.
If you file by post then the last day the tax office must receive your Tax Return is 30th September, it they don’t receive it by then, and you will have an automatic £100.00 fine to pay.
If you want to file your Tax Return online then you have until the 31st January
Now an important date that you must remember is 31st July.
When you first start trading, the first time that you have to pay tax is likely to be up to 2 years into your business, and because of this the tax man wants a percentage of any further earning you are likely to make in advance.
For example you started up in business on 7 April 2006, your first tax return will be 5 April 2007 and you work out you tax bill as £2000.00.
Now you don’t have to pay this until 31 January 2008, which means you have not paid any tax for 1 year and 9 months.
Because of this the tax wants a 50% payment for your next tax return up-front and this has to be paid by 31 July 2008 with the remaining monies due by 31 January 2009.
So in the tax year of 2007 your tax bill was £2000.00 so your up-front payment will be £1000.00, this is called “payment on account”.
Remember it is important that you save some money for when you tax bill is due.
You can do this several ways, you open up a savers account or high interest account, but you do have to pay tax on the interest.
If you open up an ISA account or buy premium bonds, these are tax free.
You can also pay Tax Deposits to the tax man to be used to pay your tax bill, with this the tax man pays interest. The initial minimum purchase value is £500.00 and additional amounts of £250.00 thereafter, for more information on this telephone 0190 35 09 064/6.
Ready reckoner 2007/08
This ready reckoner will give you some indication of how much money you might need to set aside to meet your eventual tax and (where appropriate) Class 4 NIC bill when it becomes due and payable. The correct liability, however, can only be determined once a completed Tax Return has been filed.
Weekly Monthly
Income Tax Due Income Tax Due
75 0 300 0
100 0 400 0
125 4 500 12
150 10 600 30
175 17 700 57
200 25 800 87
250 40 1000 147
275 47 1100 177
300 55 1200 207
350 70 1300 237
635 155 2750 672
These figures do not include Class 2 NIC
I will add more information at later dates and I hope it can be of some use to you.
-
Very helpfull and thankyou
Marcus..
-
This is from a previous post
http://www.cleanitup.co.uk/smf/index.php?topic=43390.0
I have been on a course which the Inland Revenue offer and run.
Its totally free and takes about 5 hours, telephone your local tax office or go to their web page for more details.
I would recomend this even if you are using a accountant, because the less work a accountant does the less you pay.
What is tax deductable and what is not and how much you can claim is quite simple.
If you have had to spend money to run your business, then this is tax allowable, if you already spend this even without a business then its not allowable. For example you rent you home and run your business from there, bacause you would have to live there anyway the rent is not allowable but other household expenses are.
Any capital expense over £200 like equipment-vechicles-computers you can claim 50% in the 1st year then 25% per year thereafter until you have claimed the total cost back, if you see the item then this figuure must be taken away from the cost and the rest is what you can claim for, if you make a profit on something you sell then you have to pay tax on this profit.
If you lease a vechicle or equipment then you can claim 100%.
You can claim for the use of a room in you home, if you can prove that its only used for the business, so if you use a bedroom, there must not be any type of bedroom furniture in it, you can only claim a percentage of your Council Tax - Gas - Electric, you cannot claim for rent or mortgage because you would have had to pay for this even if you werent in business.
The percentage you can claim is as follows, you count the total rooms in you house but not the kitchen bathroom or hallways, so if you live in a 3 bedrrom house with 1 livingroom and use 1 bedroom for business you can claim 25%.
If you use only part of the livingroom or garage then you can only claim a nominal amount of £2.00 per week.
If you use your home phone then you will have to show the call costs you have used for the business, you cannot claim for line rental unless the phone is only used for the business.
You can claim for working clothes but you cannot claim for suits and smart dress.
You can claim for gifts to your customers so long as its only £50.00 per customer per year.
You cannot claim for business lunches or drinks, but you can claim for hotel and food if you are away on business. (proof will be required)
It is worthwhile to have an accountant as the tax rules change every year and they will save you more than their costs in most cases.
It is also worthwhile to join the Ferderation of Small Businesses because they offer an insurance policy as part of their membership that covers your cost if you have a tax investigation, which can be very very expensive.
Remember to kept every bill-every bank statement-every weekly income sheet, you will need to kept this information for 6 years, so look after it like gold.
-
thanks for your kind help, luke
-
All good advice.
For me i refuse to pay tax on account, tax they wont me to pay on money i have not yet earned. >:(
So i went to see my brief & said to him what i want to do is pay my tax by the end of the first week for the privious month, how do i stand in court & fines etc. He told me they would not have a leg to stand on as it's paid.
I phoned the tax office & told them what i was doing & they were not happy & would not accept that, they want payment up front. My answer was my brief & i will see you in court, the plank or Tax Inspector went quite & said he would phone me back. Well he did about half an hour later, not a problem. ;D.
He told me its an agreement but must not be broken. So i'm well happy as i got one over the
tax hungry Labour Government.
Macc
-
I would like to see the Goverment do more for sole traders in raising the tax level, should be around £10k before you pay tax. It's a struggle trying to build a business when the tax man is trying to take every penny, with could do with investing in your buisness and then employing people.
Who said Britain was built with a nation of shop keepers, more like window cleaners as there are more now than ever ;D
Good post william
-
I had a real go at the taxman a few years ago I told them if they can make sure "EVERY COUSTOMER PAYS ON TIME I WOULD PAY THEM" guess what on more up font payments ;D
-
i've an accountant but its good to know.
Cheers
Steve
-
Excellent William X.
Truly superb information. I am very interested, and didn't know about these taxman vouchers.
It is in all our interests to keep on top of the books etc. It's a pity that we couldn't get an IR chap on here who we could throw a few questions at. There are always legal issues though, the problem being people acting improperly on advice and then trying to shift blame. For this reason I expect the mods etc are always a bit twitchy about this.
-
I always go to the Hastings Tax Office as i find they are helpfull.
-
V G Window Cleaners . . . . you really want an IR Inspector on here?
:)
-
My accountant was an EX IR inspector il get her to come on ;D
Dave
-
For me i refuse to pay tax on account, tax they wont me to pay on money i have not yet earned. >:(
Yeah, that does my head in too.
In 6 years I'd never had to that, then last time they said they want double my bill.
I've just finished paying it last week.
I dragged it out as long as possible, and also payed every installment 7-10 days late just to p1ss them off. ;D
Next time they can get stuffed now that I've read your story Macc. ;D
Nice one mate.
The more they con me, the less they'll get. ;)
-
Doug you are not wrong
Quote from a Labour party conference
"Gordon Brown certainly has his admirers. Labour party members will tell you, misty-eyed, about Brown’s maiden speech at Westminster and how he excoriated the Thatcher government’s record on unemployment. Later, when the employment minister, Norman Tebbit, asserted that thousands of jobs had been generated in window-cleaning, Brown bellowed in a Scottish rumble from the backbenches, ‘Perhaps the Minister thinks we should become a nation of window-cleaners!’"