Just found this forum and I like the way you all help each other out.
First of all let me state that I am 61 and wondering if I am too old to start a new career. I have been self employed for over 25 years and would like to stay that way (I'm happy with it).
I was a London taxi driver for 17 years and am now a tour guide but I think it's time for a fresh start and work part time from home if possible.
I have done my own and my wife's tax returns for the past 20 years. I also started do tax returns for taxi driver colleagues of mine who bought me the odd bear and saved money by not paying an accountant. I am not trying to say I know it all as I don't, but I do have a good understanding of tax and what you can and can't claim for including WDA. Trouble is I am now doing 9 tax returns without getting paid (maybe I should start by charging the wife!).
Now here's what I am thinking about. I see the ICB have a self assessment qualification but in order to take that exam I need to do levels 2 & 3 bookkeeping first.
I will admit I have no interest in offering bookkeeping services so is there any other way of taking a self assessment qualification, either with the ICB or another body, without bookkeeping. I do agree that by taking levels 2 & 3 it may give me more of an understanding of accountancy and if that is the only way then that's what I will do.
My ultimate goal is to be able to offer self assessment services to a large group of taxi drivers, tour guides and other people that I already know and hopefully attract more customers in the future.
My work as a tour guide is seasonal so I would hope to supplement this with offering services as above. I also still have my taxi licence.
Please let me have your thoughts on the above. I can take all comments good or bad and if you think I am out of my depth please say so.
A little test for you. I have a black cab I have just paid £20000 for, and my profit for the year is £23000, how would you apply the capital allowances If I only made £12000 how would you apply them.
I am a minicab driver and have bought a Vauxhall Zafira 2L for £20000 How would you apply the capital allowances in the same scenarios
3 years later the vehicle in both scenarios is sold. What action would you take on the capital allowances side?
PS I did taxi driving for 12 years, so not quite as long as you
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
A little test for you. I have a black cab I have just paid £20000 for, and my profit for the year is £23000, how would you apply the capital allowances If I only made £12000 how would you apply them.
I am a minicab driver and have bought a Vauxhall Zafira 2L for £20000 How would you apply the capital allowances in the same scenarios
3 years later the vehicle in both scenarios is sold. What action would you take on the capital allowances side?
PS I did taxi driving for 12 years, so not quite as long as you
Hi John and thanks for the test. I think!
If you had a profit of £23000 and bought a black cab for £20000 you would be able to claim £1600 allowance against your tax. I believe you can claim more in the first year but this would have an impact on following years. The allowance for a black cab is 8% as it has high emissions.
If you only made a profit of £12000 it would not be worth claiming the WDA as you would already have £11000 tax allowance so would only pay tax on £1000 of £40 and £354 class 4 NI for that year. You don't have to claim your WDA.
As for the mini cab driver I believe the rates would be the same as a 2L Zafira is over 130g/km so is only allowed the 8%. As most mini cab drivers also use the car for personal use it might be better to claim a mileage allowance instead and claim 45p per mile for the first 10000 mile and 25p thereafter. If the mini cab driver goes down this route they can not claim other motoring expenses.
I believe there are also special circumstances where you can pay more off your WDA but I don't know what they are. I also believe that the maximum WDA on a taxi is £3000.
I hope I have the correct answers but as I say I don't claim to know it all and am hoping I will learn by taking the course.
Hi, for tax look at the ATT, not to be confused with the AAT - it might be overkill for what you say you need. But folk who have 'simple' earnings seldom do! Extra knowledge pays you back.
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
If you had a profit of £23000 and bought a black cab for £20000 you would be able to claim £1600 allowance against your tax. I believe you can claim more in the first year but this would have an impact on following years. The allowance for a black cab is 8% as it has high emissions.
Black cabs (and other purpose built vehicles) are treated the same way as commercial vehicles so qualify for AIA. In this scenario I would use £12000 AIA and write the rest down at 8% No tax or NI to pay the first year.
If you only made a profit of £12000 it would not be worth claiming the WDA as you would already have £11000 tax allowance so would only pay tax on £1000 of £40 and £354 class 4 NI for that year. You don't have to claim your WDA.
Wouldn't £1000 profit be £200 tax? If the pool is £1000 or less you can write it off in one go, eliminating the tax and reducing the ni
As for the mini cab driver I believe the rates would be the same as a 2L Zafira is over 130g/km so is only allowed the 8%. As most mini cab drivers also use the car for personal use it might be better to claim a mileage allowance instead and claim 45p per mile for the first 10000 mile and 25p thereafter. If the mini cab driver goes down this route they can not claim other motoring expenses.
That's a better answer than I expected as when I wrote the question I hadn't thought about the 45p allowance. I usually go on the circumstances at the time. I have two minicab clients and on one of them the WDA rate was the better but on a car purchase last year I applied the 45p rate as it was my only option (wife bought the car on finance) but it worked out well. Other one is first year this year but there will be very minimum private use.
I believe there are also special circumstances where you can pay more off your WDA but I don't know what they are. I also believe that the maximum WDA on a taxi is £3000.
Its when it falls below £1000 as indicated above. The £3000 WDA was abolished in 2009
The test wasn't so much to trip you up as to show that (specially if you intend going into this for profit) that its important to keep up with the regs, as they change regularly. That said I dont know it all either, but the 8% was spot on, which was prevalent in my mind when setting the question.
I think it's well worth you taking the level 2 and 3 and then doing the self assessment exam . Wishing you well with it all, it sounds like a good plan.
-- Edited by Leger on Tuesday 7th of February 2017 06:32:05 PM
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
John, I have no idea where the £40 came from as I know it's £200. 20% of £1000 Doh!!!
Am I right in thinking the AIA is only available on new vehicles? This is just a question and nothing to do with the scenarios above where you only paid £20000 for the cab.
Hi Dave I think the best advice has already been given by Johnny and John - either study the ATT or IAB. In fact I would go so far as to say you should be looking at the tax modules for the AAT Level 4 as your start point (with that followed by ATT). There is after all a very good reason why such a topic is studied at the higher levels and why there is a need to have some experience under your belt before you go offering services to clients. The land is littered with folk who think they can, get away with not doing it right for a long long time and then eventually have HMRC catch up with them. Then they get the big whopping sting in the tail of the fines and penalties, which are much stricter and way more of a blame culture in the last couple of years than they were in the past, with the blame apportioned right at the door of the taxpayer in the majority of cases.
Whilst you clearly have managed to gain some understanding of tax returns, there is a long way to go. Its not all just about capital allowances of course. Interesting about the allowable expenses some folk they think they can get away with putting through, just because their mates do. Plus what about when they have other income, plus other tax 'issues'.
I dont think I know a taxi driver who would do under 10000 miles a year!!!!! John clearly has one. Maybe thats just local to me.
Plus who prepares the Accounts for the situations when they are required (and there are quite a few scenarious when they are) which you may not yet have come across personally or within your group of pals. Believe me, a fair few people on this site have had to trawl back through a number of years worth of records to try to create a set of accounts for folk who have just willy nilly prepared their own tax returns. That has proved extremely costly for the said clients - well lets face it they are almost paying for some of the work to be done twice.
Also - beward accepting any form of 'payment' from your pals...be it a few beers or more - that could come under the 'barter' requirements.
In addition - you need to consider the following:- MLR - You HAVE to have this legally (you can get via HMRC) PII - not a legal requirement but you would be barking mad not to have any. Lets face it if any one of you so called buddies end up with a tax inspection in the next few years, you will rapidly lose a mate and they will be suing the arse off your pants as well as taking your house, taxi and maybe your wife (the latter you mgiht be happy to lose!) MTD - a big thing that is happening in the industry Software - you will need third party software for filings in future.
Lots more that could be covered off. Including the answer to the AIA- which I think is inappropriate at this stage for this forum for such a generalised question. Certainly if you need any help in your studies then that can be given where appropriate.
Please do not take this the wrong way. Im not trying to put you off doing something - what Im trying to say is - get qualified first and do it in the right way.
Edited for a typo, there might be more. No glasses - again!
-- Edited by Cheshire on Tuesday 7th of February 2017 08:41:38 PM
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
