Save Money This Year with Tax Breaks for Couples

It was Valentines Season, and as you celebrate with your significant other, I thought you could use a few pointers about how to make your status as a couple work for you – financially speaking. For this feature, couples will refer to married pairs (because marriage is recognized by the law).

Here are a few tips to help you put money aside for other household items.

How can I save money as a married spouse?

Under the current UK tax regulations, the following scenarios can result in tax breaks for married couples:

  1. Marriage Allowance

For couples in different tax brackets, marriage allowances present a great tax relief option. If you earn less than £11,500 and your partner falls within the £11,501-45,000 tax bracket, you can transfer 10% of your unused personal allowance to your partner. He/she will then be able to save up to £230 per annum.

  1. Sharing ownership of Buy to Let Property

Transferring ownership of a property between a married couple will incur no capital gains tax. This is what makes it a great tax relief strategy for couples. This strategy involves one spouse transferring shares of a property to the other. If your spouse earns lower income and pays tax at lower rate, this enables part of the property income being taxed at lower rate. However, the overall situations of both partners need to be assessed in order to determine whether or not this strategy is a good fit.

  1. Transfer of Business Ownership

If your partner makes a significant and legitimate strategic contribution and bringing him or her on board was part of your long-term business strategy, transferring shares of your business to them will help you save tax in the long term. Your business will enjoy the first £5,000 tax-free allowance, while the payment of dividends and salaries to you and your spouse will reduce the taxes owed by the business.

  1. Savings on Wedding Cost

This is a creative way for couples to save money through tax relief if they’re planning to get married. Donating valuable wedding decorations to your church, or a charity that is close to your heart, is considered as charitable donations and you can get tax relief from it. However, be aware of the limitations. For example, you will not get tax relief if the size of the donation is more than 4 times of the tax you’ve paid in previous year.

  1. Inheritance Tax

As a married couple, you and your spouse could double your nil rate band for inheritance tax purposes. What that means is that your inheritance value could go untaxed for up to £650,000 if your spouse did not utilize his/her inheritance tax.

P.S. If you find this content useful, we do provide tailored professional advice on your personal or business tax matters. If you are interested, please book me in via the link so we can arrange a chat: https://hannah-xu.youcanbook.me

Organise Your Finances the More Efficient Way

Dear Client,

I hope you had a great week.

Last time I was in your inbox, we went through how you can discover your ability to create wealth. This week, I picked out a topic that I hope will help you get through the tax season without any hitches.

Do you sometimes look through your books and wonder how to put all your finances in order before the tax man rolls in? Do you find it hard to sit down to spreadsheets to organize your finances? If you do not have a problem organizing your finances, then congratulations, I’ll just be helping you do it more efficiently. However, if you are like many entrepreneurs I know who think of bookkeeping as a chore, then you can thank me later for showing you that bookkeeping does not have to be expensive, exhaustive or time-consuming.

Below, I will take you three steps to help you organize your finances the more efficient way

Step 1: Embrace Technology

There are numerous applications and technologies available today that are dedicated to helping you manage your finances. For instance, you can switch from manual data entry to simply scanning receipts to track expenditure by using Receipt Bank? Or that cloud computing services such as Xero Accounting can feed your bank statements into your accounting system so that you do not have to? Those systems nowadays cost as little as £20 per month, and they are designed to make your life easier. All you have to do is take advantage of them.

Step 2: Seek Help In Cost-Effective Ways

As an entrepreneur, having others help you will save you time, money and energy as you organize your finances. An easy way to get help is to have your spouse or children to handle the admin and bookkeeping tasks, so that you focus on building the business. You can pay them a salary that do not trigger much tax burden, and help reduce tax for you business the same time.  However, if you are solo, you can also now outsource bookkeeping in affordable way by hiring an accountant in India (or somewhere else in the world). Make sure you do try those freelancers first before you commit, so that you have the reliable person work for you. Also do consider protecting your data by having proper system and Non-disclosure Agreement.

Step 3: How and when to hire the right accountant for your business

Sometimes you have to spend money to save money. Hiring an accountant is an efficient way to organize your finances because a) you won’t have to worry about doing it yourself b) accountants will leave you free to build your business and c) the right accountant will not only get your finances in order but also optimize your tax bill. Wondering who the right accountant is? Here are the criteria: It is important to hire someone who thinks more like a business owner, rather than an employee; the ones who understand your vision and values; the ones who understand your financial pressure and work towards helping you achieve your financial goals.

I hope that today, you have taken away a lesson that will help you organize your finances the more efficient way. Don’t forget to tune in for more financial tips next week!

P.S. If you find this content useful, we do provide tailored professional advice on your personal or business tax matters. If you are interested, please book me in via the link so we can arrange a chat: https://hannah-xu.youcanbook.me

Discover Your Ability to Create Wealth

Happy New Year!

I hope you had a great holiday and are looking forward to trying out new opportunities this year!

As we move on to 2018, I just wanted to let you in on a few things. First, new year, new me, new us! We are rebranding our firm and the weekly LIVE show on Facebook. I will be showing up every Monday for a live chat on Facebook talking about subjects related to wealth building, so don’t forget to tune in each week! Simply subscribe to my Facebook page and look out for WealthAbility LIVE every Monday to get your weekly dose of interesting and motivating money advice from me (and a few other experts).

Number two, as we welcome the new year, here is a piece of advice I thought you would appreciate. It’s a little something on what I call the three pillars of wealth building. With them, you can discover your ability to create wealth.

So, what are the 3 Pillars of Wealth-Building?

For me, they are the tools you can use to not only create but also maintain wealth. I hope they are for you too.

1. Your Health

Your health is your ultimate wealth. When you are healthy, you can accomplish tasks that will help you build your wealth. Tasks such as decision-making, learning and even dealing with stressful situations. Keeping yourself healthy is essential to you and to your business.

2. Inner Work

Sometimes we find ourselves dwelling on what is going wrong in our lives. We blame ourselves for failed relationships and are afraid to talk to others about our work for fear they will learn of our failures. However, I have learnt from experience that when you appreciate your accomplishments and your potential to add value to other people’s lives, when you accept that you are not perfect and embrace your authentic self, you can look past failure and insecurity to set and achieve your goals.

3. Be Comfortable with the Numbers

Do yourself a favor this year. Learn to be as comfortable with your numbers (or at least knowing the basics of your finances) as you are with counting your hard-earned notes.  This does not mean you have to know all the details of finances inside out, just like a financial professional. But just the basics tools that is sufficient to look after yourself. It is just as it important to know how to look after your own health, feed your body with the right food, and when to seek out the doctor, it is essential to know the state of your finances and know when to seek out financial professionals for guidance.

Last Thoughts

I hope this dose of inspiration helps you discover your ability to create wealth this year. Stay tuned for more informational pieces next week!

P.S. If you find this content useful, we do provide tailored professional advice on your personal or business tax matters. If you are interested, please book me in via the link so we can arrange a chat: https://hannah-xu.youcanbook.me

How Cloud Technology Has Changed the Way Accounting Services Are Delivered

The rising of cloud technology has replaced a lot of labour intensive work. The old way of accounting, which focuses only on number crunching tasks, is going to be replaced by technology. But the new breed of accounting profession will look to interest their clients with the cause and prevention of high tax bills.

Cloud Accounting

Most of us might have been through some sort of technology change over the last couple of years. The digital accounting systems that used to cost thousands of pounds are now replaced by cloud accounting in as little as £20 per month. You do not need to install it onto your PC or on a laptop. You simply have a login and are able to look at your financial information. As it is cloud based, it is easy to sync it with your bank statements which will allow you to have direct bank feeds. All of these things have replaced a lot of labour-intensive work.

Entry-less Receipt Processing (e.g. Receipt Bank)

When it comes to accounting, in the past 5 to 10 years it has involved a tremendous amount of paperwork. Nowadays there are systems and apps like Receipt Bank that can help with the workload. Receipt Bank allows you to take a picture within the app on your smartphone and import it straight to the system. It also enables you to export it as an excel document from there. You do not have to input the name, category and amount as the system does that for you. It extracts the information and saves it as a draft, which you can approve eventually.

It is very handy as you do not have to keep the paper receipts once you have taken a picture of them as it is stored in the cloud. There is a study that shows that keeping physical copies of receipts is not good for your health as the ink on the receipts have a certain type of chemical in them. Receipt Bank not only saves you time and makes things easier, it benefits your health too. When you are digitally storing information, you must always keep in mind cyber security and data protection but in general accounting systems do have a certain level of security that they aim to maintain.

Benefits of Cloud Accounting

  • Most clients nowadays prefer to provide information via cloud accounting especially when it comes to bank statements. This is a benefit as you do not need as much space or storage as before. If some clients do send some paperwork, you can just store it temporarily and scan the document to store it in a cloud then send it back to the client.
  • Less space required and less storage means you do not need to spend much money hiring somewhere big. You can hire an open office and are able to still get the job done.

What System Should You Use If You Are Self-Employed?

When you become self-employed or start your own company you have to take care of your own tax and self-assess your accounts and your tax bill. This means you would need to keep track of how much profit you have made and keep track of your expenses so that you can run your business properly. Most people nowadays do own their own laptops or have access to one, it is very easy to pull out a spreadsheet to total all income and keep a note of all the receipts in order to categorise them etc.

Microsoft Excel is cheap and very easy to use, it is quite straightforward but the downside of it is that when you need to put out a report, it can be quite time-consuming as you would need to key in all the words and dates into the spreadsheet. Another downside of Excel is that if you have inputted data into the spreadsheet, anyone else can edit it and input other data which can eventually create errors and can be hard to track. With cloud technology, you can view what has been changed and can track who has edited it which makes things clear. You can always find out the root of a single mistake and are able to correct it.

There are several cloud technologies that you can use such as:

  • Xero
  • QuickBooks
  • KashFlow

Always go for the providers that are bigger, popular and have more recommendations because the smaller ones might end up being merged by the bigger providers.

When Is the Right Time to Start Using Bigger Providers Instead of Spreadsheet?

Spreadsheet is very straightforward to use, if you really want to keep track of your businesses it is more ideal to set up the company on a proper accounting system especially if you are planning for the business to grow. If you do not have a lot of transactions then you can take the time to get familiar with the accounting system. If you have a lot of transactions, you can outsource but you need to make sure you do have the knowledge and the wellness to know what is going on. If you are really serious about your business then it is important to have a proper system set up from day one.

There are people previously on desktop systems such as Sage and would like to transition. You can use a third-party system called Move My Books and you can take the Sage backup and use it to transition to Xero. It helps because you do not need to stress out too much, of course in the end you would need to double-check everything but if you take the right steps, everything should match perfectly.

Nowadays as long as your bank statements are synchronised with your accounting system and most things are automated then you are able to submit important information to HMRC or Companies House. All you or your accountant would need to do is just tweak the figures and then you are able to submit it which is less time-consuming. If you are doing your bookkeeping on Xero, you are able to submit your VAT Return straight from there which is very handy. Xero also allows you to customise your reports just to show you the numbers that really matter to the business. Just because a lot of the work that accountants have been doing has been replaced by technology does not mean that it will make all accountants redundant. It just means that is time for the profession to change the way that it delivers its service.

If Cloud Technology Replaced A Lot of Accountant’s Work, How Will That Change the Way Accountancy Services Are Delivered?

The idea is that cloud technology will automate most of the accounts and tax preparation work, the new breed of accountancy profession will focus more on caring about clients’ needs, help them ease their tension around cash flow problems and pay the right amount of tax through their proactive advisory services. Certainly, a cloud accounting system will make your life much easier. It also makes the accountants life much easier too and that means you can expect slightly reduced accountancy fees when you operate your business on a cloud accounting system.

What it really means is accountants need to change. They will no longer be paid for just adding up the numbers. Technology will do that. Instead, the accountant for the future will interest their clients in the care of their financial health, in tax saving, and in the cause and prevention of cash flow problems. Some accountants will make that change. Some won’t. Either way, it is a good thing for business owners.

If you find this content useful, we do provide tailored professional advice on your personal or business tax matters. If you are interested, please direct message the author of this article so we can arrange a chat.