This week's U-turn by the government over increasing national insurance contributions for the self employed is good news for all those who are self employed in the adult entertainment industry. Don't forget that if you're an escort you must be self employed to avoid problems with HMRC and Companies House.
It has, however, left a £2bn hole in the government's finances which will have to be filled before the start of the next tax year (April 2018). Most tax experts expect the government to announce new measures to collect this money from the self employed rather than from taxpayers as a whole.
Which begs the question what can be done to minimise the extra tax/national insurance payable.
My advice is to claim all the expenses you can to minimise the amount on which your tax is based.
I see too many people failing to claim the expenses which they should be claiming. Escorts failing to claim for condoms because they've described themselves as models, therapists, etc. Webcammers failing to claim for toys because HMRC won't approve. If it's an allowable business expense HMRC will allow it.
Careless bookkeeping also costs money. If you spent £100 on a hotel bill but failed to record it that's just cost you an extra £29 in tax and national insurance. Bookkeeping is a pain. Everyone hates it, even accountants but it does save you money.
And remember the cardinal rule, if you're not sure it's allowable make sure you record it. Let your accountant decide. At worst it'll be rejected but hopefully it will be allowed.
Last week's Budget was proof that the government is going to hit the self employed. The U-turn has given us some breathing space. Let's make sure we use it.
It has, however, left a £2bn hole in the government's finances which will have to be filled before the start of the next tax year (April 2018). Most tax experts expect the government to announce new measures to collect this money from the self employed rather than from taxpayers as a whole.
Which begs the question what can be done to minimise the extra tax/national insurance payable.
My advice is to claim all the expenses you can to minimise the amount on which your tax is based.
I see too many people failing to claim the expenses which they should be claiming. Escorts failing to claim for condoms because they've described themselves as models, therapists, etc. Webcammers failing to claim for toys because HMRC won't approve. If it's an allowable business expense HMRC will allow it.
Careless bookkeeping also costs money. If you spent £100 on a hotel bill but failed to record it that's just cost you an extra £29 in tax and national insurance. Bookkeeping is a pain. Everyone hates it, even accountants but it does save you money.
And remember the cardinal rule, if you're not sure it's allowable make sure you record it. Let your accountant decide. At worst it'll be rejected but hopefully it will be allowed.
Last week's Budget was proof that the government is going to hit the self employed. The U-turn has given us some breathing space. Let's make sure we use it.
