Electric Trainer

Paying less tax

One of the parts of my business skills workshops that people enjoy the most is a simple exercise called 'match the expense to the tax return'.

OK - so it's not exactly a catchy title for a game, but it's more fun than it sounds.

This financial year the tax people (HMRC) have changed a few of the guidelines for small businesses, and even some quite hardened freelances are apparently unaware of the changes.

The good news is that there is a £50K allowance for small businesses to cover capital equipment this year. That's different from previous years, where you've only been able to put 50% of the cost of a capital item down against tax.

That makes this rather a good year to buy kit, presuming you have any cash at all what with the credit crisis.

In fact that's such good news I hereby predict that the rules will change again within a year or so. Let's see.

HMRC have also clarified some of the allowances if you use your home for part of your business. Everyone knows about heating and lighting (percentage of), but there are some extras.

Read the updated guidance here - and make sure you bring it up with your accountant!

Taxing times for the nation

It's not often I get to feel smug - at least not with justification.

I've been mesmerised by the sudden realisation throughout the land that Gordon Brown effectively doubled the starting rate of tax in the 2007 budget.

Doubled?? Surely you mean "abolished"? Well don't get me started (again). I went through all that a year ago.

It amazes me that almost no one saw this tax change as a problem a year ago. Even my most fiscally challenged trainees can spot this during our business skills training.

I have no time for Labour MPs who are suddenly feeling rebellious. Last year they either didn't realise their Chancellor was pulling a fast one, or if they did realise, they thought they could keep it under the carpet.

Either way they look less than in touch with the reality of their constituents, and at worst highly cynical.

But that was before the election that never was, and plummeting approval ratings. Now some Labour MPs are worried about their seats. Surprise surprise.

As Polly Toynbee writes today, the problem is that people don't seem to perceive a need for taxes at all. Although I don't agree that New Labour never made the case for tax increases. Tony Blair did that in 1997, saying you had to pay for the services you want.

Perhaps a bit of honesty on taxes - and some fairness - is long overdue. And perhaps more journalists need to cover taxation stories in ways that make sense to their audience.

New Year Greetings

Happy new year!

As another April 6th flies past more people are slowly waking up to the fact that Gordon Brown pulled a fast one on small companies in last month's budget. Big business gets a 2p cut in corporation tax. Small business gets a 3p rise in corporation tax. How's that meant to work?

I've been wondering why so many people missed it. David Cameron has been taunting Tony Blair about 'not seeming to realise that there were two types of corporation tax'. I get the distinct impression that he didn't realise either until one of his less well-off lackeys pointed it out some time in the week between the Budget and the next PMQs.

I'll admit it's a bit of a pain updating all our training materials following each Budget, but one of the pleasurable side effects for a news junkie like me is comparing the coverage in all the papers the day after.

Almost all talked about the 'abolition' of the starting rate of income tax - a phrase that the Treasury uses. Now in my version of English abolishing a tax is a thing to be celebrated. But in Treasury-speak abolishing the starting rate actually means turning it into the standard rate. This means doubling it - from 10% to 20%.

None of the broadsheets pointed this out in ways that you or I would understand. Which was the only paper to nail it? Step forward the Sun. And to prove it here's the clever - and remarkably simple - graphic they used.