Greece is asking for a loan extension. What does this actually look like? Let’s say we borrow £100,000 over 25 years at an interest rate of 4% per year and with the intention of repaying a constant amount each year, which is the typical mortgage. The repayments needed can be calculated on an Excel spreadsheet as £6,401.20 per year.
It’s time to remind ourselves that Napoleon lost the Battle of Waterloo. He was defeated, in part, by an innovative new tax called income tax, which was introduced as a temporary measure, and intended to be in substance a voluntary levy raised in order to defeat the common enemy.
Politicians love to moralise about how we should all be paying our fair share of taxes. Well, can anyone remember non-corporate distribution tax? This tax:
(1) Never appeared in any manifesto.
(2) Was introduced and repealed within the lifetime of one parliament.
(3) Is rather too complicated for the average MP who voted in favour of it to be able to do even the simplest calculations.
This information is targeted at small owner-managed companies. It is assumed that the owners do not have any children about to go to university, or already at university, for whom a student loan application is needed.
Let’s suppose that Business A has entered into a maintenance contract with Business B to keep the computers of Business B in working order. The contract was started on 1st November, Business B paid £1,200 cash up front, and both companies have a year end of 31st December.
Our business strategy is to be a product development strategy. We will use new technology so we can offer a service which is cheaper than anyone else. Once we have some clients, we will introduce more new technology (a spreadsheet for everything for example) so we can better meet the needs of our clients. Then we will stop undercutting (but protecting the position of clients who came in early) and concentrate on being good accountants.
The January 31st Self Assessment deadline is now over, and it’s a quiet time for accountants until after Easter. There is a prospect of sitting around with nothing to do, although we will be out promoting our services. We would like to take on some VAT work. This has to be done all year round, and in addition, our software allows us to start work on the preparation of the annual accounts without duplication of activity. This in turn takes the stress off the next busy period in December/January. Our innovative software has solved a major problem that accountants have. This is a pleasant discovery which wasn’t foreseen.
If you’re in business and you want to be paid for some goods or services you have supplied, you need to issue a document called an invoice. This will provide details of your business, what you have supplied, the amount, any other charges, and any Value Added Tax. The bottom line of this invoice will show what you are owed.
If you inherit a stamp collection and sell it on eBay as a one-off transaction, then no tax is likely to be payable. There might be a theoretical charge to Capital Gains Tax, but in practice this is a relatively lenient tax and often the charge turns out to be nothing. However, if you make a habit of buying stamps as and when you can and selling them online, then you are now engaged in a trade and your profits are chargeable to Income Tax.