54 {{ upvoteCount | shortNum }}
54 {{ upvoteCount | shortNum }}

UK Warriors - How Did You Set Up Your Home Office?

by Epicurus
44 replies
Hello All

This is mainly aimed at UK Warriors working from home as I'm interested in the self employment side of things.

I've just recently gone freelance working from my home office and want to get the right information about getting set up.

I have a friend who is also self employed but in the building trade and he says that everything can be done online at the HM Gov.uk website, you just need to register for self employment.

He also says that you can claim for things such as heating, electricity, stationary and phone bills if you work from home.

Regarding tax he says the best thing to do is to keep back 20% of your earnings to pay the tax bills etc.

My main question is, is there anything else I need to know when getting set up?

Just wanted to get more of an idea from people in exactly the same boat as me before I get set up
#home #office #set #warriors
  • Profile picture of the author scattermouse
    It sounds like you're already doing some of the things you need to.

    Claiming for utility bills - you can claim for a portion of these (the portion related to work, obviously)

    Tax - is going to be different for everyone. The bureaucracy (sp?) is staggering, so you really have to get the advice of a trained professional.

    On that note, business link was set up to deal with situations exactly like this one. Free impartial expert advice - what more could you ask for? They've saved me time and money more than once.

    Business support, information and advice | Business Link
    Signature
    Kill Your Procrastination Stone Dead!
    {{ DiscussionBoard.errors[1578179].message }}
    • Profile picture of the author Epicurus
      Hey thanks for that info scattermouse.

      I see you're from Sheffield, I'm just down the road in Swinton and my GF works in Sheffield for the Sheffield Star newspaper.
      Signature

      {{ DiscussionBoard.errors[1578188].message }}
      • Profile picture of the author Richard Tunnah
        I'd suggest a good accountant. Many will give you a free intial consultation on the best way for you to trade and what you can and can't claim for. It's very important to get these things right for you to begin with otherwise you could end up paying more tax than needed or getting fined!

        Good luck.

        Rich (UK expat)
        {{ DiscussionBoard.errors[1578204].message }}
      • Profile picture of the author scattermouse
        Originally Posted by Epicurus View Post

        Hey thanks for that info scattermouse.

        I see you're from Sheffield, I'm just down the road in Swinton and my GF works in Sheffield for the Sheffield Star newspaper.
        No probs. Always happy to help, especially a local lad. How you coping with the snow?
        Signature
        Kill Your Procrastination Stone Dead!
        {{ DiscussionBoard.errors[1578228].message }}
        • Profile picture of the author Epicurus
          Originally Posted by scattermouse View Post

          No probs. Always happy to help, especially a local lad. How you coping with the snow?
          Thank you for that.

          This is one of the days when I'm glad I don't have to commute to work anymore

          Obviously the country has ground to a halt again.
          Signature

          {{ DiscussionBoard.errors[1578322].message }}
  • Profile picture of the author GoGetta
    I would also think about setting up as a Limited company, costs about £30 but then takes liability from you. If anyone was to sue you personally you can lose everything, if anyone sues you via the limited company, your company is liable not you!

    Obviously worst case scenario, but may be an idea! Depends of course on what you are planning on doing online!

    GoGetta
    {{ DiscussionBoard.errors[1578206].message }}
    • Profile picture of the author rosetrees
      Originally Posted by GoGetta View Post

      I would also think about setting up as a Limited company, costs about £30 but then takes liability from you. If anyone was to sue you personally you can lose everything, if anyone sues you via the limited company, your company is liable not you!
      I don't think that is necessarily true. If, for example, you trade while insolvent then you ARE liable for you company's debts.

      When I first became self-employed I went on a business start-up course run by Business Link.

      I think they still do them, they are free and they tell everything you need to know.
      {{ DiscussionBoard.errors[1578884].message }}
  • Profile picture of the author lloydy14
    Hi Epicurus.

    The best advice you can get for free, is probably the most overlooked.

    Ring the inland revenue direct and ask their advice, they will tell you everything you need to know about your own situation.

    Once armed with that information then approach a good accountant, preferably on recommendation of a friend or colleague who has at least 5 years of a business relationship with said accountant.

    trust me as someone who has just finished with a very stressful tax investigation brought on by an inept and corrupt accountant.

    The best way to beat the system is to know the system fist before you hire an accountant.

    Hope this helps.

    Lloydy
    {{ DiscussionBoard.errors[1578263].message }}
    • Profile picture of the author Riz
      Originally Posted by GoGetta View Post

      I would also think about setting up as a Limited company, costs about £30 but then takes liability from you. If anyone was to sue you personally you can lose everything, if anyone sues you via the limited company, your company is liable not you!

      Obviously worst case scenario, but may be an idea! Depends of course on what you are planning on doing online!

      GoGetta
      This is good advice. However, it is best to consult a qualified professional before going ahead with the limited compamy route. Depending on your earnings there may be different tax benefits to setting up as a Sole Trader, LLP (if you Partner with someone) or as a Limited Company.

      A Limited company is considered a legal entity in its own right so as Jamie suggested can limit your liablity in a worst case scenario.

      Originally Posted by lloydy14 View Post

      Hi Epicurus.

      The best advice you can get for free, is probably the most overlooked.

      Ring the inland revenue direct and ask their advice, they will tell you everything you need to know about your own situation.

      Once armed with that information then approach a good accountant, preferably on recommendation of a friend or colleague who has at least 5 years of a business relationship with said accountant.

      trust me as someone who has just finished with a very stressful tax investigation brought on by an inept and corrupt accountant.

      The best way to beat the system is to know the system fist before you hire an accountant.

      Hope this helps.

      Lloydy
      Without a doubt this is a course of action most overlooked. The IR is seen as this big bad governing body who steals our money.

      The IR website and telephone support can give you the best advice completely free of charge.

      Riz
      Signature
      NEWBIES - Stuck on Technical Issues?

      Ask me For a FREE copy of my upcoming course that will eliminate all your technical gremlins....:
      SEND ME A PRIVATE MESSAGE NOW!
      {{ DiscussionBoard.errors[1578944].message }}
    • Profile picture of the author Psy
      Originally Posted by lloydy14 View Post

      Hi Epicurus.

      The best advice you can get for free, is probably the most overlooked.

      Ring the inland revenue direct and ask their advice, they will tell you everything you need to know about your own situation.

      Once armed with that information then approach a good accountant, preferably on recommendation of a friend or colleague who has at least 5 years of a business relationship with said accountant.

      trust me as someone who has just finished with a very stressful tax investigation brought on by an inept and corrupt accountant.

      The best way to beat the system is to know the system fist before you hire an accountant.

      Hope this helps.

      Lloydy
      2 great pieces of advice here. HMRC are there to help - even if we don't automatically think so

      And of course a recommendation is always better than a sales pitch.
      {{ DiscussionBoard.errors[1583165].message }}
  • Profile picture of the author Kishor Karsan
    Hi

    I too am needing info similar to Epicurus....... I am going to go through the business link website

    Epicurus, in IM we really don't care if the country comes to a halt, that's the beauty of it, if the country comes to a halt, our online business just keeps on going .... i like that

    regards

    Kishor
    {{ DiscussionBoard.errors[1578390].message }}
    • Profile picture of the author Frank Donovan
      The best advice is obviously to consult (or hire) a qualified tax professional.

      There are many potential allowances for the self-employed, depending on your specific circumstances and set-up. You may be able to claim reductions in mortgage payments, council tax and cleaning(!), for example. Here's a link to some further reading:
      Specific deductions: use of home: specific expenses

      I have a separate room in the house dedicated to business, with its own phone line - don't forget you can claim for a portion of your broadband fees if you do most of your business online.

      I stress again that you must get professional advice, as a lot of these claims/allowances may have other impacts on your own situation (e.g. for CGT when you sell your property) so everyone's optimum course will be different.

      Good luck!


      Frank
      Signature


      {{ DiscussionBoard.errors[1578590].message }}
  • Profile picture of the author Neil Morgan
    All good advice.

    On a slightly different note, I'd recommend you systemise eveything from the get-go.

    I spent the first few years of my Internet Marketing career doing it all manually with spreadsheets etc. While that's fine in the beginning, you outgrow it pretty quickly and it's MUCH harder to change to a new system than to start with one.

    The software we use is QuickBooks - the Professional version because it handles multiple currencies.

    Now things like VAT returns are done in 2 minutes instead of 2 days.

    I hope this helps.

    Cheers,

    Neil
    Signature

    Easy email marketing automation without moving your lists.

    {{ DiscussionBoard.errors[1578857].message }}
  • Profile picture of the author Riz
    Regarding the 20% Earnings for tax - of course that depends on your level of earnings.

    You could be liable for 40% if you are earning high enough.

    Riz
    Signature
    NEWBIES - Stuck on Technical Issues?

    Ask me For a FREE copy of my upcoming course that will eliminate all your technical gremlins....:
    SEND ME A PRIVATE MESSAGE NOW!
    {{ DiscussionBoard.errors[1578945].message }}
  • Profile picture of the author Elaine From London
    The best source of information I found was my local tax office - they run workshops every couple of months covering everything you need to know about what you can legitimately claim for and how various things are calculated (depreciation on equipment purchased etc). Very relaxed and friendly (not at all what I expected from the IR!), and extremely helpful.

    Once you learn the rules, it all seems so much easier. I have not bothered with an accountant, but I did work as a bookkeeper at one time, so it's not all new to me.


    Don't know if you were aware, but there is a time limit on registering as self-employed -I think it used to be 90 days, but I'm not sure, so you need to start paying the right NIC.
    {{ DiscussionBoard.errors[1579328].message }}
  • Profile picture of the author newton
    Not that I'm an expert in the tax side of things, all I can share is what I have done for the past 4-5 years.

    Go self employed, no need for a LTD company. There are very few liabilities that you could be liable for when working from home with no employees.

    The most important thing - get a good accountant. I just give mine the full 12 months accounts, discuss things we can claim for and he works it all out. Should cost you no more than £150 a year. Just keep good records of bank ingoing/outgoing, petty cash ingoing/outgoing and receipts for all your expenses.

    That's pretty much it.

    Don't forget about your National Insurance too, takes the total percentage to around 25% or so.

    Like I say, no expert, that's just what I do!

    All the best

    Tony
    Signature
    Check Out My Blog For Affiliate Marketing Tips => Click Here <=

    {{ DiscussionBoard.errors[1579360].message }}
    • Profile picture of the author John Tighe
      Originally Posted by newton View Post

      Not that I'm an expert in the tax side of things, all I can share is what I have done for the past 4-5 years.

      Go self employed, no need for a LTD company. There are very few liabilities that you could be liable for when working from home with no employees.
      Hi Epicurus

      In a former life I was a corporate lawyer and I'd strongly suggest that you set up a limited company both for the tax advantages and to protect yourself if things go wrong.

      Liability

      newton may be right to say there are few liabilities, but that's not the point. There ARE liabilities and you need to protect yourself BEFORE things go wrong. Once they have it's too late!

      Also, if your business is successful you risk getting sued by freeloaders trying to make an easy buck (ok, pound!). There are plenty of dodgy solicitors out there who will take claims on on a "no win no fee" basis, so someone can sue you at no cost / risk to themselves.

      If this happens you at least want the liability to be with the company and not you personally.

      Originally Posted by newton View Post

      Don't forget about your National Insurance too, takes the total percentage to around 25% or so.

      Like I say, no expert, that's just what I do!
      Tax advantages

      As the director of a limited company you can get your tax rate down significantly from 25%.

      For example you can pay yourself £410 a week without having to pay any tax or national insurance (I'm pretty sure that's the figure my accountant gave to me - it's there or thereabouts, anyway).

      You can then pay yourself a dividend from any profits that the company makes and have the company pay tax on the dividend.

      The way this works is that the company pays tax at 21% (the rate for small businesses) on the profit before the dividend is paid to you. You can then receive an after tax amount of around £8,000 a quarter (or £2,670 a month).

      So in total you can receive approximately:

      12 x 410 = 4,920
      +
      4 x 8,000 = 32,000

      = 36,920

      On which the company will have paid £8,506 of tax.

      8,506 / 45,426 gives you a tax rate of 18.7%

      ** Please note, these figures are approximate. You'll have to check with an accountant the precise amounts, but they're close enough to give you an idea.

      There are all sorts of ways of offsetting expenses. Once your business is making money one of the most worthwhile things you can do is interview accountants until you find one who really knows their stuff.

      Hope this helps,

      John

      P.S. Something else I meant to mention, you don't have to pay a lot of money to a law firm to set up a limited company.

      You can use an online service and get one set up in a few minutes. I've used Company Formation Wizard to set up two companies.

      Their basic package is £24.99 plus VAT. Their website is www.company-wizard.co.uk
      {{ DiscussionBoard.errors[1582810].message }}
      • Profile picture of the author John Tighe
        Something else I meant to mention, you don't have to pay a lot of money to a law firm to set up a limited company.

        You can use an online service and get one set up in a few minutes. I've used Company Formation Wizard to set up two companies.

        Their basic package is £24.99 plus VAT. Their website is www.company-wizard.co.uk
        {{ DiscussionBoard.errors[1583179].message }}
        • Profile picture of the author John Tighe
          Another example of how you can save yourself money through a limited company is that even if you own your own car (as opposed to having a company car) you can still charge mileage to the company.

          I think the going rate at the moment is about 40p a mile (if it's business related), though I don't know if it varies depending on the type of car.

          40p a mile is based on a friend who does about 10,000 business miles a year and gets £4,000 back from the company from pre tax company income.

          I realise that if you're working from home it's going to be harder to rack up the miles, but there will probably still be lots of things that can go down as business.
          {{ DiscussionBoard.errors[1587789].message }}
  • Profile picture of the author n7 Studios
    I'll keep this short and sweet

    - You need to tell HMRC within 3 months of starting self employment that you are self employed (VERY imporant)
    - Make sure you're keeping good records of income and expenses. Use professional software (I can't recommend any as I use a bespoke system)
    - The Tax Office are a good source of advice, even if its only as a starting point. Yes, even for asking what you can and cannot claim for expenses. So long as you're not taking the p*ss, you can claim reasonable expenses, such as mileage, depreciation, utilities, internet, phone line etc.
    - You will need to submit annual self assessment returns (online deadline is 31st January for the previous financial year i.e. 31/01/2010 deadline to submit your 2008-2009 return)
    - Keep at least 25% of income aside to cover tax, NI, student loan (if any) and other expenses. Don't be tempted to spend it now because you have a long time until you need to pay the tax.
    - You can get an accountant if you feel this will put your mind at rest. Any good accountant worth their salt will be able to justify their cost by making you a good tax saving.
    Signature
    THE Web Development Guru - Bespoke WordPress Theme, Plugin + iPhone Apps [HTML5, CSS3, PHP, MySQL].
    {{ DiscussionBoard.errors[1579579].message }}
  • Profile picture of the author Steve Garratt
    Don't forget VAT. There is a minimum turnover threshold after which you must register for VAT. It involves some paperwork but it means that you can claim back VAT from every business purchase that has a VAT element.

    A good accountant is a must.

    Steve
    Signature
    Please visit my blog and if you have an interest in electronics then please join me at Home DIY Electronics
    {{ DiscussionBoard.errors[1579674].message }}
  • Profile picture of the author Kim Standerline
    Can I also suggest you pay a portion of your tax online every month. It's what I do now after spending the last few years thinkin yeah I'll put it away (and never doing so). I got hit with a ginormous tax bill last Jan and July.

    For what bit I could save by keeping my money in the bank and getting a miniscule amount of interest on it, I sleep better at night knowing I'm paying the IR every month, it's out of the way then and I can't be tempted to spend it.

    I'd reiterate a good accountant is worth their weight in gold. I just bag all my receipts etc (in a shoe box) and hand them over to mine. She has access to my paypal and bank account so I don't have to worry about anything and I just get to sign my returns at the end of the year. Mine for the end of Jan were done back in October.

    Worth every penny
    Kim
    Signature
    {{ DiscussionBoard.errors[1579865].message }}
    • Profile picture of the author simmo28
      Federation of Small Businesses is definetly a good move. theres tons of info on there on all aspects of home based business
      {{ DiscussionBoard.errors[1579904].message }}
  • Profile picture of the author 123me
    Remember to let your house insurance company know you are working from home as it would be a nightmare if something happened to your house and they refused to pay out because you hadnt told them you were using a room as an office.
    {{ DiscussionBoard.errors[1580466].message }}
  • Profile picture of the author Epicurus
    Wow!! thanks guys

    Everyone here has given some fantastic advice.

    Thank you so much people :-)
    Signature

    {{ DiscussionBoard.errors[1580615].message }}
    • Profile picture of the author MarkAndrews IMCopywriting
      [DELETED]
      {{ DiscussionBoard.errors[1581071].message }}
      • Profile picture of the author Kevin McNally
        Hi

        I highly recommend planning for way more than 20% tax on your profits as even as a self employed sole trader you will have to pay 8% NI on your profits on top of your tax.

        Kim gave some good advice on paying your tax monthly if you can as you will find it is very easy to spend your "tax" money and at the end of the year you have a hefty bill.

        Also recommend speaking to an accountant but most of it is common sense, just track your income and expenses and work out profit etc...

        The inland revenue are there to help if you have any questions.

        all the best
        {{ DiscussionBoard.errors[1581211].message }}
  • Profile picture of the author dsmpublishing
    Hi guys

    i set up home office by putting on a dvd on the tv placing a table with my laptop on it and getting stuck in whilst having the shawshank redemption on in the background.

    Jokes aside you can pretty much claim for anything in the uk ive transferred my business over to portugal as from 1st jan but before that it was registered in the UK.

    for example if you buy a laptop, printer, norton 360, printing paper etc its all tax deductable. If you are selling dvds on ebay your dvd player and tv are tax deductable as you need them to run your business.

    If you go out for lunch it could be a working lunch

    as for the household bills what you need to do is this:

    count the amount of rooms in your house, then follow this with the number of rooms you use for your business and this is how much you can claim from your business.

    So say if your bills are £1000 a month inc mortgage, weter, tv licence etc and you have 10 rooms inc wc and use 6 of them you can claim £600 a month towards your business.

    Remember your car is taxable too as is all car expenses.

    The best thing to do as far as tax and NI is concerned is to start an excel spreadsheet record all your earnings/outgoings and at the end of the month record how much you are in the red or black and once you hit the taxable threshold save 20% of your income in an ING (as they have a higher interest rate) and then once it hits 34,000 save 40% until the end of the tax year. If you are married and your wife isnt working put her on the business and then you have a higher threshold. Just like if this is your only income and by april its below £50,000 get your tax credit sorted out too.

    kind regards


    sam
    X
    {{ DiscussionBoard.errors[1582293].message }}
    • Profile picture of the author MarkAndrews IMCopywriting
      [DELETED]
      {{ DiscussionBoard.errors[1582317].message }}
      • Profile picture of the author Rufus Steele
        Without a shadow of a doubt - find an accountant you feel comfortable talking with and go sit with them and have them tell you what you can do for you to then decide what you do want to do!

        With respect - everyone here is going to have different ideas based on their perception of employment / Tax laws and they are going to be wrong in some cases!

        There are a number of different ways you can set up and organise your business and a good accountant will be able to help you uncover the best ways for you to work.

        For example - I have been self employed since '95 as a Limited Company. Some people have suggested saving your tax payments monthly at the 20% and 40% rates - good advice.

        However - I earn close to 150k p.a. and I do not pay tax at 40%. Speak to your accountant about Company Dividends and Corporation tax instead - why pay the tax man more when you can legally pay him what he wants which is less?

        You didn't mention what field of work or nature of business you're planning on running from home so a lot of this is conjecture anyway as different business types have different requirements.

        I have a very simple yet devilishly effective excel spreadsheet that works out for me exactly how much I need to pay each month in salary, NI, Corp Tax, Dividend as well as Director loans, retainment and expenses. All I have to do is enter turnover for the month, expenses incurred and reclaimed and it does the rest - including payment to my company secretary - my wife!

        Happy to send you a copy if you think it might help you.

        But seriously - do not use the opinions of people on a forum to base your business decisions, accounting practice etc - PLEASE SPEAK TO A QUALIFIED ACCOUNTANT - (someone you can sue easily if it goes wrong!! )
        {{ DiscussionBoard.errors[1582346].message }}
        • Profile picture of the author MarkAndrews IMCopywriting
          [DELETED]
          {{ DiscussionBoard.errors[1582411].message }}
          • Profile picture of the author Rufus Steele
            Originally Posted by MarkAndrews IMCopywriting View Post

            Pardon me for saying the obvious, but why should a
            forum such as this one be bad for offering advice etc?

            These are all UK business people, running their own
            businesses and companies, in other words in their right,
            they are all professional in what they do.

            Surely the best people to ask are the very people that
            are working at the raw end of self employment, therefore
            the advice given here is based on cold hard facts for the
            most part from the people most in the know.

            Obviously as regards the tax issue alone, a good
            accountant is worth their weight in gold but this is
            obvious anyway to anyone who has run a business
            for any length of time.

            You shouldn't just automatically discount the rest of
            the advice as if everyone posting here is a bunch of
            amateurs.

            Myself, I've been in business for almost 28 years, in
            that time I think I might have learn't a thing or two
            about the in's and outs of being in business for myself.
            The same can obviously be applied to everyone else
            here, they all have a great deal of personal insight
            regarding running one's own business or company.

            An odd remark above if ever I saw one.
            Morning Mark,

            Based on Epicurus's first comment - I've just recently gone freelance working from my home office and want to get the right information about getting set up - then you cannot assume he knows anything about running or setting up a business. I'm sure he has his head screwed on well and understands many aspects but from a point of view of offering advice - you can't assume anything.

            If this were a Tax Accountants / Business Start Up forum - then it would be a safer bet than an IM forum for accurate advice. However much people on here run their own business - they can and will still make erroneous comments or suggestions, either through ignorance or mis comprehension of facts they have learnt or heard.

            Like you Mark, I have run a business for many years successfully and know quite a bit about it - but would still not suggest to anyone who is starting out any other advice than to use the services of someone whose training, experience and daily job focuses on that skill.

            There are too many variables that rotate around exactly what entity the business is set up as to consider before applying the ins and outs. The excellent comment from Alexa's dad demonstrates that nothing is clear cut and should be discussed by those qualified to advise.

            I am sure that all the people offering advice and support here are admirable in their daily dealings - but they pertain to THEIR daily dealings and not Epicurus's. We don't even know in what line he wishes to freelance - if it is anything to do with Security for instance then he will have to register his trading status in a VERY specific manner to be able to acredit himself with the correct levels of security clearance in order to trade effectively. This will affect greatly what he can and cannot do both in company structure and subsequently, tax.

            But to cut a long post short (too late :rolleyes I didn't say that this forum was bad for offering advice Mark. If you reread my last comment, what I said was do not use the opinions offered to base business or accounting decisions on - speak to a qualified accountant / business advisor.

            This forum has and always will be a source of inspiration, information and support like no other on the Net. Wouldn't diss it or the people on it, there are some pukka people on here.

            But for something that is life affecting - due dilligence and care should be taken.
            {{ DiscussionBoard.errors[1582497].message }}
        • Profile picture of the author Alexa Smith
          Banned
          [DELETED]
          {{ DiscussionBoard.errors[1582421].message }}
          • Profile picture of the author MarkAndrews IMCopywriting
            [DELETED]
            {{ DiscussionBoard.errors[1582451].message }}
          • Profile picture of the author Susan Hope
            Originally Posted by Alexa Smith View Post

            You might want to be very careful over the decision about whether or not to claim a proportion of your domestic bills as business expenses for income tax purposes.

            If you live in a 5-room house, for example (kitchens and bathrooms don't count), you can claim 20% of all domestic bills as tax-deductible, and much more for the phone, but note that if you do so, there can be adverse consequences when you eventually sell the house: if it hasn't been used solely as a residence (which you can't deny, if you've made these claims), it won't qualify for the full capital gains tax exemption on a "residence", and this can suddenly sting you for a lot of money in future.

            Many people who have an office at home choose not to claim a proportion of their domestic bills, for this reason.
            So does anyone have information on this issue if you don't own your own home and you rent your home but do pay all the utility bills, council tax, telephone/broadband, the montlhy rental of the property, etc? (or in my case, my husband pays those - he was recently made redundant so is not working now).

            Sue

            PS I find this thread VERY useful in giving direction on what to do and when but of course, I will get proper advise ultimately from the tax office/an accountant, so thanks to all for contributing.
            Signature
            One-to-One WordPress Coaching Service Available at Low Hourly Rate - Let the frustration end now! WordPress Installs, Theme Design, Site Tweaks & other WordPress services available
            Find me on Pinterest: PINTEREST
            {{ DiscussionBoard.errors[1582462].message }}
            • Profile picture of the author Alexa Smith
              Banned
              [DELETED]
              {{ DiscussionBoard.errors[1582570].message }}
              • Profile picture of the author Susan Hope
                Originally Posted by Alexa Smith View Post

                If you're renting, I know of no reason why you shouldn't claim as much as you legitimately can (including a proportion of the rent) as tax-deductible. To the best of my (very limited!) knowledge, the only adverse future consequence that can arise relates to capital gains tax liability on the future sale of the property, if you own it.
                Thanks Alexa I will add this to the list to discuss when I go and see a professional.

                Thanks to everyone for all the advise and relating your own circumstances, it really helps in order to know "what questions to ask".

                "Rufus Steele" I think, among other things, Mark was pointing out that it has already been stated by most people sharing their experience in this thread that we should take these things into consideration BUT we should always seek professional advise and so what you said, really was not needed at that point and the way in which you said it came across as slightly insulting both to those giving their experience and those reading, like myself (in that you assume we would not do our own due diligence regarding this subject and that we would follow blindly like sheep) - now perhaps you did not mean it to come across that way, however, it did, at least to Mark and to me, again however, I also thank you for your advise/experience given in this thread.

                Thanks all
                Sue
                Signature
                One-to-One WordPress Coaching Service Available at Low Hourly Rate - Let the frustration end now! WordPress Installs, Theme Design, Site Tweaks & other WordPress services available
                Find me on Pinterest: PINTEREST
                {{ DiscussionBoard.errors[1582591].message }}
                • Profile picture of the author Rufus Steele
                  Sue, (et all)

                  It certainly was not my intent to be insulting to anyone.

                  In my experience, not doing due dilligence is one of the major reasons so many people get to the end of year one to be faced by a crippling tax bill and other liabilities of which they were unaware - having based their decisions on advice from 'friends'.

                  Thank you for pointing that out and I shall gracefully withdraw and re-evaluate how I write.

                  Regards

                  Rufus
                  {{ DiscussionBoard.errors[1582606].message }}
                  • Profile picture of the author Susan Hope
                    Originally Posted by Rufus Steele View Post

                    Sue, (et all)

                    It certainly was not my intent to be insulting to anyone.

                    In my experience, not doing due dilligence is one of the major reasons so many people get to the end of year one to be faced by a crippling tax bill and other liabilities of which they were unaware - having based their decisions on advice from 'friends'.

                    Thank you for pointing that out and I shall gracefully withdraw and re-evaluate how I write.

                    Regards

                    Rufus
                    No need to withdraw, your contribution is also valuable but as you say, perhaps sometimes it is worth re-reading what you just typed just to evaluate how it might come across, in forums, lots of posts can come across in multiple ways to multiple readers

                    Thanks again
                    Sue
                    Signature
                    One-to-One WordPress Coaching Service Available at Low Hourly Rate - Let the frustration end now! WordPress Installs, Theme Design, Site Tweaks & other WordPress services available
                    Find me on Pinterest: PINTEREST
                    {{ DiscussionBoard.errors[1582622].message }}
                    • Profile picture of the author maxglobal
                      Hi,

                      Home office?....Buy laptop (and extra large notepad) place on kitchen table.......Go!.
                      MMMmmm that pesky tax Etc.

                      I can recommend a company that will help with start up and it's FREE!
                      (new government directive or something)
                      This particular business link is called Blue Orchid and they have branches in Manchester tel. 0161 485 4949 and Liverpool 0151 284 7728.
                      If you are out of there 'area' they may be able to put you in contact with a relevant link near you.
                      There are free workshops to attend covering all aspects of self employment with good information,these gave me the confidence to get started.

                      Regards and good luck for 2010,

                      Phil.
                      {{ DiscussionBoard.errors[1582688].message }}
          • Profile picture of the author Steve Garratt
            Originally Posted by Alexa Smith View Post

            You might want to be very careful over the decision about whether or not to claim a proportion of your domestic bills as business expenses for income tax purposes.

            If you live in a 5-room house, for example (kitchens and bathrooms don't count), you can claim 20% of all domestic bills as tax-deductible, and much more for the phone, but note that if you do so, there can be adverse consequences when you eventually sell the house: if it hasn't been used solely as a residence (which you can't deny, if you've made these claims), it won't qualify for the full capital gains tax exemption on a "residence", and this can suddenly sting you for a lot of money in future.

            Many people who have an office at home choose not to claim a proportion of their domestic bills, for this reason.

            (This information is from my father, who doesn't live in the UK, but is a "financial man", is British and will know what he's talking about).



            Ooh, look who's showing his age ...
            I don't claim a proportion of anything. Instead I estimate exactly what I use over and above my residential expenses. I also underestimate and don't include anything for Council tax, mortgage, buildings maintenance etc. The sums are so small that my accountantant advises me that there should be no problems with CGT.

            This subject becomes very emotive when you look at what our MP's have been doing. Claiming 100% of the upkeep of a house as expenses from the taxpayer (me) then selling it with zero CGT liability. They all claim that they have "done nothing wrong".

            I am not an accountant so don't take my word for it.

            Steve
            Signature
            Please visit my blog and if you have an interest in electronics then please join me at Home DIY Electronics
            {{ DiscussionBoard.errors[1582531].message }}
        • Profile picture of the author Gee S
          Originally Posted by Rufus Steele View Post


          However - I earn close to 150k p.a. and I do not pay tax at 40%. Speak to your accountant about Company Dividends and Corporation tax instead - why pay the tax man more when you can legally pay him what he wants which is less?

          When earning a decent amount this is definitely the way to go. But I believe you need to be at least a Limited company in order to receive dividends. I may be wrong though. It's worth checking out, and also ensure you've got a good accountant, they'll be worth it in the long run.
          {{ DiscussionBoard.errors[1587905].message }}
    • Profile picture of the author Steve Garratt
      Originally Posted by dsmpublishing View Post

      Hi guys
      If you go out for lunch it could be a working lunch
      Carefull with this one. It's only allowable as subsistance if you are working away from your normal base. The HMRC argument is that you have to eat anyway lol.

      The other one to be carefull of is entertaining expenses. If you take a client out to dinner it is only tax deductable if the client is from overseas. I have no idea what the rational for this one is.

      But I am not an accountant so I could be talking rubbish.

      Steve
      Signature
      Please visit my blog and if you have an interest in electronics then please join me at Home DIY Electronics
      {{ DiscussionBoard.errors[1582514].message }}
  • Profile picture of the author ms66
    This is a good post, as I hadnt realised you can claim for electric, heating etc. I thought it was only for computers and the like.
    {{ DiscussionBoard.errors[1582543].message }}
  • Profile picture of the author Steve Peters Benn
    Alex made a good point about Capital Gains and expenses. My only real advice is get an office when you can, and go Limited.
    {{ DiscussionBoard.errors[1582618].message }}
  • Profile picture of the author tyson4
    Don't forget about paying your NI contributions as well... oh and get a good accountant with qualifications (get a chartered accountant... like me!!)
    {{ DiscussionBoard.errors[1582698].message }}
  • Profile picture of the author Zed Shah
    I set up an LLP which is without doubt the best way to set up your finances in the UK.

    I used an experienced and established accountancy firm based in Kent called a4g solutions, their contact number is 01474-853-856 and website stephen-hill & A4G Accounting - Helping to Improve and Grow your Business and Personal Finances. Speak to a guy called 'Wes' and mention my name 'Zed' (Zahid Shah) ...dont worry i dont get any commission lol

    They deal with a lot of big name British internet marketers and are vary savvy in the IM side of things, so no need to spend hours explaining what adsense is, etc.

    He'll explain in more detail how you can set up your finances and save a shed load in taxes.

    Hope i've helped

    Peace Z
    Signature
    {{ DiscussionBoard.errors[1587939].message }}

Trending Topics