Originally posted July 2020. Updated to include delayed implementation date.
HMRC have announced how they’re intending to move to digital tax reporting under their Making Tax Digital project (MTD).
In some ways the announcements are not that surprising. They’ve been talking about MTD for years. I’ve banged on about it many times.
Reporting VAT via MTD is already compulsory for any VAT-registered business.
What’s new is their timetable for making all businesses MTD-complient.
READ MORE > Posted on 23 July 2020
If you’re new to being a sole trader (ie registered as self-employed), it can be a bit daunting that people pay you without making any deductions for tax and National Insurance (NI).
You know you need to pay tax later, but how much do you put aside?
READ MORE > Posted on 02 October 2023
There are two stages to paying income tax when you’re a sole trader:
- Tell HMRC about your turnover and expenses in a self-assessment tax return
- Pay any tax you owe
In between these you will receive a tax bill from HMRC.
You can submit your self-assessment tax return as soon as a tax year finishes on 5th April.
READ MORE > Posted on 31 August 2023
I’ve had a couple of emails at the tail end of August, asking about how certain expenses are calculated when sole traders are doing their self-assessment tax return.
One area that always causes confusion is the ‘use of home’. People usually know that something is offset-able for heating and lighting, but how is this calculated? And what else can be included under ‘use of home’.
READ MORE > Posted on 31 August 2023
It can often be confusing trying to work out which jobs are likely to be paid as self-employed, and which as PAYE.
Generally speaking it’s roles where people have their own tools, or where HMRC thinks you have to show “rare skill and judgement”, a jargon phrase that always brings a wry smile.
A good starting point for clarification is the list of job roles agreed between HMRC and the production industry, including unions like BECTU.
This is sometimes called the ‘agreed list’ or ‘appendix 1’.
READ MORE > Posted on 01 August 2023
When I ask people on my courses what they think ‘freelance’ means there’s often some wag who shouts ‘unemployed’.
It’s usually someone who’s just left employment and is getting their head around the freelance lifestyle. It’s also meant as a joke, but with a frisson of ‘it’s funny because it’s true’.
The word ‘unemployed’ implies a period between employed jobs, when no income is coming in and you have nothing to do. This makes sense if you see work as being controlled by an employer.
READ MORE > Posted on 01 August 2023
Did you know that 17th May is National Numeracy Day?
Me neither, but it gives me the chance to point out that there are plenty of resources out there to help people who might be a little scared of numbers.
One charity doing good in this area is National Numeracy, a driving force behind National Numeracy Day. They exist to promote maths and numeracy education “for the public benefit”, which is unarguably splendid.
READ MORE > Posted on 11 May 2023
I suspect everyone poo-poos new tech as a threat to their job until they can see that it really is a moving a big tank onto their lawn.
I had a sudden ‘get off my land’ moment just a few days ago.
READ MORE > Posted on 11 May 2023
Income tax years in the UK run (bizarrely) from 6th April to 5th April. And the rules change every year. Sometimes it’s a tweak and sometimes, following a general election, it can be a radical new direction.
There can also be ‘interesting’ new directions when the Prime Minister is Liz Truss. That’s another story, so I’ll leave it between you and your mortgage lender.
READ MORE > Posted on 05 April 2023
I get a lot of questions from people on my Finance of Freelancers courses about what happens to tax if you have a mix of PAYE income and sole trader income.
PAYE income and sole trader profits are both taxed using the income tax system, which is pretty straight forward.
But PAYE income is usually taxed by the time you get it, and sole trader income never is.
READ MORE > Posted on 05 April 2023
If you’re a freelancer it’s good to think like a business, and part of that is keeping an eye on how tax works. You can sometimes save a bit of money just by tweaking your behaviour across different tax years.
Yesterday (17 November 2022) Chancellor Jeremy Hunt unveiled the latest plans to deal with the UK’s financial woes.
READ MORE > Posted on 18 November 2022
