Getting paid and Tax

[DropDead]

Hey,

I've just done my first paid Job for £150, im sending the invoice through but my dad is telling me that the tax man wont be happy with me and that i should get cash in hand?

 

[Flash In The Pan]

Hey,

I've just done my first paid Job for £150, im sending the invoice through but my dad is telling me that the tax man wont be happy with me and that i should get cash in hand?

And you've posted this on the internet, complete with a link to your website and with your name and home address on the whois?

 

[big soft moose]

bad advice from daddy - if you get caught taking cash in hand and not declaring it the taxman really won't be happy with you.

if you are taking money for photography you should register self employed with hmrc and keep a record of you outgoings and incomings - chances are that if you only do the occasional job your expenses will cancel your income and you'll have nowt to pay.

if you are working regularly then you'll have some tax to pay - but if you arent otherwise working you'll have your tax allowance (£10k i think) first - though you may have to pay a bit of NI - if you have a day job then remember your allowance goes on tha so you have to pay full rate on extras.

bottom line play fair with HMRC and they'll play fair with you - try to stiff them and get caught, and they'll bend you over the desk and **** you senseless

 

[DropDead]

Ah ok, well where can i go to seek advice on this because i can see myself getting alot more jobs over the summer next year

 

[gramps]

Try HERE

 

[big soft moose]

Ah ok, well where can i go to seek advice on this because i can see myself getting alot more jobs over the summer next year

Go see your local HMRC - like i say if you play fair with them they are usually really helpful.

also you local chamber of commerce /business link will give advice for free , and your bank probably has a small business advisor

or if you are going to be making a lot of dosh , speak to an accountant - obviously you have to pay for this advice, but a good one will save you more than they cost.

 

[^Joe]

Ah ok, well where can i go to seek advice on this because i can see myself getting alot more jobs over the summer next year

Me. I'm an accountant, see my thread re: free spreadsheet.

As you state you're getting more paid work, you need to register with the revenue for self employment. You will then pay your weekly £2.50 class 2 NIC.

Unless you forecast that you'll earn less than £5,315 from this business.

If you're employed and paying PAYE, then most of your work will be taxed at 20%, and class 4 NIC will kick in after £7,225 profits.

 

[DropDead]

Thanks for all the help and advice on the matter i'm going to put this invoice through and go seek some advice at some point this week...

Its all so confusing haha, I suppose this is what they say Welcome To The Real World...

 

[WilliamC]

also you local chamber of commerce /business link will give advice for free , and your bank probably has a small business advisor

Make it quick if you want freebie advice from Business Link, the local adviser network closes in 5 weeks time (Govt Budget cut). Thereafter the BL website will continue to exist and is indeed being expanded/made more user friendly. There is already a pile of fantastic Tax stuff on there and in fact HMRC's own advice pages are merging with the BL ones. HMRC also operate regional open days and free workshops for direct tax advice (google them).

I'll have plenty more time for togging in 5 weeks time when the BL adviser network closes

 

[big soft moose]

rant deleted

 

[Jimmy_Lemon]

Let's not turn this into a political debate

 

[big soft moose]

I'll have plenty more time for togging in 5 weeks time when the BL adviser network closes

looking on the bright side if theres going to be an information vacuum maybe you could outsource yourself as a consultant

 

[WilliamC]

I obviously am not able to comment on the closure of the adviser network however am happy to point people at the best resources for mostly free help which will continue to exist after our demise.

Ref tax issues the best advice, as mentioned above, is definitely to talk to them before they are forced to talk to you. They are far more customer friendly than they used to be but get on their wrong side and they will get the ton of bricks out. Useful sites to look at include:

http://www.hmrc.gov.uk/bst/
http://www.hmrc.gov.uk/startingup/
http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1081677261&type=CAMPAIGN

 

[JSER]

Believe me it is easier than you think running a small business, my sons have been doing it since they were fifteen, check my sons site by clicking my/his homepage.

You can earn a considerable sum before you pay tax, just do simple double entry book keeping, that is all.

But a £5 book from WHS, rule up five columns Date, what, spent, received, balance.

Keep all and I mean ALL receipts income and expenditure in date order and that is it, just because you have a burger when out does not mean it can not be put down against expenses, you have to eat, just don't be daft.

I take my sons to and from events still, that is an expense, dads petrol receipts.

My sons are now twenty and the yearly tax return is simple and believe me the staff at the revenue are so helpful.

By the way there isn't a business around either self employed or otherwise that doesnt do something occasionaly that isn't invoiced, they just don't tell everyone :nuts:

 

[DropDead]

Thanks for all the help guys! Much appreciated it is all making allot more sense now! With ^Joe's spreadsheet, everything is going to be alot more easier I'm gonna pop into the tax office and have a chat and see what they have to say

 

[Stratman]

Since your income will be from photography, that nice lens you've always fancied is now tax deductible

 

[JSER]

Thanks for all the help guys! Much appreciated it is all making allot more sense now! With ^Joe's spreadsheet, everything is going to be alot more easier I'm gonna pop into the tax office and have a chat and see what they have to say

My sons went on one of their courses, did you know the tax office do free courses covering all aspects of tax for small bbusinesses, and easy to understand, about 20 people at a time and a good marketing opportunity.

 

[big soft moose]

Since your income will be from photography, that nice lens you've always fancied is now tax deductible

strictly speaking its deductable from your pretax income, not from the tax itself - so you'll essentially save 20- 25% of the price (a good accountant might find a way of saving more)

 

[Yves Geza]

Hey,

I've just done my first paid Job for £150, im sending the invoice through but my dad is telling me that the tax man wont be happy with me and that i should get cash in hand?

And you've posted this on the internet, complete with a link to your website and with your name and home address on the whois?

:bang:

Well that's roughly how Richard Branson started ... but the trick is only to boast about it after you've made your first £150 MILLION!!

 

[Splog]

£150? Not worth the hassle :shake:

I hope you enjoy doing your annual tax return, or paying the fine if you screw up and have to pay an accountant to sort it out ........ Daddy knows best
.

 

[big soft moose]

annual tax return is so easy a retarded chimp could do it - so long as iyts kept its receipts throughout the year and you can even do it on line - nothing to screw up and for 150 quid they arent going to check.

also if you read the thread he says he's gonna earn a shed load more next year.

tax evasion is never a good idea - look at al capone

 

[Splog]

annual tax return is so easy a retarded chimp could do it - so long as iyts kept its receipts throughout the year - nothing to screw up and for 150 quid they arent going to check.

also if you read the thread he says he's gonna earn a shed load more next year.

tax evasion is never a good idea - look at al capone

Indeed! but as you say for £150???? If he does start earning then fair do's but if it's a one off.... Not worth the hassle

 

[big soft moose]

until it turns out that the client or one of the clients freinds works for hmrc (or an hmrc weasel has seen this thread, or someone grassses him up to them) and he gets royally shafted for not declaring himself self employed.

if hes only earnt 150 this year tax return wwill be a simple case of income 150 , outgoings more than 150 (just the kit input would see to that) , nowt to pay

so theres nothing to lose by telling them, and a big risk in not doing.

 

[Splog]

until it turns out that the client or one of the clients freinds works for hmrc (or an hmrc weasel has seen this thread, or someone grassses him up to them) and he gets royally shafted for not declaring himself self employed.

if hes only earnt 150 this year tax return wwill be a simple case of income 150 , outgoings more than 150 (just the kit input would see to that) , nowt to pay

so theres nothing to lose by telling them, and a big risk in not doing.

I agree! ..... I just think it would still be a hassle for the sake of £150. I feel he should wait and see how it goes....

 

[DropDead]

Well i've sent the invoice through and everything for the payment and logged it into my spreadsheet that ^Joe supplied me, when I go into the Tax office next week.. i'll talk to them about that invoice and stuff and I think it'd be easier to get myself sorted with the tax office sooner than later

 

[Splog]

Well i've sent the invoice through and everything for the payment and logged it into my spreadsheet that ^Joe supplied me, when I go into the Tax office next week.. i'll talk to them about that invoice and stuff and I think it'd be easier to get myself sorted with the tax office sooner than later

Sounds good

 

[joescrivens]

I've always wondered how the tax man would discover earnings like this.

They can't see your bank account, only what the end figure is of accounts and they know the savings interests so they can see what you are paid and what you have in your account at the end of the year including interest right.

If the amount you have in your account is more than you earnt after tax then that will raise an eyebrow obviously

but if it's less - how do they know your livings expenses etc?

 

[big soft moose]

The most common ways of getting caught are as ive outlined above

i) doing a cash job for someone who turns out to either work for the revenue, or whoknows someone who does

ii) when you advertise for business but dont submit a tax return
or

iii) getting grassed up by someone who you've incautiously mentioned it to (or in this case posted on a forum)

its not likely that they'd catch on to someone who does submit a return doing the occasional cash job and not declaring it (bar i above) but someone who's doing cash jobs but not registered self employed at all is on borrowed time before HMRC find out

 

[Russ77]

The most common ways of getting caught are as ive outlined above

i) doing a cash job for someone who turns out to either work for the revenue, or whoknows someone who does

ii) when you advertise for business but dont submit a tax return
or

iii) getting grassed up by someone who you've incautiously mentioned it to (or in this case posted on a forum)

its not likely that they'd catch on to someone who does submit a return doing the occasional cash job and not declaring it (bar i above) but someone who's doing cash jobs but not registered self employed at all is on borrowed time before HMRC find out

iv) a customer who you've agreed a "cash" price with who then decides they want more for their money or are dissatisfied with the service you provided and threaten you with a little word to HMRC

 

[Splog]

Also from sending an invoice that the customer submits to his accounts.

 

[fixedimage]

I was at a business gateway thing about bookkeeping recently (got sent by the cultural enterprise office I think) and the guy taking the clas said that you can put your cameras, computer car etc into the business as capital and you'll get some kind of tax relief (can't remember the exact terminology he used) based on the depreciation of these things. He said that this would come off the tax you owed at the end of the year but if my earnings were really low then the tax relief would be more than tax due and I might end up getting money back for them. The only sort of downside would be that if you bankrupt then you lose whatever you have put in as capital.
I registered as self employed in January this year and did a self assessment tax return in April for the grand total of £75 of self employed earnings. As has been said, a retarded chimp could do a tax return.
I have three PAYE jobs as well as being self employed and even with that to take into account it took me less than an hour I think. I had been paying basic rate tax in two of my PAYE jobs and within a couple days of submitting my tax return I had a refund of over £300 paid into my account which I doubt would have came so quickly had I not been doing a self employed return.

IMO, unless you are good friends with the company you are invoicing, looking for cash in hand is just asking for them to dob you in to the HMRC. Aren't there rewards for grassing up tax dodgers these days?

 

[big soft moose]

I was at a business gateway thing about bookkeeping recently (got sent by the cultural enterprise office I think) and the guy taking the clas said that you can put your cameras, computer car etc into the business as capital and you'll get some kind of tax relief (can't remember the exact terminology he used) based on the depreciation of these things. ?

this is where we really need an accountant (fortunately theres one on board .. joe ) I think (and i'm not an accountant so dont take this as gospel) that you can put items brought into the buisness against your pre tax income in the same way you would equipment bought - up to a limit of £xk (i cant remember what the limit is) in the tax year that the business is established

the only issue with cars is that it has to to be wholy used for the purposes of the buisness - if you use it for other purposes it is better to just charge your milleage at 45p/mile

but like i said I wouldnt make any decision without gettingproffesional advice either from HMRC or from an accountant

 

[^Joe]

If you're a professional photographer and this is your only income, and the equiptment is not used as a hobby; The equipment will be capitalised. This means that the gear is now an asset. Capital Allowances are available for 100% relief (generally) in the year of purchase.

If you introduced them to the business personally then this is not 100% relief, it's 20% pa on a reducing balance basis.(based on the realisable value)

If you're in full time employment, with self employed togging business, then you need to work out what %age is personal usage, and what is business. HMRC know that there's people out there who want to put all of their expensive gear through a business, even though it is primarily a 'hobby', just to reclaim some of their PAYE.

Tax; you're allowed to earn £7,475 this year tax free. That's from all income; Employment, self employment, dividends, interest, rental income etc etc.

You only get one personal allowance (of £7475).

 

[^Joe]

here's a quick demo.

You work in an office and browse TP all day, earn £20k, and paid PAYE of £2.5k
You also are self emplyed and earnt a net profit of £5k.

Tax bill = 20+5 less 7475. x20%, less already paid = £1,000.

You can see in this example that profit x20% = tax

Class 4 NIC kicks in at profits over £7225

remember that you will be paying weekly class 2 of £2.50

 

[fixedimage]

It's probably not worth me putting my gear in as capital then as even this year I'll only be earning a few hundred quid from photography so the HMRC might think I'm taking the mick as the releif will likely be more than I earn.
I don't pay NI, I got a cerificate of low earnings or something, think I pay a bit through my PAYE employment though.

 

[^Joe]

Making a loss in the first year is not out of the ordinary. Just be honest with your private usage