Two jobs
Q: I have just left university and I am currently working two part-time jobs at the moment. I’m doing one day a week at a pub, which should earn me about £2,500 a year and my other admin job pays about £5,000 a year. I’ve seen the stories in the press about the tax errors arising on people with multiple jobs and I want to avoid having this problem. Do you have any tips?
A: I imagine you’ve probably got a BR tax code on your job in the pub, which means you’re having 20% tax taken off your earnings. And a tax code of 747L on your admin job, which means you’re having your entire tax free amount of £7,475 (personal allowance) offset against your £5,000. You are therefore wasting £2,500 of your personal allowance.
I would recommend that you contact HM Revenue & Customs on 0845 300 0627. Make sure you have you have a payslip to hand for each job, so you know your national insurance number and your tax reference. You should ask them to split your personal allowance across your two jobs. This way, your tax codes will be 250L on your job at the pub and 497L on your admin job.
You should then find that you pay less tax overall, because you won’t be wasting any of your personal allowance.
Joint ownership of property
Q: My husband and I have only just celebrated our first wedding anniversary. We have just bought an investment property together, which we plan to let. However, I am in a better paid job than my husband so I put up 70% of the purchase money. Right now, all our assets and income are kept pretty separate because we haven’t been married very long- so is there any way that we can apportion the rent from the house according to our investment?
A: If you live together with your spouse or civil partner, HM Revenue & Customs (HMRC) will normally treat income from property held in your joint names as if it belonged to you in equal shares and tax each of you on half of the income, regardless of actual ownership.
However, if you actually own the property in unequal shares and are entitled to the income arising in proportion to those shares, then you have the right to be taxed on that basis.
You must simply complete HMRC form 17, which is available from their website www.hmrc.gov.uk. HMRC will expect to see some evidence to support your claim for the income apportionment.
It would be advisable to seek the advice from a solicitor on this, as there may be legal issues to consider.
Thursday 29 September 2011
Tuesday 20 September 2011
Making Groupon Pay
There has been a growth in the number of one day sales websites. Groupon is the biggest. A special offer heavily discounted, runs from midnight to midnight. The offers are provided geographically by small businesses. It is a great way to create a large database of customers very quickly, albeit at a loss.
New start-ups can find it particularly useful. I have a couple of clients who have taken part in such offers. Typically they offer a heavily discounted good or service, with Groupon taking half the offer price. If you are going to take part in such offers, then you need to have a strategy in place, to make this pay off in the long run.
You need to assess how many of the offer buyers will return and how much do they need to spend. What about the offer buyers who dont come back?, what can you offer them?
Now that you have this database of buyers, its important to communicate with them - email offers, facebook, twitter. Create and maintain that communication.
Special offers can be built around events, times of the year/month/week, i.e. flash offers which last a day - just like Groupon does. What about linking up with other non competing businesses around you - perhaps ones that also have participated in Groupon, and them offering something to your customers and vice versa. Keeping good records of customers and their buying habits will help to ensure that the investment in a loss leader can be made to pay in the long run and create repeat customers at the right price. To many rely on anecdotal evidence to assess whether their offer has been successful. See earlier post on "What gets measured, gets done"
New start-ups can find it particularly useful. I have a couple of clients who have taken part in such offers. Typically they offer a heavily discounted good or service, with Groupon taking half the offer price. If you are going to take part in such offers, then you need to have a strategy in place, to make this pay off in the long run.
You need to assess how many of the offer buyers will return and how much do they need to spend. What about the offer buyers who dont come back?, what can you offer them?
Now that you have this database of buyers, its important to communicate with them - email offers, facebook, twitter. Create and maintain that communication.
Special offers can be built around events, times of the year/month/week, i.e. flash offers which last a day - just like Groupon does. What about linking up with other non competing businesses around you - perhaps ones that also have participated in Groupon, and them offering something to your customers and vice versa. Keeping good records of customers and their buying habits will help to ensure that the investment in a loss leader can be made to pay in the long run and create repeat customers at the right price. To many rely on anecdotal evidence to assess whether their offer has been successful. See earlier post on "What gets measured, gets done"
Tuesday 13 September 2011
Common Q&A's part2
Investment Property
Q: I have just bought a house with my girlfriend, so at the moment, I own my ‘bachelor pad’ and our new house. We plan to keep my old house and rent it out. I know there won’t be any tax to pay on the sale of our new house, because I don’t think you pay tax on your home. But can you tell me what tax implications there’ll be on my old house please?
A: Firstly, you’re right- you don’t tend to pay tax on your home due to Private Residence Relief (PRR).
If you’re going to rent your bachelor pad out, then you will pay tax on the rent received, but you could claim relief for any mortgage interest and relevant expenses etc.
When you come to sell it, you’ll have to figure out how long it was your home and how long it was let for. The period that you occupied it should be covered by PRR. But the period when it was let, may instead be covered by Letting Relief- which at best, can mean you won’t have any Capital Gains tax to pay at all!
It would be advisable to write to HM Revenue & Customs (HMRC) and let them know that your circumstances have changed and that you wish to nominate your new house as your home.
There are criteria to qualify for PRR and Letting Relief, so please make sure you seek professional advice - ideally from me !, before making any decisions.
Employing an apprentice
Q: I’ve been thinking about taking on my grandson in the business. He’s only just left high school, but I’d like him to get involved in the business as I’d like him to look after the business after I’m gone. I’ve always taken on adults, so can you tell me what the main things I’d need to consider would be please?
A: Young workers have a lower limit to how many hours they can work (working time directive), when during the day then can actually work and more breaks are required during their shifts. And normal holiday and health and safety rules apply to young workers.
On the plus side, the National Minimum Wage that applies to young workers is lower than that for adults.
Depending on the level of their income and when they’re working, young employees can be subject to normal tax and National Insurance deductions. If they earn above £102 per week, then they’ll need to be added to the payroll, but they can earn up to £136 per week before you need to start calculating any deductions.
You may also be interested in the National Apprenticeship Service. Through this scheme, young people obtain on-the-job training from the employer and qualifications, and the employer gets some or all of the training costs subsidised by the government.
Q: I have just bought a house with my girlfriend, so at the moment, I own my ‘bachelor pad’ and our new house. We plan to keep my old house and rent it out. I know there won’t be any tax to pay on the sale of our new house, because I don’t think you pay tax on your home. But can you tell me what tax implications there’ll be on my old house please?
A: Firstly, you’re right- you don’t tend to pay tax on your home due to Private Residence Relief (PRR).
If you’re going to rent your bachelor pad out, then you will pay tax on the rent received, but you could claim relief for any mortgage interest and relevant expenses etc.
When you come to sell it, you’ll have to figure out how long it was your home and how long it was let for. The period that you occupied it should be covered by PRR. But the period when it was let, may instead be covered by Letting Relief- which at best, can mean you won’t have any Capital Gains tax to pay at all!
It would be advisable to write to HM Revenue & Customs (HMRC) and let them know that your circumstances have changed and that you wish to nominate your new house as your home.
There are criteria to qualify for PRR and Letting Relief, so please make sure you seek professional advice - ideally from me !, before making any decisions.
Employing an apprentice
Q: I’ve been thinking about taking on my grandson in the business. He’s only just left high school, but I’d like him to get involved in the business as I’d like him to look after the business after I’m gone. I’ve always taken on adults, so can you tell me what the main things I’d need to consider would be please?
A: Young workers have a lower limit to how many hours they can work (working time directive), when during the day then can actually work and more breaks are required during their shifts. And normal holiday and health and safety rules apply to young workers.
On the plus side, the National Minimum Wage that applies to young workers is lower than that for adults.
Depending on the level of their income and when they’re working, young employees can be subject to normal tax and National Insurance deductions. If they earn above £102 per week, then they’ll need to be added to the payroll, but they can earn up to £136 per week before you need to start calculating any deductions.
You may also be interested in the National Apprenticeship Service. Through this scheme, young people obtain on-the-job training from the employer and qualifications, and the employer gets some or all of the training costs subsidised by the government.
Thursday 8 September 2011
Time To Get The Source Out ?
I come across many clients who are just starting out in their new business. Understandably money is tight and they want to conserve as much cash as possible. One of the ways they do this is o do their own bookkeeping and VAT, and leave the annual accounts and tax returns to the likes of me!
This makes sense, as in the early days you may not be that busy in terms of trading, so have more time to devote to non-core activities such as bookkeeping. But as the business develops, and you get busier in the sales activity of your business, it makes no sense to be doing your own bookkeeping. The time spent would be more efficiently used if you spent that time on money making activity.
You need to work out what your time is worth per hour and if thats more then what you would spend on bookkeeping than you should outsource. As a business owner we have to wear many hats, but many of these tasks can be outsourced to companies for whom its their bread and butter. The other issue for business owners is to concentrate on the skills they do best, their passion, what they actually went in business for in the first place! - you'll be more efficient and happier. Why spend time on something that you probably hate doing, and it takes you longer because of it!
Look at your business. Are there areas you could outsource, that would free up your time to spend working on your business ?, or god forbid even on yourself!
This makes sense, as in the early days you may not be that busy in terms of trading, so have more time to devote to non-core activities such as bookkeeping. But as the business develops, and you get busier in the sales activity of your business, it makes no sense to be doing your own bookkeeping. The time spent would be more efficiently used if you spent that time on money making activity.
You need to work out what your time is worth per hour and if thats more then what you would spend on bookkeeping than you should outsource. As a business owner we have to wear many hats, but many of these tasks can be outsourced to companies for whom its their bread and butter. The other issue for business owners is to concentrate on the skills they do best, their passion, what they actually went in business for in the first place! - you'll be more efficient and happier. Why spend time on something that you probably hate doing, and it takes you longer because of it!
Look at your business. Are there areas you could outsource, that would free up your time to spend working on your business ?, or god forbid even on yourself!
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