Robbing Barstewards

chirpychippy · 15 Dec 2018

I've been SE Sole Trader for five years now and have been constantly honest with my income declarations. Year on year my gross income has increased. This has transpired into a double edge sword now, HMRC Tax Bill week before Crimbo payable end of Jan £9300 with projected earnings bill payable in July of £4650 odd....FFS.
I've just about got £6900 as I put it by throughout the year, but it wipes out my business account. The fact I've shelled out £1000 for new contract van deposit and another £750 odd for alarm and deadlocks and more replacing broken tools I'm in an automatic deficit of about £2400, which doesnt come into play until the end of this tax year.
So now I need to find the 2.4k I've paid out already on business needs "probably credit card" to pay the tax bill, then pay that back thus I'm paying 2.4k twice, makes absolutely no bl**dy sense...and more over I can seriously see myself going on holiday a lot between now and the end of this tax year...curiously though, what have I done incorrectly to create this problem???

KenGMac · 15 Dec 2018

chirpychippy, good evening.

Do you use an Accountant? or are you a DIY tax returner?

Ken

ktuludays · 15 Dec 2018

You've earned far too much money

Mottie · 15 Dec 2018

Or not spent enough.....

KenGMac · 15 Dec 2018

Are you claiming for all the things you can?

For example? are you claiming all you can for the van? and its FULL running costs? + tool costs? the foregoing is a simple example?

Ken

chirpychippy · 15 Dec 2018

Hello, thank you for your replies. Yes I have an accountant. I know ive earnt to much, but I dont understand "I haven't spent enough,"???

ktuludays · 15 Dec 2018

chirpychippy said:
Hello, thank you for your replies. Yes I have an accountant. I know ive earnt to much, but I dont understand "I haven't spent enough,"???

You pay less tax if you're profit is reduced. It will only reduce if you spend it on tools, van etc...

KenGMac · 15 Dec 2018

chirpychippy said:
"I haven't spent enough,"???

Get a hold of your accountant and ask for them to assist, they can be "inventive" and "helpful" but draw back at TRUMP like moves.

Has your accountant discussed at length with you "Avoidance" --- not "Evasive" ---options?? there are loads of small things that can assist?

personal question? does your wife / partner work?? if they do not, or are on a low wage, you can under he "Married Couples Allowance" claim up to 10 % of her / his tax Allowance?

If the van is a commercial vehicle you can claim 100 % of its TOTAL COST [to you] year on year on year

Ken

chirpychippy · 16 Dec 2018

I have complete confidence in my accountant he served his time working within the Inland Revenue.

I'll check with him about total cost of my van as it is a commercial vehicle, I dont socialise with it " I dont socialise" ...

I'll also mention Avoidance as apposed to Evasive I dont know what this really means though.

My partner is in full time employment and is not on low enough wage.

I haven't spent enough?????????

I dont understand how to do this? Please correct me, hypotheticaly:-

I earn £2000 per kitchen I install:-

This breaks down to:-
£250 materials
£160 Rubbish disposal
Gross earnings £1590
- 20% tax £318
Net earnings £1272

I would generally put £318 + £65 which is the weekly rental cost of my van into my business account for the end of year tax bill and cover the £250 monthly cost of my contract van. So I dont understand at which point I can spend to reduce my tax liability

Notch7 · 16 Dec 2018

chirpychippy said:
curiously though, what have I done incorrectly to create this problem???

Could you have got your accounts done much earlier in the year?

Im sure I did mine back in the summer.

The tax is calculated when the tax return is completed online so as soon as its done you would know.

You might be better taking out a loan rather than using up all the money in your account.

chirpychippy · 16 Dec 2018

Yes my accounts were done beginning of April, but I misinterpreted my liability, I read it as £9300 half due in Jan 2019 other half due July, did not realise it was £9300 due in Jan then projected due in July "quietly weeping at the moment"

...
This is my reality for now, I have got other small monies elsewhere so I'll probably use that to pay the difference, I'm a not a fan of bank loans, but thank you for the idea.

The way I see it is that I have until the end of the current tax year to severely reduce my profit thus hopefully reducing my projected earnings liability for July, I know one solution but I have to be careful I dont go over board with it

FiremanT · 18 Dec 2018

ktuludays said:
You pay less tax if you're profit is reduced. It will only reduce if you spend it on tools, van etc...

Bad advice MOT. A business should maximise income and minimise expenditure. If you buy a new van etc, you will reduce your tax by either 20% or 40% of your spend, but you will always have to pay the other 60% or 80%.

Unless you are a film star buying wood;and pr investing in the movie world

FiremanT · 18 Dec 2018

chirpychippy said:
I've been SE Sole Trader for five years now and have been constantly honest with my income declarations. Year on year my gross income has increased. This has transpired into a double edge sword now, HMRC Tax Bill week before Crimbo payable end of Jan £9300 with projected earnings bill payable in July of £4650 odd....FFS.
I've just about got £6900 as I put it by throughout the year, but it wipes out my business account. The fact I've shelled out £1000 for new contract van deposit and another £750 odd for alarm and deadlocks and more replacing broken tools I'm in an automatic deficit of about £2400, which doesnt come into play until the end of this tax year.
So now I need to find the 2.4k I've paid out already on business needs "probably credit card" to pay the tax bill, then pay that back thus I'm paying 2.4k twice, makes absolutely no bl**dy sense...and more over I can seriously see myself going on holiday a lot between now and the end of this tax year...curiously though, what have I done incorrectly to create this problem???

Your £9300 tax equates to about £57K profits, Does that seem about right. Or does the £9300 inc Nat Insurance?
I may be out of date, not been SE for 6 years. Vans and IT equipment did not use to be 100% tax allowable in the 1st year of puchase. The spend figure went into a "pool", and 25% (?) of that was allowed against tax per year year - spreading the tax claim over the life of the kit. That could be one reason for your tax being higher than you expect.

However, you say that you put by 20% + van payment aside. What about all the other costs of ruming the firm. Or the National Insurance.

Oerosnally, over the 30+ years of my SE, I found the performance and standard of my accounatnts disappoiunting, and in one case, verging on the criminal. My advice would be to get into some light reading to enhance your understanding of tax. Having said that, I could never get to grips with which tax year I was looking at

KenGMac · 18 Dec 2018

I seem to recall being told by my accountant that if i purchased a "Commercial Vehicle" then I would be able to claim 100% of All Costs, including Finance for as long as I owned and operated the vehicle. in effect 100 % tax relief on all costs for ever and ever?

Or has my accountant got it wrong?

Ken

FiremanT · 18 Dec 2018

KenGMac said:
I seem to recall being told by my accountant that if i purchased a "Commercial Vehicle" then I would be able to claim 100% of All Costs, including Finance for as long as I owned and operated the vehicle. in effect 100 % tax relief on all costs for ever and ever?

Or has my accountant got it wrong?

Ken

Ken, do you understand what "100% tax relief" actually means? No disresoect intended

Robbing Barstewards

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