Today I am pleased to introduce a guest post which is probably very relevant for a lot of SavvyScot readers. While we have all no-doubt heard various scandals on tax returns in the press, Danbro have some fantastic legitimate tips to share! While tax returns is not something I like to think about very often, unfortunately they have to be done! Enjoy..
DANBRO the award winning firm of accountants for contractors share 10 tax tips for contractors and freelancers:
- Incorporate your business – generally speaking if your turnover is £20,000 or more you may benefit from operating via a limited company.
- Register for VAT – claim back the VAT included in your expenses or consider whether the Flat Rate VAT Scheme would be to your advantage.
- Review your remuneration package – structure this to include a mix of salary and benefits e.g. sacrifice salary in return for employer provided childcare vouchers.
- Consider paying your spouse or partner – any salary should be reasonable to reflect the work they perform.
- Claim all your allowable expenses – ensure you account for all business expenses and claim allowances available to reduce your taxable profit.
- Make use of all tax free benefits – an employee can receive a number perks without attracting tax or national insurance e.g. a mobile phone.
- Pay into a personal pension scheme – obtain tax relief on the contributions you make.
- Retain profits within your business – the level and timing of extracting profit may affect the amount of tax you pay.
- Utilise unused personal allowance and basic rate tax band – divide your income producing assets with your spouse or partner, but be careful of some tax anti avoidance measures.
- Prepare an exit strategy – review your options now and plan accordingly.
About DANBRO
DANBRO are a firm of award winning Chartered Management Accountants that provide specialist accountancy services to thousands of contractors and freelancers throughout the UK.
As a firm regulated by the Chartered Institute of Management Accountants (CIMA), DANBRO have become one of the most reputable firms within the industry. They are recognised as a Quality Accountant by the Professional Contractors Group (PCG), they are audited and approved by Professional Passport and are also an affiliate member of The Association of Professional Staffing Companies (APSCo).
Their excellent service levels and unrivalled commitment to their clients and staff saw them being crowned winners of ‘Business of the Year’ and ‘Employer of the Year’ at the 2011 Be Inspired Business Awards (BIBAs) and in 2012 they also won the Red Rose ‘Commitment to Skills’ award.
DANBRO continue to set the benchmark within their industry for management standards. They hold the ISO 9001:2008 status for their excellent quality management systems, were awarded the Investors in People award due to their commitment to their workforce and most recently received the ‘Customer First’ standard for the first-rate service provided to their clients.
Notes:
- DANBRO provide all accounting solutions under one roof – This ensures contractors always receive the most tax efficient, compliant and hassle free advice tailored to their individual needs.
- DANBRO are preferred suppliers to over 450 recruitment agencies branches.
- The firm has offices in London, Manchester and Blackpool.
For more information:
Head Office: 01253 600140
Email: [email protected]
http://www.danbro.co.uk
Liquid says
Good to know for bloggers or freelance writers. A lot of these tips ring true for other countries as well. In Canada we call it a GST instead of a VAT, but it’s similar, and I intend to register for that when I start my farming business soon 😀
Liquid recently posted..Union Merger – CAW and CEP
savvyscot says
Thanks for commenting! Agreed – most of these tips can be applied to almost any freelancer! 🙂
Pauline says
Love the pic!
Those tips are really useful, filing a return is always a headache for me. I would add to keep every invoice and receipt, check HMRC to see how long, in case you have to justify mileage or other deductions.
Pauline recently posted..How to save money on currency exchange
savvyscot says
Haha Thanks Pauline! I am yet to do one, but have the pleasure of my first this year! Have you filed a few through HMRC? If so, did you claim deductions (i.e. hosting) even though you are a freelancer?
John S @ Frugal Rules says
Very useful post. All are key, especially #1 & #5. Keep track of everything because it can likely save you money on taxes. I’ve always done our taxes, but last year went with someone else to do it for us as ours just became too complicated. He was definitely worth the cost.
John S @ Frugal Rules recently posted..Blogging Tips From a Beginner
savvyscot says
Cheers John. I can see why you would get someone else to take care of it for you. If SS takes off the way I want it to, I will be following in your footsteps on this one!
Veronica @ Pelican on Money says
I’d like to add: treat yourself to a tax-deductible vacation. There are so many cruises out there that offer seminars on one thing or another. As long as you attend and have record of attending – you can reduce your taxes!
savvyscot says
Veronica… I LIKE IT!!
CF says
Useful information! I’m not sure yet how we’ll deal with the extra money we made through the blog and my freelancing. In other years, I’ve just rolled my freelancing income into my regular income and dealt with the taxes as-is, but perhaps we need to be more clever about it this time.
CF recently posted..Summer 2012 Garden recap
savvyscot says
Neat trick rolling the incomes together. I don’t think we can do that through our PAYE (Pay As You Earn) system in the UK. Hopefully you can work it to your advantage this time with some deductions..