Tax Credits - Grrrr
Currently I have a full time job (40hrs per week, 52weeks per year) and do some IT work privately outside this (which my employer is aware of). I am in a position now where if I earn £1,500 in a year on top of my 'normal' salary, it will push me over the £25,000 barrier and I will loose £3,000 a year in tax credits. I like to declare what I earn and keep it all above board. My private income goes through a limited company. Anyone got any tips? Obviously if I work enough to cover the loss, I won't gain anything because that is pretty much all I will be doing! I won't actually be getting anything extra. Great system this........
I think you've answered your own question - once you're earning x amount then tax credits no longer apply.
No, my question is this;
Originally Posted by Michael
If I earn £1,500, I will loose £3,000, therefore I will actually be £1,500 worse off. Using my limited company or any other method, is there a way around this, legally obviously!
Pay to see a proper accountant, that's what I did and in the long run saved me a lot of money
I did. I'm now after a second opinion....
Originally Posted by Danp
And it saves you having to deal with the people who run the system. Last contact I had with them, I couldn't understand the woman AT ALL. Being the son of a Liverpool lad, I speak Scouse, but SHEESH!
Originally Posted by Danp
Can you offset some of the earnings? Maybe buy yourself a laptop or buy some training software
My OH's father is a very good accountant, I can put you in touch if you require?
How did you get tax credits up to £25k? I assume you have kids?
Anything tax deductable can keep you under the limit. Tools, fuel to jobs (provided you keep the receipts), any uniform you have.
Look up tax deductions on the HNRC. I mihht be able to jump on the database later and give you a list.
@Jawloms Here are the tax deductible items/expenses (enjoy this!)
Fuel for business mileage, a log will be needed for the car so you can properly show how many miles you are driving, and any VAT receipts for the fuel expenses will be needed. Business mileage is mileage you travel doing your job. It can include travel to a temporary work place but it doesn't include: normal travel between home (or anywhere that is not a workplace) and your permanent workplace or private travel.
For example, you use your own car for 900 business miles. The approved amount is £405 (900 times 45p). Your Mileage Allowance Relief is £405. The Mileage Allowance Relief will reduce the amount of income you pay tax on, so your tax bill will reduce by £405 at 20% (if you're a basic rate taxpayer) or at 40% (if you're a higher rate taxpayer) and at 50% (if you're an additional rate taxpayer).
Records you must keep
You need to keep records of dates, mileage and details of all work journeys. The tax office needs this information to make expenses deductions for you. You also need them to get any Mileage Allowance Relief.
As a general rule an employee can't get tax relief for the cost of clothing they wear to work - but there are some exceptions. For example, if you work in a sector like the building trade or the metal working industry you'll have to wear protective clothing like: overalls, gloves, boots, helmets
If you must pay for the cost of repairing, cleaning or replacing this type of specialist clothing yourself and your employer doesn't reimburse you, then you are entitled to tax relief. However, you cannot claim for the initial cost of buying this clothing.
You are also entitled to tax relief if you have to buy - out of your own money - the tools you need to be able to do your work. For example, if you're a hairdresser your employer might require you to provide your own scissors. The tax relief also applies to the cost of maintaining and replacing the tools.
You can get tax relief on the cost of repairing, cleaning or replacing a uniform if: it's a recognisable uniform that shows you've got a certain sort of job - like a nurse or police uniform, your employer requires you to wear it while you're working, you've got to pay for it yourself.
Before you contact HMRC you’ll need to have all the following information to hand: name and address of your employer (or yourself if self employed), what expenses you are claiming for, for example the costs of laundering your uniform, the industry you work in, your occupation or job title, details of any laundry or cleaning services provided by your employer (or self), details of payment or vouchers provided by your employer (or self) to cover laundry or other costs.
Professional fees and subscriptions
It may be that in order to do your job you need to have your name included on a professional register or to have a special licence. Or it could be that it's very helpful to belong to an organisation whose activities are necessary to your work. Either way you'll pay registration fees or membership subscriptions - usually every year. You may be able to deduct the cost of these from your taxable income and reduce the amount of tax you pay. You may get tax relief on professional fees and subscriptions if:
you have registered, obtained a licence or become a member of the organisation in question because it's necessary to your work, or HM Revenue & Customs (HMRC) has approved the organisation you're a member of.
You can't get tax relief on any fees and subscriptions that you pay to an organisation that HMRC hasn't approved.
You won't be entitled to tax relief: on a life membership subscription. if you haven't paid for the allowable professional fees and subscriptions yourself - for example if your employer has paid them and has agreed a 'dispensation' with HMRC.
When HMRC approves an organisation and adds it to the HMRC list they ask the organisation to let their members know that they might be entitled to tax relief on their fees or subscriptions. Your organisation can tell you how much you are allowed to deduct.