Monthly Archives: July 2023

0 Martin Lewis and Louise in pensions duet

Yes, after months of campaigning, negotiations, contract wrangling and carrier pigeon-powered correspondence it can be confirmed that the nation’s money mavericks are singing from the same hymn sheet.

Not really.

There were no pigeons and I offer zero financial advice.

However, Martin and I do both agree on this and it’s a belter of a tune.

Remember the Great Pensions Panic of Spring 2023?

Folk scrambling madly to check what they’ve paid into their State Pensions then flocking to the HMRC National Insurance portal thingy to top them up before they pulled up the drawbridge?

No?

OK, you are forgiven but in a nutshell, our Martin (and Louise) were urging folk to go back and check your Ni contributions back to 2006. The reason being that if there are “gaps” you can go and fill them by topping them up.

Yes, it will cost you money but the end result would be a HUGE uplift in your State Pension when the time comes. We’re talking thousands of pounds for hundreds “invested” here.

Well….predictably, the HMRC website pretty much fell over so the deadline has now been extended to April 2025!

Yay!

So you’ve got plenty of time to try and get through to the Future Pensions unit and sort out what you need to pay if you want to do any catch up years.

However, what you must remember is whilst they will tell you how much it will cost, you then need to decide whether you want to pay it or not.

I can’t really advise on that as I’m not a financial advisor.

If you do decide to pay, you must get an 18 digit reference number from the NI team or the Future Pensions team in order to make the payment. Whatever you do, do not come off the phone if you decide to pay until you have that number. Otherwise, you’ll sit in the queue again!

0 The one where the words “interest” and “tax” meet in the same headline

It might sound like a contradiction in terms but I beg you pay heed to this seeming impossibility. DON’T forget to make your July Payment on Account if required!!!

Bringing it back to the headline, is it because “tax” is “interesting”?

Spoiler alert…no.

Is it because “interest” is “taxing”?

Well, yes.

Purely because if you read the following and do NOTHING about it before it is too late you might end up paying a HUGE amount of interest and even some fines to HMRC.

So what’s the problem?

It comes down to Self Assessment and Payments on Account.

Remember them?

They are the ones that are estimated by the good folk at HMRC after they peer into their crystal ball and miraculously conclude that you will earn the same amount of money this year.

They then “helpfully” ask you to pay half early doors.

Now it seems a pain to many people but it does make IF you are organised with your finances.

The problem is the whacking great inflation problem right now – you might have noticed it!

That means that if you are late….the impact of the interest you pay is far bigger than usual.

Like 7% and upwards bigger – never mind the fines.

So what do you do?

Check your online account and see how much you have to pay by the 31st of July. I recommend you set up the payment for a few days BEFOREHAND just in case something crumbles. Or…you could look at doing your tax return before the 26th of July. That will give HMRC time to reevaluate how much the July 2023 payment should be. Now…it will never go up, but it could go
down if your income has changed between the two years.

0 The accountant with SOLE has been given an encore

Scene – a suburban home in Berkshire. The early hours of the morning. The dawn chorus is warming up…

Cut to the bedroom (behave!). The Singing Accountant is restless, mid-dream.

“Me, again?

“An award nomination? Oh no I couldn’t possibly accept.

“I don’t like the spotlight. Leave that to my lovely clients. Oh maybe just a little bit then.

“Hmmm? What’s that? The Academy insists?

“Oh, not the Academy…the Accounting Excellence Awards.”

(Louise wakes up from fever dream)

So it appears that I may indeed have been overlooked by the Academy.

However, I have once again been singled out by my version of those fine folk, yes, the glitz and glamour of the accounting world awaits.

Regular readers may recall a similar storyline last year when I was reluctantly encouraged to toot my own horn.

This is far from my favoured scenario or instrument. I prefer the clarinet or even, as a classically trained opera singer, my own pipes!

However, the good folk at the Accounting Excellence Awards dropped me a line this morning to tell me that I’m one of the finalists in their glitzy annual event thingy!

To be shortlisted again is no mean feat and once again I’m in with a shot at the Sole Practitioner of the Year Award.

Last year I did vaguely threaten to sing my acceptance speech should I have triumphed.

That may not have been a wise move so for now, I will bow and nod graciously and sit calmly in the wings.

The question, as ever, is what to wear!

I debated the full Valkyrie costume with Wagner as my acceptance music last year.

Maybe this time something a tad more understated?

Any suggestions gladly considered!

Now, maybe I can sneak in a nap and go back to the Oscars dream again. Failing that, I’d take a Tony!

0 Your child and earnings – part 2 on Etsy

This is a little bit different to the child actors earning money.

Etsy is like a big online craft fair where people from all around the world can buy and sell unique, often handmade or vintage items. It’s like an online marketplace that’s special because it focuses on unique, creative goods, much like the things you might find at a local art fair or antique shop.

Just imagine walking into a bustling craft fair, where artisans showcase their beautiful, handmade crafts, jewellery, clothing, and other special, often one-of-a-kind items. Now, imagine being able to visit this craft fair from the comfort of your own home, any time you want, day or night.

What we have found is that children are creating work and then selling it, and as it is crafting, the most appropriate platform is Etsy. So the income belongs to the child right?

Wrong!

Etsy won’t let anyone under the age of 18 set up an account, so the parent has to set up the account under their name as the adult. But the income still belongs to the child right?

NOPE

HMRC treats it as the adults’ income as the account is in the name of the adult, so the adult has to declare it on their tax return.

This is not a problem if the adult does not have any self-employment as you can earn up to £1000 per tax year without having to tell HMRC. But if the adult is self-employed, no matter what the earnings on Etsy are, it needs to be on that adult’s tax return, and that adult pays tax on it, and oh my that could be at 40% and as it is treated as the adults’ earnings, maybe VAT as well.

So what starts to be a child’s hobby can turn into an adult’s tax nightmare. We don’t want to discourage creativity or entrepreneurship, but now you know this, if there are two adults attached to the child, put the Etsy account in the lower-income adults’ name.

The hard part is how to tell the child that they may loose some of their income to the tax man. Oh well, never too early to start that element of disappointment in life!