Mortgages and “interest” rates – a contradiction in terms?

The notion that there has been virtually no interest on mortgages for so long does tickle me.

Mortgages and “interest” rates - a contradiction in terms? Performance Accountancy, Louise Herrington, Getting a Mortgage when self-employed

It is probably the most boring subject in the world, just above tax I suspect!

Sadly, this lack of interest on so many levels does impact a lot of people, especially the self-employed, so here is the second part in our thrilling series on everything you wanted to know but were afraid to ask about mortgages.

I will try and add some “interest” at no charge to you, dear reader.

The last post about mortgages was all about getting some standard documentation from your tax account, and the need for an accountant’s certificate, but post-COVID 19 pandemic (if there is such a thing at the moment), mortgage companies are requiring more information from the self-employed.

They now require a full copy of the submitted tax return for 2020-2021 and 2021-2022, rather than just the SA 302 and tax year overview. You are able to get this from your tax account, or just use the copy that your accountant sent to you to sign if they have used commercial software to file your tax return.

So what the devil are mortgage companies looking for now?

Well, the full return will show any SEISS grants claimed, as well as any other COVID grants. Originally, a mortgage company considered this to be a risk as effectively there was no work for the self-employed and it’s being topped up by the governments. Could then the normal income support the mortgage payments? They disqualified anyone from the mortgage application process if they claimed the grants, unless the non-grant income was enough to support the mortgage application.

Caution – “interest” reference coming up

Interestingly enough though (if that phrase can ever be used in a post on mortgages), employees that received furlough payment don’t have to declare that they were on furlough as it’s hidden in the P60.
They don’t get discriminated against because their employers put them out to pasture whilst the government was propping up their pay.

The second thing they want to look at is if there’s any foreign income in the return, as this might
be riskier if you have to travel and potentially travel gets stopped again.

A few brokers have said that the mortgage companies will ignore foreign income. That is a bit of a concern for musicians and opera singers, as often they have to jump into Europe to do various contracts or cover a role.

Or they might be “employed”, and I use that term loosely, by a production house overseas for an opera season, just one opera or maybe the whole season. This can be a significant portion of income for that person.

How will the mortgage company know about the overseas income – sorcery?

There are unsubstantiated rumours (mainly in my head) that they communicate with seeing stones using the power of the mind. The simple answer, however, is that any overseas income would be declared in the foreign section of the tax return, providing taxes have been deducted. It doesn’t actually require you to put down all your foreign income.

It just says if taxes are being deducted locally.

There is no other declaration anywhere in the tax return about other foreign income. So does that mean if you are taxed with withholding tax, which is how most of the European countries should operate, is that really going to be a disadvantage?

Well, potentially yes.

What’s the solution? None at the moment, as you are correctly doing the tax return by putting in any taxed foreign income into that section of the tax return and any untaxed self-employed foreign income going into the gross income of self-employment.

You may want to keep some bookkeeping notes and record any income you get from UK self-employed work; any income you get from an overseas source that has not been taxed, and then any gross income (before taxes being deducted from overseas) for foreign work.

But to be honest, it’s just another example of people not understanding the life of a musician and opera singer. Plenty more hoops to go through for the self-employed trying to get on the property ladder.

On that note, we asked a friendly mortgage broker for her thoughts on all this.

Here’s what Sarah Parkin at independent brokers Hollybeck had to say, thank you for your
insight Sarah!

“The landscape for the self-employed has much improved over the past few months, with some lenders now reverting to pre-covid requirements on documentation. Not all have, though. I firmly believe that anyone who is self-employed should seek the advice and guidance of an independent mortgage broker. Your broker will know, based on your needs and the paperwork you can provide, who is best placed to help. Complex income sources often need the eyes of a human underwriter – not a computer – and so it’s the smaller building societies who we tend to work with in these situations. Be warned though – not all brokers have access to the smaller lenders so do your homework on your broker to make sure they aren’t restricted to using a lender ‘panel’.

Wise words on finding the specialists there from Sarah.

Whilst the landscape for the self-employed has improved in general, we know that for us performers (and yes, I do still perform the odd show myself) we are in a very tight spot so as ever, it pays to get niche advice. If you need any on your dreaded accounts, you know who to ask. I might even make it a little more “interesting” for you.

Work from Home Rebate? What is this £312 tax rebate people keep talking about for an employee?

How to get your Self Assessment tax refund

What is this £312 tax rebate people keep talking about for an employee?

You may have had to work from home during the coronavirus pandemic in tax year 2020/2021 and tax year 2021/2022 as a requirement from your employer. This will then mean additional household costs to have been incurred. It may be for a few days, weeks or months. There was a relaxation of the normal home working rules for employees in these tax years and employees had the ability to claim the full £312 in the tax year if their employer did not pay this via payroll, by logging into a microsite on the HMRC website, and registering for this allowance.

It would need to be done twice – once for 2020/2021 and again for 2021/2022 if you were required to work from home, and not just chose to work from home. HUGE difference.

But what if you are self-employed and employed?

If you are an employee as well as self-employed, it is not too late to claim the working from home allowance if your employer required you to work from home during the tax year 2021/22 for covid purposes, and it was not your normal place of work for them, as you have to complete a self-assessment tax return.

You would complete the employment section with details from your P60 (or your P45 if you’ve left during the year) and that will detail out your gross pay and your PAYE tax paid, plus any other benefits you may have received. If you go to the expenses section of the employment page, that is where you can put in the £312 of working from home allowance if your employer required you to work from home during 2021/2022, because of COVID. It's too late now to go forward, because it’s not on offer for the tax year 2022/2023, but some people panic that they’ve missed out as they did not apply for it in the tax year. Panic yea not – as you have to so a self-assessment tax return, that is where you apply for the allowance.

Don’t worry about the people that say, “Oh, it’s too late now.” If they’re only PAYE and they don’t have to do tax returns, it is too late for them, but it’s not too late for you. If you have any issues, any problems, any questions, feel free to contact us.

If you need any help or advice then please give me a call on 01344 669084 or email [email protected]

Insuring the future with a look at the present (no gifts from the chancellor in this one)

how to link personal tax a/c to self assessment

Spring has sprung (OK, it is snowing as I write this but forgive me), the daffs are out, the sap is rising, what a time to be alive!

And what better time than to check out the latest episode of our favorite soap, “Downing Street”, starring Dishy Rishi and his magic red box of delights.

In this week’s episode, he’s got that special spring in his step too and who can blame him…it is time to reveal the latest changes to National Insurance (NI)…

Cue drums or brass band intro, depending on your preference of north vs south soaps. Scene opens with Dishy (sorry, Rishi – must be professional, all very serious here) stood at his little table thingy in Downing Street.

Flashes go off from the adoring/baying press, delete as applicable.

One intrepid hack ventures from the media scrum.

“What news from the spring statement Dishy?”

“Yeah, what’s all this about a fall in income tax?”

Dishy, urging the pack to settle;

“Ah, be calm my friends. We will come to that in good time. Probably. Maybe. A bit. However, remember, that when I give with this hand, I snatcheth away with this.” Much shuffling of papers ensues before a gentle cough signals the REALLY EXCITING news is about to be announced…

Presenter (Louise) takes over, Dishy in background, droning on…

So where are we at the moment for the 2021/2022 year?

Your employer will deduct 12% NI if your gross earnings are over £9568 (then goes to 2% above £50270). They also pay national insurance on your earnings over £9568 at a rate of 13.8%.

A self-employed person gets to pay Class 2 National insurance at a rate of £3.05 per week, and also pay class 4 NI at 9% if profits are over £9568 (then it goes to 2% above £50270).

In the 2021 the chancellor introduced a Social Care Levy of 1.25% of gross earnings & profits, taken from the employee, employer and self employed person. However, for the 2022/2023 tax year, to make things “SIMPLE”, the 1.25 percentage points would be added onto the national insurance paid.
Errr what?

Basically, the employee would pay 13.25% NI (3.25% if over £50270), Employer pays 15.05% on gross salary and self-employed pay 10.25% class 4 NI on profits until £50270 then at 3.25%.

Psst (stage instruction from wings).

If you earn money from dividends, you normally pay 7.5% on dividends over £2000 in a tax year, but for 2022/2023, that rate is now 8.75%. The rate for higher and additional tax payers also have an additional 1.25 percentage points.

Righto so what’s changed?

The social levy is still being introduced, so the rates of NI will still apply, but the thresholds are changing from 6 th July 2022.

Effect on the employee:

For salary in April-June 2022, anything above £823, will have NI deducted of 13.25%. For salary from July onwards, the monthly threshold changes to £1048 before any NI is deducted.

Effect on the Self-employed:

Although the threshold to pay class 4 NI increases to £12570 in the year, it only comes in from July 2022. That means when the self-assessment tax return is done from April 2023, the class 4 threshold will be £11908 before you pay any NI.

This is because you have 3 months at the lower threshold, then 9 months at the higher threshold. The system assumes an even split of earnings throughout the year and will not do a 3/9 month split of profits if income is seasonal. From 2023/2024, the full threshold will apply.

But more on 2023/2024 another time – oooooh I bet you can’t wait!

The effect of class 2 NI is the “interesting” bit. If you are into this lark. Profits between £6725 up to £11908 will not attract any class 2 amount to be paid, but full credit will be given for NI credit in relation to benefits and state pension. Taxable income above the amount will be charged at £3.15 a week so totalling £163.80 for the year.

The self employed with profits below £6725 can opt to pay the class 2 NI amount of £3.15 per week for the year to keep the benefits or not. It seems crazy that you have to pay £3.15pw if your profits are below £6725, but if you increase profits to just above the £6725, you will have nothing to pay as you get deemed NI. Let your accountant work this one out as to whether it is beneficial for your profits to go above the £6725 limit or not as it may inpact if you have to pay income tax should you have other income.

Directors of your own limited company

Well you are a special breed. you can pay yourselves £758.33 a month and not pay any employees or employers NI. Woo Hoo. This is the maximum of £9100 a year before employers NI kicks in, so if you think you can increae it to £1047.50 from July – think again. You won’t be paying employees NI as below the threshold, but that sneaky employers NI of 15.05% kicks in at £9100, so if you are set up as a director on the payroll, you will be paying NI for the last few months of the year.

If you need any further information, please contact us

A quick lesson on Very Annoying Tax aka “VAT” and Tuition - Performance Accountancy, a Chartered Accountancy firm in Berkshire - Working with performers

A quick lesson on Very Annoying Tax aka “VAT” and Tuition

As things have changed over the last 18 to 24 months, more and more musicians, singers and actors have turned to teaching online as live performances were non-existent.

Those that have done it really well (yay!) may have found that they are approaching the VAT threshold for the rolling 12 month period (boo!), especially when normal business starts to resume.

Now, this has actually sent many people into a bit of a head spin.

Suddenly they’ve got to register for VAT and charge 20% more than other people in their field!

Just when they were doing so well. It feels like you can’t win!

Now that is “VAT”!

People are even trying to concoct different ways around this VAT registration to keep their costs down and the need for reporting to HMRC quarterly.

Well, concoct no more, there’s absolutely no need to panic.

In fact, here’s some good news…

In general, fees from private tuition are EXEMPT from VAT and do not count towards the income threshold for VAT turnover.

Therefore, VAT does not have to be charged on these fees.

Yay again!

Hold your horses there teacher…

It is only exempt if certain conditions are met:

  1. Lessons are given by a sole trader or self-employed person or a member of a partnership.
  2. Private doesn’t actually mean one to one only. It can be one to many as sometimes tuition can only really work in a class.
  3. The subject must ordinarily be taught in a school or university.

Now you might assume that if it’s ordinary taught in school and university, then there would be an age limit.

Au contraire!

Even if tuition is given to a 50 year old, that person is still learning a subject taught in schools or university and therefore remains exempt from VAT!

Yay again! *begins small hopeful dance before reading on with trepidation*

Wait a minute, here comes the science – the REALLY boring bit.

Now, a self-employed person giving tuition cannot outsource that to another self-employed person and treat it as exempt income if they are VAT registered.

It has to be delivered by the self-employed person that is doing the billing to the clients. So be very careful. There’s no depping out tuition and getting away with it if you have income above the VAT threshold.

A bit of a nightmare keeping accurate records for that too!

So, you MIGHT decide, given you are doing other things as well, that you want to set up a limited company and put all the business through a limited company.


However, that’s where the situation gets a bit trickier so steady on there old bean and read on…

If you deliver tuition through a limited company and then start to break the VAT threshold, your lesson fees count towards the VAT threshold.

So you would need to charge VAT on them and may become, in effect, 20% more expensive.

“So what to do Lou?”

Deep breath. 

You could stick as a sole trader to deliver the tuition and put your other type of income, like performing income, into the limited company. 

That’s absolutely fine.

However, if you do split your business legitimately between teaching and performing, then you may not hit the VAT threshold in total because your limited company has one threshold and you as a person have another threshold.

Cunning eh?

In summary, providing you are self-employed, delivering the teaching yourself and the subject is normally taught at schools or university, there is no concern about having to be VAT registered for tuition. 

how to link personal tax a/c to self assessment

Are you sitting comfortably?… Well, don’t!

It’s very easy to get comfortable at this time of the year; the dark mornings and evenings are long, you can keep the central heating on for an extra hour or so, chuck on your comfy clothes… and, now, put off filling in your tax return for a month.

Really? Well…read on.

You see, our friend, the Chancellor of The Exchequer, Rishi Sunak, has decided that self assessment tax-payers now have until February 28 to file their tax returns.

The pandemic really has got in the way of everything, including, it seems, filling in your self-assessment form.

While this might seem good news on the face of it, getting too comfy with your tax returns and letting dates come and go can be a slippery slope.

There is also a sting in the tail (isn’t there always?!)

You could be left with a nasty surprise if you think the extension also applies to paying your tax.  HMRC still wants its dosh and any late payments will see you hit with interest at 2.75% and a 5% surcharge if not paid by 1 April.

“But…,” I hear you cry, …”if Dishy Rishi says we have more time – why the panic?”

Well, there’s no panic, but with Making Tax Digital just around the corner you might want to get used to filling in your tax returns on time – ‘cos, come April 2024, working with HMRC isn’t going to be a once-a-year thing you do through gritted teeth.

A reminder…

If you are VAT registered and below the VAT threshold you can voluntarily join the Making Tax Digital service now but you will be required to follow Making Tax digital VAT rules for your first return starting on or after April 2024.

So, my advice to you is to make sure you get your self-assessment tax return completed by 31st January as you never know what’s around the corner that could delay you (or your accountant) in February to stop it being completed.


Making Tax digital doable, chartered account in Berkshire

Making Tax Digital Doable for Income Tax Self-Assessment

A few years ago, the Conservatives pledged to abolish the tax return.

Bravo!” I hear you cry!

Of course, accountants like me despaired, we’re talking head in hands time.

Naturally, the taxpayer went “woo hoo” and gave it no more thought.

I don’t blame you one bit.

However….as ever, the tax devil was in the detail. Cue sneaking music…(Enter stage left, creeping).

The Treasury believes they are missing lots of tax revenue by people under declaring income or over declaring allowable expenses, so this tax gap exists. By fixing this, then there will be more money slushing around the public purse in order to give back to the people that need it.

However….to do that, need “more up-to-date information about businesses and their finances” to enable “easier identification and better targeting for taxpayer support”.

And lo…the time will soon be upon us when we will have to embrace “Making Tax Digital” because guess what, the tax return hasn’t really been abolished, it has just been tweaked!

Help! What will I have to do if it applies to me Louise?

Don’t panic Mr Mainwaring!

Here’s the situation in a nutshell:

● Keep digital records of all business or property income & expenses
● Send quarterly updates direct to HMRC electronically with no human intervention
● Submit an end of period statement to finalise the self-employment accounts
● Do a finalisation return which then pulls in all the other sections of the tax return.

Now, I guess you have spotted the fun – this is 6 returns for each tax year! It is a “big bang” approach in that everybody needs to go on this from the 1st April 2024.

“OH PHEW!” That’s AGES away” I hear you cry!

Not so fast! Go to the dressing up box and find your best thinking cap, you will need it.

OK, thinking cap on, what do I need to do now Louise?

May I humbly suggest snaffling a copy of the FREE guide I have written just for you?

You can grab it here.

Don’t worry, I’m not going to spam you!

Watch this quick video and be reassured:



Meanwhile, get thinking.

You need to know these things and think about what you need to do to comply with the changes.

Look at it as an opportunity to understand where your money comes from, but more importantly, being able to analyse where your money goes.

● Do you need to spend £5K a year at various coffee take-away places?
● Do you need all these subscriptions for things you never use?

Seeing this as you go along can really hammer home what works for you and what works against you. That £4.99 a month subscription is not very much, but if you have 3 or 4 of them, that can be £20 a month going out the window for no reason. The benefit is better management of your business.

There’s a lot to cover which i cannot possibly summarise in a blog, so grab the free report and you can find out the following:

● Who is caught by MTD ITSA?
● What YOU will have to do.
● All about paying tax quarterly
● Any exceptions to this whole thing
● Can you leave the system?
● What software you might need
● Potential complications and other banana skins

What can Louise and her team do to help me?

Firstly, we will be keeping you up to date with as many webinars as we can for when changes take place and will start to review available software after the tax return filing season is over, plus considering what we can do to help you with your bookkeeping.

Updates will be on our website and in our Facebook groups for performers

(), plus for clients and those on our mailing list, there will be regular updates from February 2022.

May I humbly suggest snaffling a copy of the FREE guide I have written just for you – Making Tax Digital Doable? You can grab it here, don’t worry, I’m not going to spam you!