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Rewarding Yourself

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neversay
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Rewarding Yourself

#156164

Postby neversay » July 30th, 2018, 5:20 pm

Running a business can involve hard work, long hours, personal risk, stress and even 2am cold sweats (anyone?). Far from the 'fat cat' image the hard-left try to cultivate, running a typical business is more Ford Escort than high-class escort. After all, we all pay a lot of taxes and, sadly, the latter isn't tax deductible. So I was wondering...

How do you reward yourself?

It seems to me that most of the 'perks' that once sweetened the pain of all the risk and effort have all but disappeared. Today's options seem to be:
  • Non-financial rewards - like freedom, autonomy, working hours/holidays, working conditions, etc.
  • Salary - always painful to see the double whammy of personal and business deductions
  • Dividends - but now only £2k tax-free
  • Pensions - SIPP and tax-free lump sums at 55? (assuming it survives long enough)
  • Expenses - e.g. meals out, hotel stays, attract HMRC's attention if not qualifying
  • Equipment - e.g. laptops, attract HMRC's attention if for private use
  • Life/Critical Illness Cover - Aviva's Relevant Life policies have just been closed to new customers
  • Health Insurance - taxable
  • Car - taxable
  • Cycle to work - mostly cheaper to buy a bike privately at sale prices
  • VCTs etc - medium/long term
  • Film schemes/Offshore trusts - mostly gone
[*] Entrepreneur's Relief - not much use if you need income as you go along

What ways are you rewarding yourself for all the pain and heartache?

Go on, spill the beans.
Last edited by neversay on July 30th, 2018, 5:33 pm, edited 1 time in total.

Snorvey
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Re: Rewarding Yourself

#156170

Postby Snorvey » July 30th, 2018, 5:32 pm

None of the above.

Well, 45p a mile and we still have RLAs I guess.

Oh, and a highly desirable auto enrolment scheme.

didds
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Re: Rewarding Yourself

#156172

Postby didds » July 30th, 2018, 5:46 pm

AIUI you can add mobile phone bills to that list as tax deductible etc.

probably changed now but ISTR at some stage you could claim a % of a "guard dog's" costs ? If you've got a "guard" dog of course.

use of home as office?

??

didds

neversay
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Re: Rewarding Yourself

#156174

Postby neversay » July 30th, 2018, 5:59 pm

@Snorvey - agreed on mileage. Forgive my ignorance though, what are RLAs? (lifetime allowances?). Was the highly desirable auto-enrolment tongue in cheek?

@Didds - yes, I forgot mobile ('business use only') and % home office (or £18 per month flat rate). Don't tempt me on a (tax-deductible) dog as that's what the kids want. Although I'm not sure HMRC would see their preferred Pug as a guard dog!

We also own the stationery supplies I suppose. I also used to charge my Amazon membership (includes free TV) as it was mostly business purchases, although I now note that they do free business accounts. Grrrr.

I'm still not sure it makes up for those early days and the cold sweats though... :-)

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Re: Rewarding Yourself

#156179

Postby Snorvey » July 30th, 2018, 6:44 pm

Forgive my ignorance though, what are RLAs? (lifetime allowances?).

RLA - Relevant Life Assurances.

Was the highly desirable auto-enrolment tongue in cheek?

Oh yes.

neversay
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Re: Rewarding Yourself

#156193

Postby neversay » July 30th, 2018, 8:14 pm

Thanks for the clarification. I have the Aviva Relevant Life policy that included critical illness cover but, as mentioned, that has been closed down by HRMC. Perhaps I am missing out on other tax-efficient forms of business protection...?

As for, auto-enrolment, part of my thinking was that the small incentives for being an entrepreneur are diminishing and so too are the incentives for employing others. It's unfortunate as I could create more new jobs but the overheads are just not worth the effort.

N.

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Re: Rewarding Yourself

#156198

Postby Snorvey » July 30th, 2018, 8:31 pm

There's still the employers NI allowance

https://www.gov.uk/claim-employment-allowance

And divs are still more efficient than salary I guess.

neversay
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Re: Rewarding Yourself

#156205

Postby neversay » July 30th, 2018, 9:12 pm

Snorvey wrote:And divs are still more efficient than salary I guess.


Quite true. Today's entrepreneurs have the £2k dividend tax threshold compared to £5k last year and before that dividend tax credits and lower rates.

Corporation tax at 19% on any dividends and retained profit :-( dropping to 18% in 2020 :-I

R&D tax credits.

I forgot Trivial benefits allowance - up to £50 a time, maximum £300 per year for each director, and £150 staff entertaining allowance -
https://www.gov.uk/expenses-and-benefit ... l-benefits

Do others use their P11Ds?

Dod101
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Re: Rewarding Yourself

#156207

Postby Dod101 » July 30th, 2018, 9:26 pm

None of you business owners need to do any of it so I suppose the 'Rewarding Yourself' must be the lifestyle which you have chosen so get on with it and enjoy!

Dod

neversay
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Re: Rewarding Yourself

#156219

Postby neversay » July 30th, 2018, 9:52 pm

Dod101 wrote:None of you business owners need to do any of it so I suppose the 'Rewarding Yourself' must be the lifestyle which you have chosen so get on with it and enjoy!

Dod


I appreciate your sentiment Dod and it is a choice that, as you say, we should enjoy (or move on).

On the flip side, if you talk to many business owners they often ask 'why do I bother?' and consider the merits of a (comparatively) secure role in the public sector. One business owner I know has just given up as he was tired of having all the stress of winning/delivering business while his well-compensated profit-sharing colleagues did the minimum they could. I fear for the British economy when entrepreneurship is so disincentivised.

Personally, I'm fortunate in having a nice/enjoyable/profitable business, but I don't have the motivation to grow it more, or starting another one, given the overheads, bureaucracy and diminishing returns. Perhaps if successive Governments stopped putting up so many barriers then I might reconsider.

N.

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Re: Rewarding Yourself

#156230

Postby supremetwo » July 30th, 2018, 11:41 pm

neversay wrote:On the flip side, if you talk to many business owners they often ask 'why do I bother?' and consider the merits of a (comparatively) secure role in the public sector. One business owner I know has just given up as he was tired of having all the stress of winning/delivering business while his well-compensated profit-sharing colleagues did the minimum they could. I fear for the British economy when entrepreneurship is so disincentivised.

Personally, I'm fortunate in having a nice/enjoyable/profitable business, but I don't have the motivation to grow it more, or starting another one, given the overheads, bureaucracy and diminishing returns. Perhaps if successive Governments stopped putting up so many barriers then I might reconsider.N.


My beef is inheritance tax, where the allowances and exemptions are so far behind inflation.
In the South, just your property is likely to use most of that even with recent additional exemptions.

Unless you leave the UK after you have been successful (or buy a farm), kiss Good Bye to 40% of your wealth.

I know there are trusts etc. but those are no use at all if you need the capital to expand a business.

Abolish IHT altogether (or raise the exemptions to USA levels) and more wealth will remain in the UK rather than departing for overseas and more wealth will come here.

That wealth is likely to generate more income tax, more VAT, more Council tax and more employment opportunities than IHT.

https://taxfoundation.org/estate-and-in ... und-world/

"Thirteen Countries or Tax Jurisdictions Have Repealed Inheritance or Estate Taxes Since 2000"

Macau 2001, Portugal 2004, Slovak Republic 2004, Sweden 2005 Russia 2005,

Hong Kong 2006, Hungary 2006, Singapore 2008 Austria 2008, Liechtenstein 2011,

Brunei 2013, Czech Republic 2014, Norway 2014.

Slarti
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Re: Rewarding Yourself

#156314

Postby Slarti » July 31st, 2018, 12:38 pm

neversay wrote:How do you reward yourself?

[list]
[*] Non-financial rewards - like freedom, autonomy, working hours/holidays, working conditions, etc.
[*] Expenses - e.g. meals out, hotel stays, attract HMRC's attention if not qualifying
[*] Equipment - e.g. laptops, attract HMRC's attention if for private use


For me it was the freedom not to have to work for idiots, who then took the credit for my work. Working hours were often longer than those who complained about consultants and productivity was way higher

Meals out and hotel stays were mainly a PITA. I'd rather have been at home with my wife.

Equipment, well I probably do have better computers (and more of them) than I would if I wasn't working in an area where they are required to function.

But, the one you didn't mention was the Annual General Meeting and company conference ;)
A weekend at a reasonable hotel for the 4 directors of the company (me, my partner and our wives) where we did the AGM and discussed what the year had been like and what we planned on doing the next year. Must have taken a good hour to sort that lot out.

Slarti

neversay
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Re: Rewarding Yourself

#156319

Postby neversay » July 31st, 2018, 12:51 pm

I run my own business but sadly still work for an idiot... ;)

Good idea on the AGM front. I agree on the business travel, hotel stays and meals. My waistline has increased (my bad) and I desperately miss the time away from my wife and kids. Moreover, after I have been away my wife suggests going out for a meal - which is usually the last thing I can face (the meal, not my wife!).

Itsallaguess
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Re: Rewarding Yourself

#156329

Postby Itsallaguess » July 31st, 2018, 1:08 pm

neversay wrote:
and I desperately miss the time away from my wife and kids.


Presumably you could just invent some meeting or other at some far off location if needed?

How would they ever know?

Itsallaguess

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Re: Rewarding Yourself

#156342

Postby Snorvey » July 31st, 2018, 1:45 pm

Create subsiduaries in the Netherlands and in the Caymans and have AGM's there. These foreign entities would then charge your UK business an 'intellectual property rights fee', which by pure co-incidence is exactly the same as the UK company's taxable profit.

As an example, you could name name the subsiduaries 'Takingthepiss.ned' & 'Waving2Fingers andlaughingattheUK.com'



Seriously though, most people (in this part of the world at least) are content with buying extremely expensive looking cars - normally enormous American style twincab 4x4 things - and sticking a tiny business sign on the side like 'Joe's Plumbers' ' or 'Beryl's Hairdressers'.

tea42
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Re: Rewarding Yourself

#156350

Postby tea42 » July 31st, 2018, 2:27 pm

The best bit for me was working in my own Engineering Company and no longer watching hard earned profits disappearing into the pockets of know nothing accountants drafted in to run the business for various vulture capitalists and opportunist spivs. Being your own boss and being able to dispense with useless drones, and make business decisions oneself is the ultimate reward. Back in the day (pre 2004) when I retired there were certainly more financial perks, especially those dividends. Since retirement i have managed to stuff a large proportion of our wealth into ISAs out of the reach of Spreadsheet Phil (for the time being… ) :D

neversay
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Re: Rewarding Yourself

#156371

Postby neversay » July 31st, 2018, 4:20 pm

@tea42 - I quite agree about dispensing with the drones and spivs, although I have to fight my control freak tendencies. It sounds like you came through it all at just the right time as the headwinds have been growing. Mind those ISAs though as I was reading somewhere the other day that an internal Labour party review has proposed them as an easy target for a Corbyn-led Government.

@Snorvey - If I didn't have morals, the offshoring route would be wonderful. It reminded me of an EU project on European Standards that I worked on had its annual conference in Acapulco. Ah, the European Union, now there's a real gravy train...

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Re: Rewarding Yourself

#156391

Postby ap8889 » July 31st, 2018, 6:01 pm

Great topic, neversay. Have a rec.

I was recently taken to the airport by a taxi driver who arranged his companies affairs to pay him a salary small enough that he retained access to some State benefits. Meanwhile the business disposed of the sales income he generated in the form of a lot of high end computer gear, a couple of IPhone Xs for the family as company directors and availability for personal use of vehicles nominally for "business purposes". The guy was a nice chap and I wished him well, but wouldn't have liked to be in his shoes if HMRC took a close interest.

neversay
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Re: Rewarding Yourself

#156422

Postby neversay » July 31st, 2018, 7:38 pm

Thanks @ap8889. I have had two HMRC inspections, both with no faults. Well, in one they insisted that I claimed for some minor incurred expenses that I had disregarded as it wasn't worth my time claiming. It turns out a peculiarity of some of our contracts seems to 'flag' us as being unusual on the HMRC systems. Even so, the whole experience is very stressful and inconvenient.

While this thread covers some limited legal tax avoidance methods, for the sake of further savings I wouldn't risk being marked by HRMC or the sleepless nights it would cause. I would not like to be the taxi driver you mention.

Incidentally, here is a good article that explains how the HMRC go about catching people and I highly recommend everyone give it browse:

http://ig-legacy.ft.com/content/0f98bbc ... 144feabdc0 (hopefully it works for you)

To quote:

"When Mike Wells touches a button on his keyboard, a tangle of tiny lines bursts on to his computer screen. Within seconds, it weaves an elongated spider’s web connecting small graphic symbols representing people, addresses, phone numbers, bank accounts and employers.

When he clicks on an icon, another maze of connections ripples across the screen. At a glance, a skilled investigator can detect a pattern of concealment. Wells, director of risk and intelligences services at HM Revenue & Customs, says: “Over time you get familiar with a normal person’s spidergram. When someone is operating in a hidden economy it has a different shape.”

melonfool
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Re: Rewarding Yourself

#159343

Postby melonfool » August 13th, 2018, 6:51 pm

I've just seen this:

http://www.cheapaccounting.co.uk/blog/i ... -tax-free/

Gin. Gin is under £50. And I bought a new purse last week which was £45.........happy days!

Mel


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