Mortgages? Don't wait to be turned down on the high street...
Whether trying to buy your first home, moving up the property ladder or adding to your portfolio of assets you may need to consider your mortgage options. Here at Genie Accountancy we work closely with ContractorFinancials who can help freelancers and contractors who often struggle to secure a mortgage.
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Topics: Genie Accountancy, Freelancers
Number of IR35 investigations by HMRC quadruples in the last year
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Topics: Genie Accountancy, HMRC
From 2015 HMRC can access your bank account if you don’t pay up!
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Topics: Tax Evasion, Genie Accountancy, Accountancy advice, Tax return, HMRC
'I had a run-in with a cow' - top ten excuses for late tax returns!
HMRC have revealed the ‘top ten oddest excuses’ for late tax returns. Among the reasons people have given for sending in their returns late include a self-employed builder who blamed the death of a goldfish and a woman who blamed a volcanic eruption.
The list is as follows:
1. My pet goldfish died (self-employed builder);
2. I had a run-in with a cow (Midlands farmer);
3. After seeing a volcanic eruption on the news, I couldn’t concentrate on anything else (London woman);
4. My wife won’t give me my mail (self-employed trader);
5. My husband told me the deadline was 31 March, and I believed him (Leicester hairdresser);
6. I’ve been far too busy touring the country with my one-man play (Coventry writer);
7. My bad back means I can’t go upstairs. That’s where my tax return is (a working taxi driver);
8. I’ve been cruising round the world in my yacht, and only picking up post when I’m on dry land (South East man);
9. Our business doesn’t really do anything (Kent financial services firm); and
10. I’ve been too busy submitting my clients’ tax returns (London accountant).
All of these taxpayers received a £100 penalty from (HMRC) for filing late and whilst they tried to appeal against the decision, their excuses were seen as unreasonable and they were unsuccessful.
HMRC are human and they do acknowledge exceptional circumstances when a “reasonable excuse” may exist, but these are rare and the best advice is to file your Self Assessment Return and pay the tax you owe by the 31 January 2014, to avoid any late filing penalties. Remember a late filing penalty applies for a late return even if you have no tax bill.
Genie Accountancy can help your file your return if you have not already done so. Contact one of our specialist accountants now to avoid unnecessary penalties.
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Topics: Genie Accountancy, Tax return
Are you a contractor and confused about how pensions work?
Are you on track to reach your retirement goals?When it comes to planning your retirement, it is important not to underestimate how much income you will need per year to maintain a comfortable living standard. A recent report by Prudential shows that those who will be retiring within the next 12 months will be expecting a larger income than those who took their pensions in the last 2 years at £15,800, £500 higher than last year. This optimism comes after a five year period in which people’s retirement plans had been crushed by the market crash. With those retiring before the recession in 2008 expecting to command an average income of £18,700, nearly £3000 higher.
Don’t underestimate the cost of retirement
Although it is good news that retirement incomes are rising, Contractors should consider whether an income of £15,800 a year would be limiting when it comes to enjoying a comfortable retirement. In the Autumn Statement, Chancellor George Osborne speculated that the age at which you can receive the state pension could rise to 69 by the late 2040s. Meaning that Contractors currently in their 20s and early 30s may have to work into their 70s before being eligible for the state pension.
According to a study by BlackRock, British pension investors hope to achieve an annual household income in retirement of £27,400, much higher than the average figures of what pensioner’s will expect this year. In order to achieve this level of income, these investors think they would only need to save £259,000. Unfortunately, the truth of the matter is that with life expectancy on the rise, they would actually need to save closer to £525,000 in order to achieve their goal.
Make the most of the £50,000 annual allowance
In order to avoid financial worries when it comes to retirement, Contractors should ensure they are taking full advantage of the annual allowance that you can invest up to per year and receive tax relief at your highest nominal rate. This tax year the annual allowance has been £50,000 but it will go down to £40,000 from April 2014, this means that Contractors should waste no time in investing up to the allowance before tax year end.
If you have built up a pot of retained profits in your limited company then you could invest them directly in to a pension and avoid a hefty corporation tax bill. Whilst this will mean delaying getting your hands on the cash until you reach age 55, it does represent a very tax efficient method of transferring funds from company to personal hands. At 55 you can choose to release up to 25% of your pension as a tax free lump sum with the remainder left to grow or used to provide an income.
As long as your day to day expenses are covered and you have taken any salary or dividends that you require, you should be able to invest as much of your remaining income and retained profits into a pension as you would like because there is no relationship between salary and the size of a company contribution. As funds are transferred directly, there is no personal income tax or national insurance deduction and you also save on the corporation tax that you would otherwise have paid on this year’s profits.
Don’t delay, invest today
When it comes to organising your pension don’t leave it too late. Our experienced pension and investment Advisers are on hand to help, whether you are 48 or 28 they will advise you on the best pension to suit your needs and retirement goals.
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Topics: Self Employed, Genie Accountancy, Pensions advice, Accountancy advice, Mortgage advice
Genie Accountancy - a helping hand with Mortgages.
Over recent years Freelancers and Contractors have grown in numbers and now represent a substantial element of the labour market. Many contractors choose to enter the labour market through their own Personal Service company and as such they are able to structure their rewards in a way that is most suited to their circumstances. Traditionally many contractors choose to withdraw funds through a combination of salary and dividends – this is often a concept not understood by high street lenders and is sometimes cited as a barrier to choosing the contracting route.
A lifestyle decision to enter a contracting career and legitimate tax planning should not detract from a contractors ability to obtain a competitive mortgage. Genie Accountancy work closely with Contractor Financials who specialise in providing mortgage advice to contractors. Contractor Financials have negotiated specialist contract based underwriting with many of the well-known High Street Lenders that makes securing a competitive & affordable mortgage easy. Instead of looking at what the accounts of your limited company show, your mortgage will be based on a multiple of your annualised gross contract rate. This means that any tax saving methods you have in place will have no impact on your affordability calculation & you won’t need to present three years’ worth of accounts to prove your income. This often means you can borrow more than your permanent colleagues & at the same competitive rates.
Your first step on to the ladder
Before you start the exciting hunt for your perfect home, you need to have an idea of how much you can afford to borrow. You should work out what your expenses are per month, so that your repayments will be affordable for you. Worryingly 33% of first time buyers have put an offer on a property without knowing whether or not they could afford it but you needn’t fall in to this trap.
When you are ready to start the process of organising your mortgage, an Adviser at ContractorFinancials can arrange an agreement in principle from whichever mortgage lender you have chosen.
Once you have had an offer accepted on a property, ContractorFinancials handle the whole mortgage process for you & they won’t charge you a fee for specialist advice, saving you over £500.
Remortgaging to a better rate
If you already have a mortgage then you will already have an idea of what you want your monthly repayments to be but you might be surprised by how much you could save by remortgaging to a new fixed rate product.
A remortgage expert can help you look at the whole of the market to find a more competitive rate which could save you hundreds of pounds a year in repayments. Your new mortgage will depend largely on the valuation of your property but the expense of this is often covered by the new Lender, as are any legal fees, so you needn’t be concerned about the costs of remortgaging. If your property has risen in value then you may be able to release some capital to put towards home improvements or whatever you had in mind, alternatively you may wish to leave this capital where it is so that you can secure an even lower LTV remortgage & therefore access better rates.
More than a million first time buyers have entered the market since the base rate was cut to a 300 year low at 0.5% in early 2009 according to Lender Nationwide. Many of these first time buyers have yet to experience a rise in interest rates & some may be shocked to see their repayments increase when that day comes.
The guidelines announced as part of the Bank of England’s (BOE) Forward Guidance scheme last year, explained that when unemployment hits 7%, the BOE may look to increase the base rate. This was not expected to happen until 2016, however the economy has grown at a meteoric rate since then & unemployment is now standing at 7.1%.
Getting a fixed rate mortgage
Contractors who are concerned about the potential increase in interest rates, should remortgage on to a fixed rate Contractor mortgage to avoid being affected when rates start to move. A fixed rate mortgage is great for Contractors who want to know exactly what their monthly repayments will be for a certain amount of time. When this period is up, you can always remortgage onto another fixed rate if you need to.
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Topics: Self Employed, Genie Accountancy, Accountancy advice