Legal UK tax rules, tricks and tips you think people should know about...

[mbsun]

So, I have been thinking recently - what LEGAL tax rules, tips and tricks should everyone know about when it comes to money making/saving?

A few I personally think people should know about:

1. You can earn £1000 per year from your property without having to pay tax on it (I'm still working out the best way to do this)
2. If self employed, ensuring you claim EVERYTHING you use for business on your taxes (like I just ordered some headphones that I will be using at least 50% for business calls etc)
3. ISAs are overrated, they usually offer very low interest rates and unless you are earning A LOT of interest, you probably aren't going to have to pay tax on it anyway

What are your tips and tricks?

 

[BreeziOG]

1 - DO NOT wait until January to think about completing your tax return. Leaving it to the last minute will make it seem far more stressful than it needs to be, and you'll have a hard time and a long wait on the phone if you need to speak with someone at HMRC for help.

2 - Keep on top of your accounting, spending 10 minutes once a week updating your spreadsheet/accounting software/whatever you use to keep track of this with income received and expenses out is FAR easier than having to do it all in one go at the end of the tax year.

 

[mbsun]

Great points. Thanks for sharing.

I have been guilty of point one. But I am much better than I used to be.

 

[homie]

So, I have been thinking recently - what LEGAL tax rules, tips and tricks should everyone know about when it comes to money making/saving?

A few I personally think people should know about:

1. You can earn £1000 per year from your property without having to pay tax on it (I'm still working out the best way to do this)
2. If self employed, ensuring you claim EVERYTHING you use for business on your taxes (like I just ordered some headphones that I will be using at least 50% for business calls etc)
3. ISAs are overrated, they usually offer very low interest rates and unless you are earning A LOT of interest, you probably aren't going to have to pay tax on it anyway

What are your tips and tricks?

#1 There is also £7,500 tax free if you are renting out a room to someone. Not that I would want to share my house but it works for some people and is a decent tax free income stream.

#3 It's worth using an ISA if you have stocks and shares because dividends and capital gains are free of tax. You might think you won't reach the threshold for paying tax but if you are adding to it every year and the stocks go up then in 10 years time you could find yourself with a capital gains tax bill when you come to sell, without the ISA. Agree the cash ISAs often pay less interest than normal accounts so aren't always a better bet.

Also, don't forget there is a £1000 'trading allowance' so if you earn less than that from your online endeavours you don't need to complete a tax return.

 

[gker]

So, I have been thinking recently - what LEGAL tax rules, tips and tricks should everyone know about when it comes to money making/saving?

A few I personally think people should know about:

1. You can earn £1000 per year from your property without having to pay tax on it (I'm still working out the best way to do this)
2. If self employed, ensuring you claim EVERYTHING you use for business on your taxes (like I just ordered some headphones that I will be using at least 50% for business calls etc)
3. ISAs are overrated, they usually offer very low interest rates and unless you are earning A LOT of interest, you probably aren't going to have to pay tax on it anyway

What are your tips and tricks?

I have a phone I plan to use 50% for business. Can I claim for it? I have a monthly charge for the phone.

 

[gker]

1 - DO NOT wait until January to think about completing your tax return. Leaving it to the last minute will make it seem far more stressful than it needs to be, and you'll have a hard time and a long wait on the phone if you need to speak with someone at HMRC for help.

2 - Keep on top of your accounting, spending 10 minutes once a week updating your spreadsheet/accounting software/whatever you use to keep track of this with income received and expenses out is FAR easier than having to do it all in one go at the end of the tax year.

I need to read more about keeping on top of my accounting. I can't afford an account at the moment but might consider one in the future.

 

[BreeziOG]

I need to read more about keeping on top of my accounting. I can't afford an account at the moment but might consider one in the future.

It's pretty simple to do, unless you've got a huge amount of complicated transactions or you're a LTD an accountant isn't really necessary at all. Feel free to ask if you have any questions

 

[gker]

It's pretty simple to do, unless you've got a huge amount of complicated transactions or you're a LTD an accountant isn't really necessary at all. Feel free to ask if you have any questions

I just don't know where to start! I have very few outgoings.

 

[BreeziOG]

I just don't know where to start! I have very few outgoings.

That makes it a pretty simple process.

I am NOT an accountant, but I can give you a few resources to look at for getting started.

Cash basis accounting is usually the most simple method for small business income/expenditure recording - there's a good overview of it here: https://www.gov.uk/simpler-income-tax-cash-basis - there are lots of links to further reading from the government within the article, it's super helpful for getting started.

There's a great example of the type of spreadsheet you can use to record your income and expenditure here: https://www.cashbasisaccounting.uk/free-income-expense-spreadsheet

Alternatively, you can look at Quickbooks/Xero and other accounting software for small businesses, who automate this process for you, and you log your transactions on an online portal/app. I previously used QuickBooks but now use the business toolkit from Starling, as I have my business account with them, so it makes it easier for me to have everything in one place. Of course, these are paid services (Starling Toolkit is £7 per month, and Quickbooks was the same price when I was with them, but not sure if that's the current price) - however, it is a business expense, so can be input as such in your tax return to reduce your tax liability.

Hope this helps a bit!

 

[gker]

That makes it a pretty simple process.

I am NOT an accountant, but I can give you a few resources to look at for getting started.

Cash basis accounting is usually the most simple method for small business income/expenditure recording - there's a good overview of it here: https://www.gov.uk/simpler-income-tax-cash-basis - there are lots of links to further reading from the government within the article, it's super helpful for getting started.

There's a great example of the type of spreadsheet you can use to record your income and expenditure here: https://www.cashbasisaccounting.uk/free-income-expense-spreadsheet

Alternatively, you can look at Quickbooks/Xero and other accounting software for small businesses, who automate this process for you, and you log your transactions on an online portal/app. I previously used QuickBooks but now use the business toolkit from Starling, as I have my business account with them, so it makes it easier for me to have everything in one place. Of course, these are paid services (Starling Toolkit is £7 per month, and Quickbooks was the same price when I was with them, but not sure if that's the current price) - however, it is a business expense, so can be input as such in your tax return to reduce your tax liability.

Hope this helps a bit!

Very helpful. Thanks.