Five ways to make your life easier and save time if you’re self-employed

Life can be pretty hectic when you’re a busy sole trader. Often there just doesn’t seem to be enough hours in the day.

Having to work long, demanding hours can take its toll on your health after a while, so it’s important to try to find ways to make your life easier and save time during your working day so that you can enjoy a healthier work-life balance and spend more time with your loved ones. So, what could make your life easier and save you time?   

1 Learn to say no more often

Seems impossible when you’re trying to run and grow a successful business, right? But who told you that you had to say yes to everything? Being too eager to say yes can seriously add to your workload and rob you of much time. Realise that you can’t do everything – nor should you try. Be more selfish with your time. Have realistic expectations of yourself. Let others share the workload and responsibility. You don’t have to be rude, but at times you need to politely say no. Don’t feel guilty about it. Ask yourself if it’s essential. If not, you don’t have to do it.  

2 Wave bye bye to bad customers

Again, this might seem counterintuitive and self-destructive, but it could free up more of your time and enable your business to become more profitable. Obviously, you want to retain good customers; it’s easier and cheaper to sell to them. You establish strong, long-lasting relationships with them based on trust and mutual respect. You enjoy dealing with them, you feel appreciated, they pay you on time and recommend you. 

Bad customers are entirely different. They can be more trouble than they’re worth. They drain your enthusiasm and energy, and are never grateful. They can be disloyal, disrespectful and downright unpleasant. They always try to pin you right back on price; they drag their feet when their invoice is due for payment and they have unrealistic expectations. Crucially, they rob you of your most precious commodity – time. Get rid of the worst ones and replace them with better customers.  

3 Remain organised and plan each day 

It’s a well-known quote: if you fail to plan, you are planning to fail. Failing to plan your day, week or month may not lead to your business going bust, but your business probably won’t be as successful as it could be. If you work in a more reactive, disorganised and random way, you won’t be as productive, efficient and successful as you could be. You even risk feeling overwhelmed some or all of the time.

Successful business people are normally very disciplined and organised. They need to be, because they have much to do each day. They have to plan their time to ensure that they use it in the best possible way and get the best results. Your time and workload should be well-organised and you need to prioritise your tasks. Many busy people succeed by creating to-do lists, with key tasks prioritised. Allocate a set time each day or on a specific day for regular business admin tasks (eg updating your accounting software or sending out invoices). Check your emails only at specific times during your working day. 

4 Limit your social media use

Many of us waste time on social media and online communication platforms. That’s one thing, if you’re at home in your spare time, but you really shouldn’t be doing it during work hours. You shouldn’t be looking at social media or using online communication platforms for personal reasons when you should be working. It could actually be damaging your business. Turn off your social media notifications. Unless you do it for business, avoid looking at social media altogether while you’re working. It could free up many hours of your time each month.     

5 Maximise the benefits of software

Making full use of the time- and effort-saving potential of a wide range of apps and software can make an enormous difference to your business and life. Accounting software Coconut is a perfect example. 

If you update it regularly when your business is paid or pays out money, accounting software can help you to control your cash flow. It can enable you to better understand your business costs and whether you need to reduce them, overall or in specific areas. The same is true of your income, as you can see when you earn more or less, and compare your income to previous years. Accounting software can provide an excellent invoicing solution and tell you how much to put away to cover your tax bill. 

Talking of tax bills, software can also save you time, money and stress when you need to complete your Self Assessment tax return. GoSimpleTax is a leading example of Self Assessment tax return software used by thousands of sole traders. A bewildering range of apps and software can really save you time when it comes to many other business tasks. It can also help you to remain organised and make better use of your time so that you’re ultra productive. Think about where and how an app or software could help you and then research your options. It could well be much cheaper and easier to use than you thought.    

• This blog was originally produced by DeadGoodContent for Coconut, the accounting app created for freelancers, sole traders and small private landlords.

What UK tax will you pay if you move from the UK to Dubai?

More than 120,000 expat Brits are reported to live in Dubai, the UAE’s second-largest emirate (Abu Dhabi is the biggest). Many are attracted by Dubai’s sunny climate, as well as its family-centred, clean and safe environment (serious crime is almost non-existent).

The beaches are beautiful, and while its traditional Arabic heritage remains, Dubai is a multicultural metropolis with modern infrastructure and awesome architecture, including the world’s tallest building (the 830-metre-high Burj Khalifa) and the largest shopping mall on Earth (shopping is another reason why people love Dubai).

Dubai attracts about 14.3m international visitors each year and about 1.5m of them are from the UK. Many Brits continue to relocate to Dubai, attracted by excellent career opportunities, a tax-free salary and a higher standard of living. If you’re thinking about moving to Dubai, you’ll probably be wondering about visas and how much tax you’ll pay.

Many Brits continue to relocate to Dubai, attracted by excellent career opportunities, a tax-free salary and a higher standard of living.

Which visa to live in Dubai?

• Freelancers, the self-employed and skilled employees can apply for a UAE Green Visa, a residency visa that enables someone to sponsor themselves for five years, they don’t need sponsorship from a UAE national or employer. The Green Visa is renewable for five more years upon expiry.

• Freelancers or self-employed people must get a permit from the Ministry of Human Resources and Emiratisation (MHRE). They also need proof of their degree or diploma, as well as evidence of self-employed income for the previous two years of at least 360,000 UAE Dirhams (about £77,000), or proof that they have enough money to sustain their stay in the UAE.

• Skilled employees must have a valid employment contract, salary of at least 15,000 AED (£3,200) a month, a degree or equivalent and their occupation must be of a sufficiently high professional level according to the MHRE.

• A two-year standard employment work visa is available to those coming to work in the UAE’s private sector. The employer applies for this.

• Over-55s who wish to retire in the UAE can apply for a five-year Residence Visa, which is renewable, although they will need significant property assets or income. 

Telling HMRC that you’re moving to Dubai

You must tell UK tax authority HMRC if you’re leaving the UK to live abroad permanently or going to work abroad full-time for at least one full tax year (6 April to 5 April). This applies to Dubai, of course.

If you don’t normally complete a Self Assessment tax return and you’ve already left the UK, you need to fill in form P85 online. If you’re still in the UK, fill in form P85 offline and include Parts 2 and 3 of your P45 form (get these from your employer).

If you usually complete a Self Assessment tax return (eg because you’re self-employed or a landlord), you’ll also need to complete the ‘resident’ supplementary page (form SA109) to report your residence and domicile status once you’re living in Dubai. 

You must use commercial software to file all forms – you won’t be able to do it online via GOV.UK (it’s not available to people who live outside the UK). Alternatively, you can get a UK-based accountant to do it for you, but you’ll have to pay a fee. Doing it yourself is cheaper and reasonably easy. HMRC will let you know if you’re owed a refund for the tax year during which you left the UK.

If you don’t normally submit a tax return, you’ll first need to register for Self Assessment by 5 October following the tax year in which you had taxable UK income, otherwise you could be charged a penalty.

Need to know!  You also need to let your local council know if you’re leaving the UK to live in Dubai or anywhere else, so that you’re not charged Council Tax (if applicable). Your UK citizenship will not be affected by moving and you can usually vote in UK elections.

Paying tax if you’re non-resident

If you’re “non-resident” in the UK for tax purposes, no UK tax is payable on any income or gains that you earn or make in Dubai.

• You’re usually non-resident for UK tax purposes if you: spent less than 16 days in the UK (or 46 days if you have not been a UK resident for the three previous tax years); worked abroad full-time (averaging at least 35 hours a week) and spent less than 91 days in the UK and no more than 30 of them were spent working. 

Although there is no Income Tax in Dubai, you’ll need private medical cover – it’s a legal requirement. If applicable, your employer must provide basic health insurance, but that doesn’t extend to dependents (eg a spouse or children) and it comes from deductions from your salary. If you work for yourself or don’t work, you’ll need to sort out your own private medical cover.   

If you’re non-resident in the UK for tax purposes because you’ve moved to Dubai, UK tax may be payable on income earned in the UK. Taxable UK income can include:

• pension payments

• rental income

• savings interest

• wages from UK employment.

Need to know! If you don’t claim any tax expenses, you do not pay tax on the first £1,000 of UK property rental income or income from UK self-employment.  

How much UK Income Tax will you pay?

If you’re eligible for the tax-free Personal Allowance (you don’t get it if your taxable income is more than £125,140 a year), you won’t pay tax on your total UK taxable income until it is more than £12,570 (2023/24 figure) in a tax year. 

You pay tax on your profit, which is the amount of UK income that remains once tax expenses or allowances have been deducted. If you rent out more than one UK property, the profits or losses from them all are added together to arrive at a total figure and you will be taxed on that basis. 

The amount of UK Income Tax you pay is determined by the Income Tax band into which your total UK taxable income falls.

• The basic rate (20%) is payable on annual UK taxable income between £12,571 and £50,270.

• The higher rate (40%) is payable on annual UK taxable income of between £50,271 to £125,140.

• The additional rate (45%) is payable on annual UK taxable income over £125,140.    

You may be able to claim a range of tax reliefs and allowances to reduce your taxable UK income. Income Tax is no longer automatically taken from interest on savings and investments. Non-residents do not usually pay UK tax on the UK State Pension or interest from UK government securities (ie gilts).

How to report your taxable UK income from Dubai

If you live in Dubai (or elsewhere overseas) and receive taxable income from UK property or have other taxable UK income to report to HMRC, you must fill out and file a Self Assessment tax return (SA100), as well as the resident supplementary page (the SA109 form) to report your residence and domicile status. 

• If you have UK taxable rental  income to report, you’ll also need to fill out and file the SA105 form. 

• If you have taxable UK income from self-employment, you’ll also need to fill out and file the SA103 form. 

• You may have to file other supplementary pages, depending on your income sources. 

You can’t use HMRC’s online services to file your Self Assessment tax return and any supplementary pages if you’re living in Dubai (or anywhere else overseas). You can either fill out your forms by hand and send them by post, get a UK-based tax professional to do it for you or you can use commercial Self Assessment filing software, which is a cheaper option and it’s simple enough.

• The filing deadline for a paper Self Assessment tax return is midnight on 31 October following the end of the tax year to which the tax return refers. 

• The UK tax year runs from 6 April until the following 5 April. 

• If you use filing software and choose to file online, the deadline is midnight on 31 January following the end of the tax year to which the tax return refers. 

• Another key advantage of using filing software is you get more time (ie three months) to complete your Self Assessment tax return. 

More on paying UK tax on UK rental income

If you earn more than £1,000 from renting out property in the UK, it can be subject to Income Tax, once your taxable income goes over the Personal Allowance (£12,570 a year in 2023/24). Capital Gains Tax can also be payable if you make a “chargeable gain” (ie after selling you get more than the amount you paid for the property or land).

If you live outside of the UK for six months or more a year, HMRC classes you as a “non-resident landlord”, regardless of whether you’re a UK resident for tax purposes or not. You can choose to get the full amount of rent from your tenant(s) and pay tax on it via Self Assessment. If so, you need to apply by filling out the NRL1i form and sending it to HMRC. 

The other option is for the tax to be deducted by your letting agent or tenant, who will pay it to HMRC on your behalf. They will deduct the basic rate tax from the monthly rent (minus any expenses if an agency) and give you a certificate at the end of the tax year detailing the tax they’ve deducted.

You’ll need to keep accurate records of your rental income and expenses, because HMRC can ask for proof of the Self Assessment figures you report. You must keep your records for at least five years after the filing deadline for each tax year.

You’ll need to keep accurate records of your rental income and expenses, because HMRC can ask for proof of the Self Assessment figures you report.

Need to know! If you report your UK rental income via Self Assessment from Dubai, as a landlord, you can claim a range of “allowable expenses” to cover things you pay for to rent out your property. Claiming these can reduce your UK tax bill significantly. Visit GOV.UK for official guidance on paying UK tax on UK property rental income. 

• This blog was produced by DeadGoodContent for GoSimpleTax, award-winning software that makes completing a Self Assessment tax return much easier, quicker and cheaper when compared to using an accountant.

Could you turn your hobby into a successful business?

Musical types buy and sell vinyl, write songs or make instruments. Arty types paint, take photographs or make ceramic pots. Sporty types cycle, go fishing or canoeing. Some write stories or poetry, while many others knit or sew, bake cakes, make jam or grow plants. 

Most of us have hobbies. They make life more enjoyable because they’re fun and they can benefit our physical and mental health. But for some, they can also generate a welcome few extra quid.

Can I turn my hobby into a business?

Research carried out by insurer Hiscox in 2022 suggested that 23% of sole traders had turned their hobby into a business. Many people now run “side-hustle” businesses, often selling on such platforms as eBay, Etsy and Amazon after turning their hobbies into lucrative cash-spinners. 

But not everyone has what it takes to run a successful business, no matter how much they love doing something. And sometimes a hobby is best suited to a spare-time business. However, hobbies can be turned into successful full-time businesses, enabling people to jack in their jobs and earn a living from their hobby or passion. 

A less risky option might be to launch as a spare-time hobby business, and see how it goes before deciding whether to launch full time. Caution is also advised, because doing something for money can be a lot different to doing it purely because you love it.     

Caution is also advised, because doing something for money can be a lot different to doing it purely because you love it.     

How much can I earn from my hobby before paying tax?

UK tax authority HMRC allows you to earn up to £1,000 of tax-free income from a hobby business. This is called your Trading Allowance. So, if you’re earning less than that a year, you won’t have to register your hobby business or pay any tax. But if you earn taxable income of more than £1,000 in a tax year (6 April to 5 April), you’ll need to register so that you can pay tax.

If you earn money from more than one hobby, the total taxable income from them all cannot be more than £1,000, if you want to avoid having to register and pay tax on your income.

How do I register my hobby business for tax?  

• Most people who need to report hobby business income to HMRC register as a “sole trader”, which is basically where you run your own self-employed business. 

• As a sole trader, in law, you and your business are the same thing, so you’re personally liable for business debts. To avoid this, you can set up a limited company, but that requires more tax admin and cost.

• If you haven’t done it before, you must register for Self Assessment before 5 October in your business’s second tax year (6 April until 5 April), otherwise HMRC can fine you. 

• Visit government website GOV.UK to register for Self Assessment.

If you haven’t done it before, you must register for Self Assessment before 5 October in your business’s second tax year (6 April until 5 April), otherwise HMRC can fine you. 

How much tax will I pay on my hobby business income?

Once your hobby business trading income goes over £1,000, if you’re earning more than the Personal Allowance (£12,570 in the 2022/23 tax year), you pay Income Tax on your “net profits” (ie total sales minus allowable tax expenses), with tax allowances also accounted for.

The amount of tax you pay is determined by the Income Tax band your taxable income falls into. Your taxable income can include income you earn from other sources (eg share dividend payments, rental income, pension payments, etc). 

• You’ll pay the 20% basic rate of Income Tax if your annual total taxable income is £12,571-£50,270.

• You’ll pay the 40% higher rate of Income Tax if your annual total taxable income is £50,271-£125,140.

• You’ll pay the 45% additional rate of Income Tax if your annual total taxable income is more than £125,140 (2023/24 for all figures; Income Tax bands and rates are different in Scotland).

Do I pay National Insurance on hobby business income?

• If your hobby business income is more than £12,570 a year, Class 2 National Insurance contributions (NICs) of £3.45 a week are payable. If it’s £6,725-£12,570, you don’t need to pay Class 2 NICs, but you still receive the benefits that come from paying them. 

• Class 4 NICs of 9% are payable on profits of £12,570-£50,270, with 2% payable on profits above £50,270.

What tax expenses can my hobby business claim?

To reduce your tax bill, potentially, there are many tax expenses that your hobby business can claim, including:

• machinery and equipment

• stock or raw materials 

• packaging and print

• broadband and phone

• travel (ie fuel, parking, train or bus fares)

• premises (ie rent, heating, lighting, business rates, etc)

• postage and office stationery 

• marketing and advertising costs 

• bank charges, insurance

• professional membership fees

• wages and professional fees paid to others 

• safety clothes and business-branded workwear.

If you run your hobby business from your home, you’ll probably be able to claim for some of your heating, electricity and water costs, Council Tax, mortgage interest or rent, broadband and telephone use. Alternatively, you may be able to claim a flat rate.

You can only claim for genuine business costs. There can be severe consequences if you conceal taxable hobby business income or make fraudulent expenses claims. If you use something for business and personal reasons (a mobile phone being a classic example), you can only claim business use costs as an allowable tax expense.

There can be severe consequences if you conceal taxable hobby business income or make fraudulent expenses claims. If you use something for business and personal reasons, you can only claim business use costs as an allowable tax expense.

Will my hobby business need to register for VAT?

• If your sales that were subject to VAT in the past 12 months were more than £85,000 (the VAT threshold for 2023/24) or you expect them to be more than £85,000 in the next 30 days, you must register for VAT. That is more likely if your hobby business is full time and very successful. You register for VAT via government website GOV.UK.

Will my hobby business need to keep tax records? 

If you need to register your hobby business and pay tax, you must maintain accurate, up-to-date records of your sales and costs, with exact figures and dates, so that you can complete your Self Assessment tax return and evidence your income and costs should HMRC ask you. HMRC can fine you if your records are not accurate, complete and legible. Also keep receipts and invoices for things you claim as tax expenses. 

How do I report my hobby business income to HMRC?  

You complete a Self Assessment tax return each year, the main SA100 tax return and the SA103 supplementary page, summarising your hobby business income, as well as all expenses and allowances you claim. 

You can file your Self tax return any time after the tax year finishes on 5 April, although the annual deadline for filing your Self Assessment tax return online is midnight on 31 January. A £100 fine is payable immediately if you miss the filing deadline. 

After HMRC receives your tax return, it will tell you how much tax you owe. The deadlines for paying your tax bill are usually: 31 January for any tax you owe for the previous tax year (known as a “balancing payment”) and your first “payment on account”; then 31 July for your second payment on account.

• This blog was produced for GoSimpleTax, award-winning software that makes completing a Self Assessment tax return much easier, quicker and cheaper when compared to using an accountant.