Tax on second job

[Kermit_Man]

I have a family member who has a well-paid professional job, but has started a garden landscaping business that he works in at the weekends (sole tradeer - as in it's just him doing the work).

He pays higher rate tax on his day job - but is there a a tax efficient way to run the weekend landscaping business so he doesn't have to pay higher rate tax on every penny that he earns through it? Perhaps using a ltd company etc?

 

[DWS]

I have a family member who has a well-paid professional job, but has started a garden landscaping business that he works in at the weekends (sole tradeer - as in it's just him doing the work).

He pays higher rate tax on his day job - but is there a a tax efficient way to run the weekend landscaping business so he doesn't have to pay higher rate tax on every penny that he earns through it? Perhaps using a ltd company etc?

It depends on the level of profits, how much is he expecting to earn?
Ltd Company may work out more efficiently in respects that he will only pay C/Tax on the profits, but if he also wants to extract money from the Company then there will be personal tax to pay, also he would need to consider the added costs of running a Ltd Company against being a Sole Trader.

 

[Gecko001]

I have a family member who has a well-paid professional job, but has started a garden landscaping business that he works in at the weekends (sole tradeer - as in it's just him doing the work).

He pays higher rate tax on his day job - but is there a a tax efficient way to run the weekend landscaping business so he doesn't have to pay higher rate tax on every penny that he earns through it? Perhaps using a ltd company etc?

Just to be pedantic, working on his own does not mean he cannot form a Ltd company. By the same token, if he did employ people, he could still be a sole trader. Some sole traders have dozens of employees.

In saying that, being a sole trader has several advantages over operating as a Ltd Company for such a small enterprise. Advantages include, not having certain aspects of the finances of the Ltd company being made public, and a little less administration.

I cannot see a way of legally paying less tax, if he does all the work himself.

 

[DWS]

I cannot see a way of legally paying less tax, if he does all the work himself.

There are plenty of legal ways to reduce the tax, but someone would need to know a lot more about the business and the personal circumstances to enable them to give constructive advice.

 

[pentel]

Pay it all into his pension.

 

[ethical PR]

I have a family member who has a well-paid professional job, but has started a garden landscaping business that he works in at the weekends (sole tradeer - as in it's just him doing the work).

He pays higher rate tax on his day job - but is there a a tax efficient way to run the weekend landscaping business so he doesn't have to pay higher rate tax on every penny that he earns through it? Perhaps using a ltd company etc?

Why doesn't he get an accountant on board to advise him?

 

[Lisa Thomas]

He needs an accountant - I suggest contacting some of the UKBF members who have taken the time to reply to your post...

 

[Gecko001]

Many accountants will refuse business from people who come to them with the sole purpose of reducing their tax burden. So be careful of how you approach them.

 

[DWS]

Many accountants will refuse business from people who come to them with the sole purpose of reducing their tax burden. So be careful of how you approach them.

Why would an Accountant refuse a possible client just because they wish to reduce their tax?
Is that not part of the service we offer, we review the existing and then advise on if there is anything that can help to reduce the tax liability, all within the law of course!

 

[DontAsk]

Many accountants will refuse business from people who come to them with the sole purpose of reducing their tax burden. So be careful of how you approach them.

Really? Please quantify "many".

 

[paulears]

The snag is you used "all within the law" - and I know at least three accountants who are actively rejecting clients unless they fit certain profiles. They just don't want to be thought of as 'dodgy'.

 

[Gecko001]

Really? Please quantify "many".

Above 50%.

 

[DWS]

The snag is you used "all within the law" - and I know at least three accountants who are actively rejecting clients unless they fit certain profiles. They just don't want to be thought of as 'dodgy'.

Is that not the case with all professions then, not just Accountants?
If a prospect walks in and asks you to do something illegal you would turn them away so what I said is not a snag but if they walk in and ask if there is anything you can do to reduce the tax they pay then you look into it and advise accordingly, that is part of the job.
Not sure what you mean by having to fit a certain profile otherwise the firm would seem to be dodgy.

 

[DWS]

Above 50%.

And you have data to back this up I take it? If so please share as it would be interesting

 

[Gecko001]

I have no data. Just my experience.

 

[DontAsk]

I have no data. Just my experience.

Sample size?

 

[Gecko001]

I have no data. Just my experience.

Just to elaborate. Of course there is no data on how many accountants who have refused to take on a client because they thought the client might be wanting advice on tax evasion, but that does not mean that they do not make judgements on the intentions of a prospective client. All professionals will make judgements of the intentions of prospective clients. Clients will not say to a professional when they make the first approach that they want them to collude in something illegal such as tax evasion, not getting Planning Permission etc. That will usually come later, requiring difficult conversations and often parting company with that client, resulting in arguments about getting paid for work done.

 

[DWS]

Just to elaborate. Of course there is no data on how many accountants who have refused to take on a client because they thought the client might be wanting advice on tax evasion, but that does not mean that they do not make judgements on the intentions of a prospective client. All professionals will make judgements of the intentions of prospective clients. Clients will not say to a professional when they make the first approach that they want them to collude in something illegal such as tax evasion, not getting Planning Permission etc. That will usually come later, requiring difficult conversations and often parting company with that client, resulting in arguments about getting paid for work done.

Please make your mind up, earlier upthread you said that Accountants turn away a prospective client if they want them to reduce their tax burden, now you are saying it is not the first approach but this comes later!
As said above what is the sample size of 50%?
Makes a big difference 250 out of 500 or 1 out of 2

 

[fisicx]

My accountant actively looks for ways to reduce my tax. Saves me far more than he costs in fees.

That’s my sample of one.

 

[Gecko001]

Please make your mind up, earlier upthread you said that Accountants turn away a prospective client if they want them to reduce their tax burden, now you are saying it is not the first approach but this comes later!
As said above what is the sample size of 50%?
Makes a big difference 250 out of 500 or 1 out of 2

I said the following:

Many accountants will refuse business from people who come to them with the sole purpose of reducing their tax burden. So be careful of how you approach them.

I was advising on how they should approach an accountant, considering that their thread was about a tax-efficient way of doing business. Since a couple of members, bless them, gave the advice of seeing an accountant, I suggested that they be careful on how they approach said accountant if their sole purpose (of hiring an accountant) was for reducing their tax burden. Since the OP specifically only wanted advice on tax efficiency, it is assumed that they would approach the accountant on that basis. I contend, from the accountants that I know, that many (over 50%) would turn them down if the approach was made on this basis. You might contend it would be less than that or zero. That is fine by me. It is an open forum where we discuss things and can express opinions.

 

[Gecko001]

My accountant actively looks for ways to reduce my tax. Saves me far more than he costs in fees.

That’s my sample of one.

Of course, one of the many services that an accountant provides is advising or tax-efficiency. That should be taken as read. My accountant advised me on such matters, but it was only part of the services they provided.

 

[DontAsk]

The sound of back-pedalling is deafening