For a growing number of people, the chance to work from home, form their own company and/or work for themselves is a possibility that they would welcome. Based on a recent study done by the Manchester Metropolitan University, there are now two million full-time home-based workers in the UK. But working from home has its own attendant problems like the tedium of preparing VAT returns and tackling income tax which is based on a self-assessment system.

Here are some tips that will help ease the difficulties of handling a home-based business:

1. Don’t forget to register your business with the HM Revenue & Customs (HMRC). Only three months are allotted for new businesses to do this. Failure to register would mean an automatic 100 fine. File Form CWF1 with the tax office immediately because this will ensure that you start on the right foot in terms of your tax responsibilities as well as informing the tax office of the business.

2. Always remember that you are now a part of the self-assessment system. An individual who starts a business during the 1005/06 tax year and who does not receive a 2006 tax return will have up to 5 October 2006 to notify HMRC. Failure to do this could result in penalties up to the amount of the unpaid tax.

3. Keep some cash on hand for taxation purposes. The 2005/06 income tax is payable on 31 January 2007 – which may look like it’s still too far into the future. But, business solutions experts warn, payments on account of the 2006/07 liability is payable on the same day, which could mean that the total amount to be paid could be large. Therefore, there’s a need to prepare for the cash as early as possible especially in light of the fact that HMRC does not offer extended credit terms.

Related Articles




Leave a reply