Retired? How best to earn some extra cash

retirement moneyIt’s extremely unfortunate, but with rising living costs, many people who’ve retired are discovering they have to take on work to make ends meet. Sometimes pensions may just about cover expenses, but not provide people with the cash to enjoy things they’ve always wanted to do. In other scenarios, retirees’ income isn’t even enough to pay for food, heating and the plethora of other expenses associated with modern day life. Often, discovering they have to go back to work can be very upsetting for people. But there is a great range of options available if individuals need to make some extra cash.

One great way to earn some extra money is to utilise the skills people already hold. For example, nurses can find an abundance of work by picking up a few temporary shifts here and there. Home care services also require nurses, and a variety of shift lengths allow people to choose the best working pattern to suit their needs. Likewise, retired accountants can find work bookkeeping or helping contractors fill out their self-assessment forms. Other retirees who have plumbing or carpentry skills make the ideal local handyman for neighbours to call on, whilst those who have creative expertise, such as photography, could turn to wedding and event photography to make some extra money.

Another great option for innovative and entrepreneurial retirees’ is to set up a small home business. Those with good English and writing skills could become copywriters, creating content that can be used for websites and press releases around the world. Individuals who love crafting could set up an eBay or Etsy shop and sell their work, whilst keen bakers and cooks can turn ingredients into artisan products to be sold at farmers’ markets or to local restaurants.

For those not wanting to set up a business, part-time work might also be found close to home. Many supermarkets and high street stores have policies encouraging the hiring of older people, so it’s worth visiting these shops and taking a moment to speak to a manager to see if any vacancies are available. Local newspaper and newsagent windows are also a great source of wanted ads, and part time or temporary work can often be found listed there.

It’s important for anyone wanting to take on extra work to pay very close attention to their finances and ensure they don’t start to earn too much. Whilst many people want to earn a little money to supplement their income, earning too much could put pensions into jeopardy, so it’s crucial to do a little research and discover the personal income limits before undertaking work. Unfortunately, there are also a few unscrupulous individuals out there waiting to take advantage of older people, so individuals wanting work should never send money to agencies claiming to find jobs for a fee.

Taking on a small job when retiring can actually be very enjoyable, not only providing a little bit of extra cash, but also giving people an entirely new social circle; and, with retiring being an ideal time to make a career change and try something new, getting a job can bring about a new lease of life.

Running a business from home? How to minimise your tax liability

your tax liabilityA study by the FSB has reported that many UK small business owners are struggling to manage their accounts properly. On average, 12 working days are lost each year to the accounting process and the total cost to small businesses for tax administration is around £500 million a year.

Around 50 per cent of all small businesses spend around two to eight hours each month understanding, calculating and completing tax forms. On top of this, 11 per cent of businesses spend between two and six days every month on financial administration.

For small businesses, good tax management can make or break the company. Having a thorough understanding of the savings that can be made on income tax is vital for businesses, but this can be very time consuming. In addition to a personal allowance, which should be fully utilised to reduce a tax bill, companies can also make further tax reductions through various tax allowable expenses.

Tax allowable expenses

Capital allowances refer to the tax relief on certain items that are vital for business. Such items include cars, computers and machinery. There is a limit to how much each person can claim in a year, which is called the capital allowance or annual investment allowance. The current annual investment allowance is £250,000. Businesses cannot claim tax relief on the whole cost, but instead annual allowances are written down by claiming a percentage of the total cost each year following the initial purchase.

Tax deductions can be made against the cost of running a car for business. It is important to keep an accurate record of business car use, as private car use is not tax deductible. The easiest way to manage this is to just claim on the fuel used in travelling on business and use a business card to purchase the fuel. Total mileage is used to calculate the allowance, so also keep a record of how many miles are travelled on business, and how many for private use.

Record keeping

Good record keeping is vital for all businesses. Without proof of every purchase and sale a company cannot provide proof of their tax liability. Although self-assessment means that most of the time a small home based business will not need to provide documentary evidence, sometimes HMRC do carry out inspections on small businesses.

Companies should keep expenditure receipts, at least all that are included in the tax calculation. If driving allowance is being claimed fuel receipts are the best evidence that the car is being used for business.

Where to get information

The best source of advice is the HMRC website. Tax rules and allowances change often and privately run websites sometimes display out-of-date information. If you prefer to have printed information, leaflets and advice can be found at your local Citizens Advice Bureau. Many larger libraries also have a business section and stock leaflets and other information to assist small business owners.

Employing a qualified accountant or a tax specialist

Hiring a tax specialist can have many benefits although the main objective is to reduce the size of the tax liability. HMRC adjust the tax rules every year and it is very difficult for entrepreneurs to keep up to date with these changes while also devoting sufficient time to running the business. A good accountant is a wise investment and the savings made in taxation and other financial dealings might well recoup the professional fees payable.

Self-assessment tax returns

Sole traders who are trading under their own name can submit an annual self-assessment. This can be submitted online or in paper form. Online is easier and has a later deadline, so is the preferred option. For those with a simple business structure this is a quick and easy process. However, for more complex businesses professional assistance may still be required.

Umbrella companies

Due to the growing complexity of financial administration and taxation many small businesses and sole traders are using the services of umbrella companies to manage their finances. An umbrella company acts as a parent company for a sole trader or small business. This means that the umbrella company manages all the paperwork and files tax returns for their client. The client is paid a monthly salary via a PAYE system.

The biggest advantage for sole traders is that they can focus on their core business rather than wasting hours every week with administration. Savings are also made through improved tax avoidance. Umbrella companies are managed by skilled accountants and tax specialists who make every tax deduction that is possible for their clients.