Podcast Summary
Express love with a thoughtful Mother's Day gift from Blue Nile: Start tax returns early for flexibility, sleep better with individualized comfort from Sleep Number, and make tax return process easier with tips from The Money Clinic
This Mother's Day, express your love and appreciation for the extraordinary women in your life with a thoughtful gift from Blue Nile. Whether it's for your mom, a mother figure, or yourself as a mom, find that perfect piece from their exquisite collection of pearls and gemstones. Sleep is essential, and Sleep Number smart beds offer individualized comfort to help you and your partner sleep better together. As the tax deadline approaches, starting your tax return early can provide flexibility if you can't pay in full. The Money Clinic offers valuable tips for freelancers and those with side hustles to make the tax return process easier. And remember, procrastination can lead to less thrilling activities than deep cleaning your kitchen or washing your bin!
Preparing for taxes reduces stress: Setting aside funds for taxes and tackling the process during work hours can help reduce stress and financial strain
Preparing for tax filings and having the necessary funds to pay the bill on time can help reduce stress. Deborah Edwards, a chartered accountant and money mentor, emphasized the importance of planning and setting aside a portion of income for taxes. She also advised against procrastination and suggested treating tax preparation as a business function. Additionally, having a UTR (Unique Tax Reference) number, which can take up to 10 days to obtain, is a crucial requirement before starting the filing process. The longer you wait to file and pay your taxes, the more stressful it can become due to potential financial strain. To avoid this, consider setting aside a portion of your income and tackling the process during your working hours.
Understanding Tax Obligations for UK Side Businesses: If earning over £1,000 from side activities, register as a sole trader with HMRC. Selling old items doesn't count, but buying or making items does. Combine business and personal income, and pay tax on profits.
If you're an individual in the UK earning additional income through freelance work, side hustles, or even selling old items online, it's essential to understand your tax obligations. Around 11 million people in the UK are required to submit an annual tax return. Those who generate more than £1,000 in a tax year (April to March) from their side activities need to register with HMRC as sole traders. However, selling old items that you already own doesn't count as a trade, and you don't need to report it. If you're buying or making items to sell, it's likely to be considered a business, and you'll need to let the tax office know. As a sole trader, your business and personal income are legally combined. Renting out a room in your home also falls under this category, and you can earn up to £7,500 in rental income tax-free through Rent a Room Scheme. To calculate your turnover and profit, remember that turnover is your sales or revenue, while profit is your income after deducting all costs and expenses. You only pay tax on your profits. Understanding these concepts and staying informed about your tax obligations can help you keep more of your hard-earned money and avoid potential penalties.
Keeping accurate records of business expenses is essential for tax purposes: Record business expenses for tax purposes, claim proportionally for part-business expenses, pay for missing National Insurance years, hire an accountant for limited company transition, and maintain good records for easier tax filing
As a self-employed individual, keeping accurate records of business expenses is crucial for tax purposes. Expenses must be incurred solely for business purposes, and common examples include office costs, travel, advertising, and the cost of business premises. Some expenses, like tools and equipment, can be claimed through capital allowances. Part-business, part-personal expenses, such as a car or phone, can be claimed proportionally. Self-assessment tax returns require both tax payments and National Insurance contributions. If you find missing National Insurance contribution years, you can pay to top them up. The cost of an accountant can be a tax-deductible expense, and their services become necessary when transitioning from a sole trader to a limited company. Keeping good records, whether digitally or physically, simplifies the process and makes tax filing easier.
Maximize tax efficiency and asset protection by registering as a limited company: Maintain accurate records, use tax forms, make it a regular habit, use accounting apps, and keep a separate business bank account to simplify tax season.
If you run a business, especially one with significant turnover, it could be more tax efficient and asset-protecting to register as a limited company. For those with a side hustle, keeping accurate records and using tax forms like P60, P45, and P11d are essential for filing a complete tax return. To simplify the process, Deborah recommends making it a regular habit, using accounting apps like Xero, and maintaining a separate business bank account. By staying organized and using the right tools, you can make tax season less daunting and more manageable.
Managing Complex Taxes for Small Business Owners and Higher Earners: Starling Bank's tools help manage invoices, expenses, and estimate taxes. HMRC offers multiple channels for guidance, and individuals can negotiate payment plans. Provisional tax figures can be adjusted, and higher earners can reduce tax liabilities through pension contributions.
Managing taxes, especially for small business owners and higher earners, can be complex, but there are resources and solutions available to help. Starling Bank's tools can assist with invoice tracking, expense categorization, and tax estimation. HMRC offers various channels for guidance, including a YouTube channel, web chat, phone line, and Twitter. If individuals are unable to pay their tax bill on time, they should reach out to HMRC for potential payment arrangements. Provisional figures can be estimated on tax returns and later adjusted within 12 months. For those earning over £100,000, they may need to complete an annual tax return due to the loss of personal allowance, leading to a higher tax rate on certain income. Higher earners can potentially reduce their tax liabilities by contributing more to their company pension schemes. Overall, communication and proactive engagement with HMRC are crucial for addressing any tax-related concerns and avoiding potential penalties.
Focusing on Financial Resolutions and Discussing Money Issues: As the new year approaches, focus on financial resolutions and discuss money issues on the Money Clinic podcast. UnitedHealthcare offers flexible and budget-friendly insurance plans for various needs.
As the new year approaches, it's a good time to focus on financial resolutions, and we'll provide tips for that in upcoming episodes. In the meantime, if you have a money issue you'd like to discuss on the Money Clinic podcast, get in touch. And remember, the podcast is for general financial discussions and not individual financial advice. In other news, the Connect Industrial Intelligence Platform offers a unified experience with trusted intelligence, collaboration, and actionable insights for growth and sustainability. Flexibility is also important in insurance coverage, and UnitedHealthcare Insurance Plans offer flexible and budget-friendly options for medical, vision, dental, and more. Whether you're between jobs, coming off a parent's plan, starting a full-time business, or missed open enrollment, these plans may be right for you. So, stay tuned for financial tips, and if you have a money question, reach out to us. And remember, flexibility is key in both finance and life.
