Starting a Tour Guide Business

[Endean0]

For many years, the history of London has fascinated me, and researching the Capital over the last millennium has become a hobby. For several years I've run frequent guided tours for friends on a free basis.
I'm currently in full time employment, however at the age of 60, I'm hoping to scale down a little to 3 days per week. I'm thinking of setting up my own guided walking tour business, but have no idea on what sort of set up I need to follow.

As I'm PAYE and self assessment, can I just start running tours on a limited basis and declare the income to HMRC, or do I need to set up a Limited company and all that entails. The objective is to build the tours to a level where I could give up my existing job before reaching retirement age and just have a modest income coming in before taking my State and Personal pensions at the age of 67.

Any help and advice would be most gratefully received.

Thanks

Steve

 

[Scalloway]

You can just do it on a self employed basis. I would take out insurance in case someone gets injured on one of your tours.

https://www.insuremybusiness.co.uk/insurance/public-liability-insurance/Tour-Guide/

Have you thought of doing a qualification?

https://www.itg.org.uk/examinations/how-to-become-a-tourist-guide/

 

[Ecomccountant]

Hello,

First thing you should do is think about how you are going to acquire paying customers. I know that in London there are a lot of tour guides, Shoreditch and whitechapel have lots of tour guides. They seem to be catering for tourists in large groups - how did they get them to sign up?

So you can run this as a sole trader, where any income you make from this would have to be reported on a self assessment form, whatever rate you are paying in your current job would be the rate you pay on your self assessment (unless you move up a band).

It really depends on your current salary and project profit for the year- I have a spreadsheet which calculates this if you can give a rough idea of what salary you are currently on and what you think profit would be in first year I can tell you which is most tax efficient.

 

[Endean0]

Hello,

First thing you should do is think about how you are going to acquire paying customers. I know that in London there are a lot of tour guides, Shoreditch and whitechapel have lots of tour guides. They seem to be catering for tourists in large groups - how did they get them to sign up?

So you can run this as a sole trader, where any income you make from this would have to be reported on a self assessment form, whatever rate you are paying in your current job would be the rate you pay on your self assessment (unless you move up a band).

It really depends on your current salary and project profit for the year- I have a spreadsheet which calculates this if you can give a rough idea of what salary you are currently on and what you think profit would be in first year I can tell you which is most tax efficient.

Thanks for the reply. I feel I've got the first bit covered with my marketing plan tailored to small numbers and well away from the trendy areas of Shoreditch and Whitechapel. I think to clarify, I'm not looking to replicate my existing salary through this venture. I have no financial commitments except for the usual things like food and energy bills, I'd just like to do something in between now and my retirement that I enjoy. My plan is to start these tours next year while working in my currant role for 3-4 days a week and see how it goes for a year. I'm forecasting 10 customers per week, based over 40 weeks in the year @£20 per customer=£8,000 Set up costs are low at £400 PA for web hosting, coms, PLI and overseas advertising. Biggest overhead is travel, but I'm in a position to offset that to zero for the first year. Last year I earned in the region of £50k but I have a 153T tax code due to a company car.

 

[Scalloway]

If you are a higher rate tax payer then a limited company may save you tax. I recommend speaking to an accountant.

 

[Ecomccountant]

So i checked what is the most tax efficient way using our calculator and even if you go to part time earning £30k a year it is still more efficient to create a limited company. This has been calculated using the most efficient use of your dividend and salary split in a limited company and your tax code.

So based on £30k (assuming you go part time), and £7600 profit from your business you would pay additional amounts of roughly £2.5k (effective tax rate of 32%) as a sole trader and £1.8k (effective tax rate of 23%) as a limited company.

Based on £50k (assuming you go full time or close to it), and £7600 profit from your business you would pay additional amounts of roughly £3.2k (effective tax rate of 42%) as a sole trader and £2.8k (effective tax rate of 37%) as a limited company.

So looks like limited company is the way to go.

Please note there are additional costs for maintaining a company but these would be tax deductible. For a start up like this i would expect your fees to be around £300 for someone like me or around £700 from a high street accountant.

 

[Endean0]

So i checked what is the most tax efficient way using our calculator and even if you go to part time earning £30k a year it is still more efficient to create a limited company. This has been calculated using the most efficient use of your dividend and salary split in a limited company and your tax code.

So based on £30k (assuming you go part time), and £7600 profit from your business you would pay additional amounts of roughly £2.5k (effective tax rate of 32%) as a sole trader and £1.8k (effective tax rate of 23%) as a limited company.

Based on £50k (assuming you go full time or close to it), and £7600 profit from your business you would pay additional amounts of roughly £3.2k (effective tax rate of 42%) as a sole trader and £2.8k (effective tax rate of 37%) as a limited company.

So looks like limited company is the way to go.

Please note there are additional costs for maintaining a company but these would be tax deductible. For a start up like this i would expect your fees to be around £300 for someone like me or around £700 from a high street accountant.

Thanks for that, so I'll look to set it up as a limited company. As a complete novice, what does that entail with regard to HMRC ? Would they mean that I would have to file accounts to Companies House and a tax return to HMRC for that first year?

 

[Ecomccountant]

So set up a limited company - i have a guide in my signature, its not as hard as you think.

Once you set up a limited company you create a company tax code at the end, this is so you can do your tax return. This is done annually.

You will also need to register as self employed before the deadline which is 5th of October 2019

You will then need to complete, annual accounts, tax return and self assessment after the first year. You will also have to perform an annual return at the end of the year. (all managed through companies house)

If you want an accountant to perform your annual accounts, self assessment, tax return etc.. you can either get it at the year end and pay a lump sum or go for an accountant which bills monthly, normally this is the same price but you can then ask for advice during the year. The later model is what i prefer because i can have contact with clients all year round.