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As the owner of a small business, finding and hiring a good accountant has proven to be the best investment of both my time and money. HMRC will chase you to the ends of the earth for pennies, but try and get a refund from them... they're always short staffed, whole departments on strike, or other mind bending excuses. Having a professional in your corner who deals with this nonsense, day in and day out, will help you retain your sanity.
They are short staffed when it comes to reading what they owe us, but if it’s to collect debt from us… they are never short staffed for that. They deliberately ignore and allow tax to accumulate to a higher rate, then charge certain individuals with “tax evasion”…
@@footyball66 I wish I was. I’m a graphic designer who runs a small agency. I understand basic mathematics but, the idea of submitting tax returns for a limited company didn’t fill me with much excitement. So I hired someone who knew what they were doing. Full disclosure. The firm I use is called FILAN. You won’t find me listed anywhere within the company.
All the Tories are in business directly or indirectly contributing through stocks shares and profit sharing. Even while on payroll. Everyone has a side hustle and the government itself encourages you to NOT pay taxes that you don't owe. Instead creating jobs and opportunities for others is one way businesses contribute to the economy and to peoples feeling of self worth through work and jobs. Welfare is necessary for some key groups but detrimental to those who would like to work but can't or choose not to because of low wages that keep them at the food bank or near destitute.
@@mrjelfs3705don’t forget investing in your pensions could potentially increase in value but PAYE tax will never benefit you in face value once deducted. It’s gone whereas deductions to your pension account will be invested and most likely grow.
Thanks for having me on the show Ato. So glad to see that this message is resonating with so many. I am a click/link away for anyone who needs more accounting advice/services 😊
My pleasure! Thanks for taking the time to share insights into the Tax system. Going by the several messages and queries we’re going have to do a part 3 soon!
Please please please keep up the great work. Talking with expertise to use common people on this subject is priceless. I bet all your friends get in touch in April 😊 tax makes my eyes bleed. It is a rabbit hole I get lost in.
I worked for the government ironically for over 20 years. At 40, I set up my own business. I was scared shitless and had to learn on the fly. I just wish I had done this sooner. I have been educating my kids on the benefits of setting up their own business and not being an "employee." The government absolutely rinse us.
Yeh I understand that being in a business, you are protected because all the elites, politicians, etc own businesses so its harder for them to introduce rug pulls. Even the dividend one...not really a problem because £1000 tax free is rubbish anyway... The key is to create a product that earns income for your business. Don't just rely on being a contractor because that rug can be pulled at any time.
@AfterEarthHuman I had a skillset that I gained working for the government most of my life. I just transferred that from government sector to the private sector. Basically I do a similar role, but not for the government anymore. I set up a Ltd company. Im definitely no business expert. But if there is a demand for something, then people will want it and pay for it. The best advice I can give is do not fall into the trap of procrastination. Be proactive, Try a few things if needed and dont be afraid of making a mistake. The last tip is probably what held me back the most. Good luck 👍
Yeah i agree it great to have own business, the sleeless nights the stres the resposibility to bad clients and still be rewarded hansomly buy just paying 26 % tax to hmrc before you pay your income tax. It used to be decent in the uk 20 years ago when i started but not anymore.
The education system is almost entirely divorced from reality and honestly seems like a sales funnel into universities. They don’t even care what degree, they encourage you to get “any” degree because employers want them 😂 which is complete bullshit.
If they taught people the truth about money there would be a revolution tomorrow. Only those who work in finance get told about money mechanics. Explaining the reality of a mortgage transaction to a 8yr old and they would tell you it's a scam. The bank never gave you any money it created once you signed the contract and now you get for decades to pay it back 😂😂
@dgamerssvideoreaction7666 Lol, this is so true. I sussed the scam when i questioned my dad on these types of matters. I remember him breaking down the concept of working 40 hrs a week and only being 'allowed' four weeks time off a year - that also had to be authorised. Mind 🤯. It was at that point i realised that type of adulting was not for me 😅
once you are an adult and working....that's pretty much most of what life is....work and sleep.....until you are 71 (which will likely be the state pension age for most)
Unless you save every solitary penny and put away in higher interest accounts or investments. Meaning you live no life, no holidays, no eating out, no fun experiences. Just a miserable ordinary life. Throw kids into the mix, all your money goes on raising them. It's a rough deal being a working or middle income earner. You have to be earning quite alot and hire accountants to tax dodge to live well in this country.
It's designed to keep the poor stay poor, especially if you work in minimum wage jobs. I worked fulltime in London four years, and I didn't have any savings left.
You hit the nail on the head about the PAYE system being designed to keeo everyone around the same level. The IR35 legislation was because the government was scared of too many people breaking out as freelancers so they have created a hostile environment, so that now clients are so afraid of tax penalties that 90% are forcing employment. In addition the UK tax system is so broken with traps at £50k (child benefit and savings allowance lowered), £100k (personal allowance, savings allowance withdrawn, tax free childcare), and even at £240k (loss of pension allowance) that the incentive to stop working at various thresholds exists. If you navigate this then when you get to £500k or £1m as a couple, you are exposed to IHT at 40% above that, of course the very rich avoid this, but regular middle classes cannot as easily.
PAYE is awful for the employee. If it didn't exist they would pay the same amount in taxes, but earn considerably more over a lifetime as interest paid into bank accounts. PAYE takes even that away.
Tax is legalised robbery, pay tax on earnings, pay council tax, TV licence tax, Road Tax, 20% VAT on almost everything you buy with your money that's already been taxed
@@footyball66 there is a tax on gambling, with things like the lottery or betting shop it is normally taken on the bet and not the winnings and is basically taken out of the price you pay. It's like insurance tax it's there but the supplier handles it.
Plus tax on side hustle and other online platforms like people making money on ebay amazon, etc and they are snooping on our bank accounts to know what transactions take place! Many businesses are already jumping ship for safety, as this country sinks economically, in other words the government and hmrc are turning the gun on themselves.
The. UK, punishes hardwork and success. As soon as I started getting hit with higher taxes, I either stopped working as much, or I would massively overpay into my pension. So either way, it prevents the money I would have otherwise earned from entering the economy. And then the government wonders why the economy is stagnant
Robert Kiyosaki (the creator of Rich Dad poor Dad) talks about this, the laws are tailored to business people. I’m pretty sure the people that make the laws are business people.
Good that you mentioned Robert Kyosaki Rich dad poor that where he talked lengthy about his rich dad advised to get a secure job and well paid job while his rich dad advice him not to work for money because the moment you start working for money, you now become a slave to money. He talks about how the rich uses the corporation as a loophole vehicle to avoid paying tax legally to the govt. As an employee, you EARN, TAX and SPEND while as a business owner/ investor, you EARN, SPEND and TAX. You have total control of your money and incharge. He talks about financial statement, financial literacy and cash flow quadrants. Are you an E-Employee, an S- Self employed located on the left side of the cash flow quadrant or are you a business owner or an investor located on the right side of the cash flow quadrant. Its the deception of the Robin Hood theory that the poor thought they could use to punish the Rich, there by taking from the rich and five to the poor but the rich are start to protect their asset through various means such as corporations, trust and mutual funds and nothing in their ame but they control everything and the govt now expand the idea and the poor and middle class and high middle class earners are the ones who suffer from higher taxes and not the rich. 😂😂😂😂😂😂
The UK tax system perpetuates inequality with its loopholes favoring the wealthy. While ordinary citizens struggle under heavy tax burdens, corporations and high-net-worth individuals exploit legal gaps to evade their fair share. Such inequity erodes social cohesion and exacerbates economic disparities. Reform is imperative to ensure a just and equitable tax system that serves the interests of all citizens, not just the privileged few.
I saw the length of this video and thought I didn't have the time to listen. Then when you two started wrapping up the convo I realised I have listened to the whole thing and it felt like 20mins. Easy listening. Thank you
1. Tax bands are different for different parts of the UK, so for example Scotland have much more tax brackets. I guess she was talking about England but it should be clearly stated. 2. My understanding is that if u are getting paid a salary, company can put it into its cost and doesn’t pay any tax on it, but for dividends it first needs to pay tax so 19/25%, and then additional 8.75, 33.75% or 39.35%. If it is like this, then it’s higher than 45%… 3. Dividend allowance used to be £5,000, £2,000, £1,000 and now it will be £500 from next year, so it’s constantly decreases. 4. I know there is a hyper inflation elsewhere - Argentina, Turkey, Wenezuela, Nigeria etc., but I don’t think we should compare UK to this countries - USA, Germany, France, Japan, Canada - generally speaking G7 of which UK is a part, is our comparison and a poor countries with unstable economies… 5. During COVID every single country has increased its borrowing and helping people or businesses. The obvious effect was inflation, but high taxes right now? It’s mostly because of the poor performance of UK economy. Brexit is losing us 0.5% every single year. Since 2008 productivity is stagnated. UK is lagging behind its peers, and without real growth, spending needs to come from somewhere. If they can’t generate higher taxes naturally from growing economy, they need to increase taxes. So pandemic is partly to blame but definitely not entirely.
This needs to be pinned a lot of the info given was biased and came with a lot of incorrect conclusions. The tax we are paying isn’t funding anything they make money from thin air I think I more honest conversation should be had with an actual economist to get a wide scope of what the function of tax is and what it does for us. So these percentages and fees are put into context.
@@ife9455 The government is able to print money, and this is true, but first of all it creates inflation, as the sudden injection of huge amount of money which doesn't come from economy destroys its value (hence the government needs to spend more on public services). And then they need to create bonds which covers this printed money. If they were able to create money from thin air without any securities, there wouldn't be a problem with national debt, which is a huge problem for the government, as it is costing more and more. So yes, our taxes goes for public services, government can print money, but it needs to generate debt to do so.
I’m a tax accountant and find it baffling schools teach nothing about tax, yet the government expects everyone to do a ‘self assessment’. This countries a scam 😂
Same in every country (definitely mine, which is not the UK) as far as I see. But on a previous comment, as someone who had a "Gov't Job" for about 30 years, would be considered middle class, this is what happens to most of us during our working years and we catch ourselves after we retire or close. We get caught up in living above our means, taking unnecessary loans & expenses because financial institutions, schools, hotels, airlines , retail outlets, insurance companies etc. sell us a dream that they know we have money to buy. And we buy the dreams because ( we believe) we're earning money, instead of saving as much as we can for the 30 or 40 years of our working lives. The system is not designed to enrich us. Learning how to manage and make money will enrich us.
speaking as an american working in london, this is why i learned to code and currently build and ship apps on the side with MRR’s of 2500-4000 P/M as well as play poker whilst working my day job in banking, its so pathetic how the people i work with are beyond desperate to become managers for an extra 300/400 quod a month (which i make every other day on the side in addition to my wages) the UK is insidious in the way its designed to keep you from true success
First time viewer.. Loved it. Benedicta was wonderful. One thing I will add is...do not leave it until the 31st Jan to call through to HMRC to make payment on or towards your tax bill or to arrange a payment plan, as the lines are busy and you may not get through, so will no doubt pay a late payment fine. So try at least to do a week if not more before the deadline.
I run a business, very scalable yet I keep it small because: 1) Reaching VAT threshold will mean my products are 20% more expensive. Even after ofsetting VAT rebate, I'll still be more expensive, losing my price advantage. 2) Don't want to deal with VAT shenanigans. 3) Don't want to cross 50k income as almost half of what I earn will be gone. Its almost like diminishing return, I would rather spend that time to raise my kid. He will be a better investment. So my take is, this country dosent want you to get rich..
I think Benedicta's closing point of the poverty mindset goes beyond business owners. Too many of us view tax as a penalty, when really they are the dues of living in a 1st world, functioning society with services that don't fund themselves. The least we can all do is give back.
This is the only comment that makes sense here thank you! It’s really mind blowing how nobody wants to pay tax but want to be living in the modern world.
Tbf I think the anger is more the fact that we know the tax we pay could do better but our government just want to increase that tax without increasing the services
They don't need Taxation to run the country. Money (fiat papers) is printed from air like computer generated numbers. Taxation is a means to give value to paper money. That is, Taxation is a means to manage fiat circulation..
SUMMARY Gross income £120k Earn £120,000 in 2023/24 and you'll take home £74,838 across the year. This takes into account the national insurance (NI) change in January 2024. The NI change does mean your take-home pay will vary: From January, you'll take home £6,284 a month Before January, you'd have taken home £6,221 a month Over the year you'll pay £39,432 income tax and £5,730 in national insurance. Almost 40% of you income or 150 days you working for the Government regardless what you are doing.
Nice breakdown. I worked for a tax-free salary for a decade (Middle East), and returning to the UK 🇬🇧 has been a shock to the system. I will leave the UK 🇬🇧 soon for many reasons, but tax is one of the main reasons! I'm a higher rate taxpayer. Last month, I paid over £5k in taxes. PAYE is a scam!
The dividend rate being quoted around 8% in this video is not correctly represented - don’t forget that by the time you draw a dividend out of a business and put that into your pocket - you have already paid corporation tax through your business on the profit you’ve made at 19% below 250k profit and then 25% for above that - to get a real number you need to account for BOTH in order to draw a comparison to earning a salary on standard PAYE. Well put together video though guys, great to be discussing this 👌
Because government make the rules and capital gains are taxed at lower rates - the theory being this is a return on previously tax income that was invested. This encourages people in theory to take risks with capital, in reality the compounding means the rich choose when to realise gains while getting richer like a wealth snowball.
@@garycroft8213 Gordon Brown changed the rules on capital gains tax, lowering the rate of tax, but also removing indexation. So if inflation for the period of ownership of the asset is 20% and the asset has increased 20%, there is no actual gain, but you will still have to pay CGT. Additionally, if CGT is due, it means that the assets are not held in a tax free wrapper (ISA or SIPP) so any dividends in the period would also have been taxable. So while what you say is true, it is also incomplete.
The VAT threshold is ridiculous. My son has a street food business and as soon as he reached £85,000 turnover he had the increase his prices a little and absorb the balance. He went on to double his turnover and in doing so had to employ 2 people. He is no longer as profitable as he was when he first launched. The threshold is the killer and VAT should be scrapped on hot food, or the threshold increased to £250,000. That way, more jobs will be created, saving the government paying out benefits.
I had exactly this experience with the VAT system. Even without employees I earned more turning over £80k than £160k. I eventually just decided to work less, and I am much happier for it. VAT should be abolished entirely, taxing people on turnover makes no sense whatsoever, all it does is discourage small businesses from growing and becoming more successful. There's no point in working hard if you are only going to be penalised for it.
Benedicta, I could listen to you for hours. You put this subject matter across at the perfect level for the average person. I have learned more from listening to you on a podcast then I have my entire life relating to this subject. I also like the way you explain the "narrative" behind the UK Tax system. I've never heard it explained like that before. Especially with regards to keeping "employees" within a "pay band". It makes perfect sense. Keep doing what your doing. Your helping thousands of people wake up from this financial matrix.👌👍
@taiwoolorunyomi6794 I think you better get out while you are not entangled here. Tomorrow with regret will be too late. You will get trapped, I promise you!
The funny thing is anyone on lower earnings always point to higher earners and say we don't pay enough tax... When the reality is we get absolutely shafted in tax. It's the billionaires that are using loop holes keeping money off shore that are avoiding the tax. Not your average 6 figure earner.
Thanks for educating us on the tax system in the uk. We usually get the American tax system, which is different from our in the uk. Thanks for explaining about taxes. It's a good thing that you are doing to help for the people understand.
An alternative perspective to intellectualy biased opinions. Born in the UK to a working class family I started my first business with £500 and went on to become chairman of my own group of companies. Taxation is essential to fund our welfare system and which although somewhat tarnished still the envy of many other nations. To create success in employment or business ignore risk adverse armchair experts and follow your dream with passion and ruthless persitance. Kind regards Tim
Simple, put your money on a life insurance policy, pay the interest rate, ask for a loan against your money. You don't earn any income, you are just taking loans and pay them off with interest, hmrc cannot tax debt
Thank you guys. Such an informative podcast. We never get taught this stuff in the UK education system so please keep going, helping us grow and learn.
Gift aid and pension contribution keeps my 40% taxable income to a minimum. Got to be ahead of the game. I file my tax return by June each year, just to get my refund from HMRC as early as possible😂
This is so silly though. If you think about it.....does it mean that the rest of population go to work naked? They also need to wash the sweat 😂 Should be for everybody.
@@diligenceeke3023 of course I was talking about working population and not unemployed people. In fact those working in offices for a minimum wage have to buy their clothes and wash it. Contrary, blue colour workers are given uniform that they have to wash, same as others and get refund. Seriously? Who invented this nonsense?
Very insightful! I've been running a small limited company for over a decade and what I've learned about the tax system is quite misleading. To say that the lowest tax on the dividend is 8.75% is a great offer does sound fantastic until you realise that actually the tax on the money YOU brought into the company should be taken into account, not just the bit that you pay yourself. In this case, you will be tax on the profit (minus expense) at 19% first. Then when you pay yourself from the remaining amount, you will be taxed again depending on the tax band (PAYE) and the dividend you pay yourself (from 8.75%). So The total tax is what I focus on. I don't get drawn into the fallacy that the profit belongs to the company which is actually an artificial entity. Surely the director expelled energy to work for that money?? As usual, HMRC - a private company- continues to mislead and deceive the people.
@Jonnyicey if your total tax rate is 40% then surely it's effectively 40%. It's the lower tax brackets that have an effectively lower tax rate if you include the tax free allowance.
Thank you for this podcast! I'm a tax accountant myself, however my specialism is VAT in the UK and the rest of Europe. But I'm a bit rusty when it comes to personal taxes so it was really useful revisiting these topics in a conversational format but also getting the scoop on what's to come. Thanks both and to your teams behind the scenes 🍀
Worth mentioning child benefit charge as well, only 1 parent needs to earn more than £50k for you to be required to pay some of it back! Self assessment required for this, this doesn’t get communicated very well at all and so many parents could potentially get caught out…
Solid advice and information. However 44:46 is INCORRECT. Interest is currently charged at 7.75% and accrues from the moment a balance is outstanding. There is no refund and it only stops accruing when the balance clears. Also Time to Pay is agreed to HMRC’s discretion, it is not a right.
Exactly, you still pay income tax at normal rates when you pay yourself. Also with a business you pay NI twice, employers and employees. It only makes sense to have a business if it's a big business, I can't see how anyone can make money in a small business in the UK.
On 260K+, you get pension allowance taper meaning 70%+ marginal income tax rete. The problem is that not everyone who works in a high paying job will do well in business. When you are on a very high salary, it means you have a lot of experience in a very specific area, which probably is quite technical, and to go from being an expert in one technical area to being completely responsible for a business, including sales, marketing, dealing with deliveries, I just don't see how I personally could make it work. Some technical people used to be able to be contractors, but now this loophole is increasingly being closed
Totally this. I earn about £200k. I put £60k in my pension each year so that's tax free. If I had a business its very high risk and most businesses do fail statistically speaking to me it's not worth it and I'm not convinced I would be good at building a business and generating the kind of income I have now. That said we are emigrating to the USA this year where my tax will be 13% and pay will be about 40% higher allowing a much better future for me and my family. That is a better option than attempting to start my own business to me at least.
@rjv000 there are other things i do to save and keep more of my money not talked about here. I have 2 kids both have junior SIPPs. I invest £2880 every year into them, I then get back £720 tactics relief from the government. I have a SIPP for my wife that I manage also where I do the same. When we all leave the UK there is the '5 year rule' which means I can still get this tax relief upto a max of £2880 per each of us for 5 years even when we are not living here and that goes for me too because I won't be taking any income here. That is worth £14400 of free money over 5 years.
Great episode! Thank you 🙏🏿 A couple of things here that i think are worth highlighting: 1. Although we do pay for the NHS and might not use it, I do not know any Americans who think their health system is superior. Our NHS, when properly funded is one of the best health systems in the world. In 2010 and even up to 2012, waiting lists, patient satisfaction, and value for money were in the top 5 and higher. It has been the treatment of the NHS through real term cuts and grant cuts to train nurses and pay cuts for doctors (who are all looking to leave), that the NHS is now in such a shambles. 2. Yes, they want us to all roughly be on the same level, except if you're super rich. Those with millions in wealth have ways to keep their money. Things like capital gains and inheritance tax and ways to avoid are what the Tories have specialised in for themselves and their super rich supporters. This is why the hand outs of the pandemic have ended up in the hands of the super wealthy, while we feel the pressure more and more. Wealthy isn't a couple of hundred thousand pounds, real wealth is measured in millions and they have ways to keep hold of their money. Rishi earns between 20 - 30 million a year in passive income, that's up to £80,000 a day richer, every day, year on year... Does he pay tax on it? NO! And his wife's family are hundreds of times richer than he! Income tax is one tax amongst many and it's regressive as fuck to keep us poor af. The more money you have the more you can keep. Those with the least, pay the highest proportion of their earnings to the government, through NI contributions, income tax, VAT, and inheritance taxes. The system is rigged in their favour.
Yes, it is a very punitive Tax system , but from experience ( 20years practising in Tax law ) , the people who actually should be paying their fair share of Tax ( the rich/ super rich ) never do , and when they do pay any Tax , it is comparatively little ….
I have a brilliant accountant but I have learned that being in business you do 'ultimately' make savings on tax 'overall'. However, HMRC tax your profit 'corporation tax' and your dividend tax 'also from profit' is taxed at 8.75% until a certain amount. (There is a lot to it). It is worth mentioning, pre 2016, there was zero tax on dividends, but 'technically' you are still better off than on a PAYE salary in comparison. There is much less flexibility in what you can consider a 'business expense' than when you are 'self employed'. They are different, something to look into if you decide to start a business. You will either go sole trader or limited. There are pros and cons to both. Having been an employee from 16 - 28 and now a business owner, i have experienced both sided of the fence and the truth is, it comes down to your ambition, and what works best for you. I will say though, running a business is extremely stressful and there is no safety net in comparison to working solely under PAYE.
I already pay for my electric, police and ambulance don't come when you need them, roads are crumbling, If you add together all the taxes you're lucky if you see 25% left. Total scam, pay all that money and get nothing back. UK was built on low tax and now they cant keep it going on high tax. so glad I left this sinking ship
That’s because that was the exploitation of other nations that was funding the building of this nation, now that everyone is cycle, free and independent, and the resources aren’t that easy to steal this is where the UK finds itself
How can I move to isle of Mann? Do you have any advice? Also, if I work for a UK company but live in isle of Mann, do I pay isle of Mann tax or UK tax?
@@green1880 I am not sure, but I believe that taxation is related with the passport/citizenship you hold. If you hold British, no matter where you go, you have to pay tax to Charles 3.
I feel that information like this is golden and not many people know these things- so our ignorance is capitalised on and we are effectively penalised. I had to pause this video put in a claim for tax relief for my work uniform and my nursing registration fees. Thank you.
Am I not right in thinking dividend payments do not count towards your state pension? If so that is definitely worth bearing in mind. Taking some of your profit as a dividend could be beneficial depending on how much you are making, but taking it all as dividend could leave you in serious trouble in old age!
I've watch this 2ice today. It gave me a bit of anxiety if I am being honest. There's soo much to learn and not enough time😢 .. But very grateful for the information. What a ton of help. Subscribed 4 life 💪🏿
Most people benefited from furlough, grant's eat out etc . I got zero pounds from this situation due to being part employed/part self employed. Then I needed 25 weeks off with a prem baby in NICU due to be on life support whilst cost of living went up racking up dept in 2022. But now I'm paying this back everyone's via my tax. We wasn't all in it together.
Stumbled across this channel by chance. I'm not the target market, but I think this is really excellent content. If Benedicta is representative of the quality of the guests in other clips, I'd recommend any young person to subscribe to the channel. Financial literacy is essential, so to explain the basics of income tax so clearly and accessibily is a great service to the viewers. On a side note, just for once I'd like to see a TH-cam video that doesn't have a clickbait headline - explaining is not "exposing" - but that ship has probably already sailed.
Don't simply sign off accounts. Believe me when I say that accountants often make mistakes and it is your responsibility to ensure the accounts are correct. You may then want to consider getting a new accountant if the mistakes were down to carelessness because you will get the big tax bill - not the accountant.
Lol ok and how much do you think insurance will costs for people doing this 'opting out of the nhs' that would be necessary in order to validate this tax discount...
Right on time! Information on the UK tax system. Boring as hell 4 someone like me but so, so necessary. Big thanks, will check Benedicta out and bring a sister more business. 🙏🏾
Used to work in tax for 10 year and found contacting HMRC mostly simple, easy and helpful. Apart from PAYE i've found getting refunds for business pretty easy when they were due. The quickest department to repay would be VAT followed by corporation tax (rare to get a refund, but can happen with the most common being clients having paid with the wrong reference (using corpartion tax reference when should have used VAT's or PAYE).
I'm glad that you shared this because I've been telling people about all this stuff, I do my own accounts and have done for 15 years. I don't manage my bank accounts properly (YET) only because it's took me this long to learn all this stuff plus I've been raising a child for the last 9 years 😅 people just look at me like I'm mad and I'm going to get busted by the tax man 🤦 everything I do is what you've mentioned and is all legal...I wish these people I tell would listen and they'd save some money!
What you miss though is the richest people don’t pay income tax or National Insurance or that much VAT if they don’t spend. The TAX SYSTEM taxes earned income from working for others ( the pay cheque ) it avoids taxing wealthy people all together.
I used to work in the Netherlands and it’s normal to talk about each other’s salaries so some employees don’t get paid more than others. In the uk ppl were silent about it and the one people who benefit from this are the employers because they can pay different salaries to different employees. I was in a company where people were paid for the same role different wages, ranging from £20k to £36k. That’s enormous which benefits the employer
The person that complains to the accountant is proof that we all need better financial literacy here in uk. We ain’t been taught to reason from an early age, whereas the rich people kids have been taught these things from an early age at their private schools. Educate yourselves and then pass on that knowledge to your kids from as early as possible
Thank you so much for this podcast! God bless you both. No gatekeeping on any knowledge. Like straight insights with real life examples. More podcasts like this. She was amazing! 🎤🙏🏾💜 so many useful gems 💎 in the U.K. we don’t talk about financial literacy enough and tax is just one of those things that we just don’t talk about.
Very eloquently simplified for a lot of us, Thank you. And of course taxing more the extremely high income to fund on the very unfortunate members of society is not only moral but necessary for the nation to function. I don't understand why someone on 150k deserves a personal allowance? How are we going to fight homelessness for example of the wealthy keep more of their money?
Learn how the tax system works and how to build your own wealth. You do it for your family legacy Give back to your community - though you have to work on yourself to become wealthy so you can help your family and friends if needed. Also pour community will benefit if you have money and influence
Your comments is abhorrent and annoying. I'm sorry if that sounds harsh. Some people are homeless by choice through drugs, alcoholism, etc. Now some people are wealthy through hard works, sweat and blood. And then to you, morality is to take someone's sweat and blood by force and give it to some homeless guy? The person earning 150 gets taxed to smithereens and yet you are not satisfied. Why not go live in communist China?
@@Matt-vp6eq wow. Are you seriously joking? I'll tell you this.. 25k isn't poor. 14k is getting close. And try living on 11k or less. That's the real.world for the poor.
Young Black people need to be talking business, finance, and economics, not the things that's keeping you distracted. I'll keep it really ready short...learn about delayed gratification, INVEST your money (#BITCOIN) and diversity in tech stocks. Do this to stop yourself from becoming poor slowly. Excellent show...
Your take is a lazy take, I am assuming you just watched a bit and decided that you have figured it all. Even if your understanding was true, its not just laziness. I run a business, very scalable yet I keep it small because: 1) Reaching VAT threshold will mean my products are 20% more expensive. Even after ofsetting VAT rebate, I'll still be more expensive, losing my price advantage. 2) Don't want to deal with VAT shenanigans. 3) Don't want to cross 50k income as almost half of what I earn will be gone. So my take is, this country dosent want you to get rich..
Thanks for the interview. Very interesting . I started searching for Benedicta on TH-cam. I wish more people have those open discussions on finance. Not in a fin terminology. But in a conversation form!
great pod and if there's one thing we should take away from this it is the money game is rigged. We need to look for more substantial wealth and even re-evaluate our values. Unfortunately money is the gate keeper to our desires in life, so that's why we can never truly be free.
Props for sharing info and philosophy on money and the UK tax regime. The people whose standard of life are most impacted by finances are not aware of a lot of these things. Great episode. Just a few things to help people stay informed: - needing a TR to claim employment expenses - relief for pension cont. and gift aid - the dividend allowance - political history around the personal allowance - taxing profit on personal items (chattels) - the £1,000 trading allowance is relatively new - you don't get fined £100 for late payment, it's for late filing - on a time to pay arrangement the penalties are frozen but not the interest, the interest accrues throughout the whole time after the due date, on any unpaid balance She's a chartered accountant not a tax person as she said - she said she has tax people in her team to leverage. Just adding comments so that people can check that they're doing the right thing.
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Hi can you reply to the ronniebiggs message in the comments please
Thank you so much for enlighten us keep up the good work
Just found this channel, some great content. I just started my Ltd in London and this knowledge is invaluable. Thank you so much. keep it up.
It would be intresting to see all expenses that are possible to submit.
@@GU__NI true, I agree
I'm 33 years old, but boy is it good to see young people having real conversation about money/taxes and actually putting some knowledge out there🙏
wtf, you're not old 🤣 if you think 33 is old, you're gonna have a complete meltdown when you get to be middle aged
@@fabulously695 true words😅😅😅😅
And 33 is old? 😂
You should be getting your pension next year 🤣
@@Do27gg lol
As the owner of a small business, finding and hiring a good accountant has proven to be the best investment of both my time and money. HMRC will chase you to the ends of the earth for pennies, but try and get a refund from them... they're always short staffed, whole departments on strike, or other mind bending excuses. Having a professional in your corner who deals with this nonsense, day in and day out, will help you retain your sanity.
Finding a good accountant is another challenge. Most accountants I've come across are lazy.
True
I would not be surprised if this was written by an accountant.
They are short staffed when it comes to reading what they owe us, but if it’s to collect debt from us… they are never short staffed for that.
They deliberately ignore and allow tax to accumulate to a higher rate, then charge certain individuals with “tax evasion”…
@@footyball66 I wish I was. I’m a graphic designer who runs a small agency. I understand basic mathematics but, the idea of submitting tax returns for a limited company didn’t fill me with much excitement. So I hired someone who knew what they were doing. Full disclosure. The firm I use is called FILAN. You won’t find me listed anywhere within the company.
I have been saying this for years! Business is the best way to make money, the more you earn at a 9-5 the more you are penalised!
Yep exactly! Seems like more tax benefits for people with businesses
Personally, I just think everyone should pay fairly into the tax system!
NHS, schools, benefits, etc must be funded.
@cleliofs you get taxed when you withdraw it from your pension - they get you either way.
All the Tories are in business directly or indirectly contributing through stocks shares and profit sharing. Even while on payroll. Everyone has a side hustle and the government itself encourages you to NOT pay taxes that you don't owe. Instead creating jobs and opportunities for others is one way businesses contribute to the economy and to peoples feeling of self worth through work and jobs. Welfare is necessary for some key groups but detrimental to those who would like to work but can't or choose not to because of low wages that keep them at the food bank or near destitute.
@@mrjelfs3705don’t forget investing in your pensions could potentially increase in value but PAYE tax will never benefit you in face value once deducted. It’s gone whereas deductions to your pension account will be invested and most likely grow.
Thanks for having me on the show Ato. So glad to see that this message is resonating with so many. I am a click/link away for anyone who needs more accounting advice/services 😊
My pleasure! Thanks for taking the time to share insights into the Tax system. Going by the several messages and queries we’re going have to do a part 3 soon!
For Sure! @@savvywallet
Please please please keep up the great work. Talking with expertise to use common people on this subject is priceless. I bet all your friends get in touch in April 😊 tax makes my eyes bleed. It is a rabbit hole I get lost in.
what's your business link?
How can we use you as an accountant?
I worked for the government ironically for over 20 years. At 40, I set up my own business. I was scared shitless and had to learn on the fly. I just wish I had done this sooner. I have been educating my kids on the benefits of setting up their own business and not being an "employee." The government absolutely rinse us.
At least you started🎉 well-done
Yeh I understand that being in a business, you are protected because all the elites, politicians, etc own businesses so its harder for them to introduce rug pulls.
Even the dividend one...not really a problem because £1000 tax free is rubbish anyway...
The key is to create a product that earns income for your business. Don't just rely on being a contractor because that rug can be pulled at any time.
@AfterEarthHuman I had a skillset that I gained working for the government most of my life. I just transferred that from government sector to the private sector. Basically I do a similar role, but not for the government anymore. I set up a Ltd company. Im definitely no business expert. But if there is a demand for something, then people will want it and pay for it. The best advice I can give is do not fall into the trap of procrastination. Be proactive, Try a few things if needed and dont be afraid of making a mistake. The last tip is probably what held me back the most. Good luck 👍
Yeah i agree it great to have own business, the sleeless nights the stres the resposibility to bad clients and still be rewarded hansomly buy just paying 26 % tax to hmrc before you pay your income tax. It used to be decent in the uk 20 years ago when i started but not anymore.
Were you a trained VAT officer by any chance? Good luck to you either way.
This lady needs to be on here often as the information she gives us is invaluable
Thank you 🙂
Teaching youth about finances and taxes should become mandatory in schools imagine having this type knowledge from a young age.
The education system is almost entirely divorced from reality and honestly seems like a sales funnel into universities. They don’t even care what degree, they encourage you to get “any” degree because employers want them 😂 which is complete bullshit.
But they won't. They need to make mindless workers not independent business people.
If they taught people the truth about money there would be a revolution tomorrow. Only those who work in finance get told about money mechanics. Explaining the reality of a mortgage transaction to a 8yr old and they would tell you it's a scam. The bank never gave you any money it created once you signed the contract and now you get for decades to pay it back 😂😂
@dgamerssvideoreaction7666 Lol, this is so true. I sussed the scam when i questioned my dad on these types of matters. I remember him breaking down the concept of working 40 hrs a week and only being 'allowed' four weeks time off a year - that also had to be authorised. Mind 🤯. It was at that point i realised that type of adulting was not for me 😅
@@RachelLondon That's it don't be a PAYE wage slave. Set up a company or become self employed only way to make any real money 👍🏻
The biggest scam is what we call a job,you work 40yrs, 8hrs a day. Therefore, after you retire, you are broke. How that's not scam?.
once you are an adult and working....that's pretty much most of what life is....work and sleep.....until you are 71 (which will likely be the state pension age for most)
Meanwhile, they take out the value of the currency, the purchasing power. That's cheating. 🔥
Unless you save every solitary penny and put away in higher interest accounts or investments. Meaning you live no life, no holidays, no eating out, no fun experiences. Just a miserable ordinary life. Throw kids into the mix, all your money goes on raising them. It's a rough deal being a working or middle income earner. You have to be earning quite alot and hire accountants to tax dodge to live well in this country.
there are investing opportunities out there that can somewhat help... but yeah, not many would consider those options.@@Natta44
UK Tax system is unnecessarily complex....I don't know who designed it but life doesn't have to be this difficult.
It's designed to keep the poor stay poor, especially if you work in minimum wage jobs. I worked fulltime in London four years, and I didn't have any savings left.
By design, watch the corporation movie, and zeitgeist and 97% owned for more info.
@@InkulabiIs Corporation Movie the title of the movie?
@@ambpetertobio6168" the corporation "
😅 I think it's purposely complicated... it's taken years of studying and engaging with the system to get to understand and know what I know now.
You hit the nail on the head about the PAYE system being designed to keeo everyone around the same level. The IR35 legislation was because the government was scared of too many people breaking out as freelancers so they have created a hostile environment, so that now clients are so afraid of tax penalties that 90% are forcing employment.
In addition the UK tax system is so broken with traps at £50k (child benefit and savings allowance lowered), £100k (personal allowance, savings allowance withdrawn, tax free childcare), and even at £240k (loss of pension allowance) that the incentive to stop working at various thresholds exists.
If you navigate this then when you get to £500k or £1m as a couple, you are exposed to IHT at 40% above that, of course the very rich avoid this, but regular middle classes cannot as easily.
It’s £260k now not £240 btw. Annual allowance is now £60k.
PAYE is awful for the employee. If it didn't exist they would pay the same amount in taxes, but earn considerably more over a lifetime as interest paid into bank accounts. PAYE takes even that away.
Tax is legalised robbery, pay tax on earnings, pay council tax, TV licence tax, Road Tax, 20% VAT on almost everything you buy with your money that's already been taxed
TV licence tax 👀
It really is a disgrace, then you get taxed on your pension too… it’s disgusting !
This is all so taxing.
who pays TV License nowadays anyway.. Oh wait, do you??
@@RUX70N Tell me about it 😅
Business owner here and trust me, they still get you! Corporation tax, income tax, employers NI. Tax on dividends, it’s a multi whammy
Just have to make more money
@@snorttroll4379more money leads to more tax spending
tax on crypto - which is basically gambling...... gambling is one thing they don't tax.
@@footyball66 there is a tax on gambling, with things like the lottery or betting shop it is normally taken on the bet and not the winnings and is basically taken out of the price you pay. It's like insurance tax it's there but the supplier handles it.
Plus tax on side hustle and other online platforms like people making money on ebay amazon, etc and they are snooping on our bank accounts to know what transactions take place! Many businesses are already jumping ship for safety, as this country sinks economically, in other words the government and hmrc are turning the gun on themselves.
Brilliant lady, to explain with such clarity is a skill, thank you
your welcome 🙂
The. UK, punishes hardwork and success.
As soon as I started getting hit with higher taxes, I either stopped working as much, or I would massively overpay into my pension.
So either way, it prevents the money I would have otherwise earned from entering the economy.
And then the government wonders why the economy is stagnant
They tax the pension in the future though. Scam move by the govt.
Well remember they are going to tax your pension which was money that was already taxed haha
@@prich0382 it's daylight robbery
What is the tax rate comparison for paying into your pension instead of receiving it as income?
There is zero tax when paying into a pension. hence why i do it. so that i do not get ripped off with Income tax
I had enough of the uk tax scam and moved to isle of man
That's interesting how is it different there?
@@jordanhtiffirg1990 yeh isn't that still the UK?
@@Andy-si1pl lmao 🤣
Tax is like 7% there or something g crazy
@@Ceebreeshh-ps5 oh yeh I actually forgot places like that existed in the UK! Jersey is another one.
Robert Kiyosaki (the creator of Rich Dad poor Dad) talks about this, the laws are tailored to business people. I’m pretty sure the people that make the laws are business people.
Also the people that make the laws are then hired after by companies so that they know all the loopholes to not pay tax
@@therealjag wow, I didn't think of this, that makes perfect sense
The people who make the laws are on the house of lords. They they used to be the land owners in the UK.
Good that you mentioned Robert Kyosaki Rich dad poor that where he talked lengthy about his rich dad advised to get a secure job and well paid job while his rich dad advice him not to work for money because the moment you start working for money, you now become a slave to money.
He talks about how the rich uses the corporation as a loophole vehicle to avoid paying tax legally to the govt.
As an employee, you EARN, TAX and SPEND while as a business owner/ investor, you EARN, SPEND and TAX. You have total control of your money and incharge.
He talks about financial statement, financial literacy and cash flow quadrants. Are you an E-Employee, an S- Self employed located on the left side of the cash flow quadrant or are you a business owner or an investor located on the right side of the cash flow quadrant.
Its the deception of the Robin Hood theory that the poor thought they could use to punish the Rich, there by taking from the rich and five to the poor but the rich are start to protect their asset through various means such as corporations, trust and mutual funds and nothing in their ame but they control everything and the govt now expand the idea and the poor and middle class and high middle class earners are the ones who suffer from higher taxes and not the rich. 😂😂😂😂😂😂
Most definitely - which is why we need to join them!
The joke of it all is even MPs especially the Prime Minister use regular tax evasion tactics/loopholes.
The PM is a multimillionaire. All very wealthy people dodge taxes through legal ways.
PM's net worth is 730 million
@@SilentWalker-if4ncWhich proves to me he’s not here for us. He has no idea who ‘us’ even are!!
Tax avoidance not evasion, the only difference is one is illegal and the other just immoral
Because they are informed. Take advantage of UK tax laws
The UK tax system perpetuates inequality with its loopholes favoring the wealthy. While ordinary citizens struggle under heavy tax burdens, corporations and high-net-worth individuals exploit legal gaps to evade their fair share.
Such inequity erodes social cohesion and exacerbates economic disparities. Reform is imperative to ensure a just and equitable tax system that serves the interests of all citizens, not just the privileged few.
I saw the length of this video and thought I didn't have the time to listen. Then when you two started wrapping up the convo I realised I have listened to the whole thing and it felt like 20mins. Easy listening. Thank you
1. Tax bands are different for different parts of the UK, so for example Scotland have much more tax brackets. I guess she was talking about England but it should be clearly stated.
2. My understanding is that if u are getting paid a salary, company can put it into its cost and doesn’t pay any tax on it, but for dividends it first needs to pay tax so 19/25%, and then additional 8.75, 33.75% or 39.35%. If it is like this, then it’s higher than 45%…
3. Dividend allowance used to be £5,000, £2,000, £1,000 and now it will be £500 from next year, so it’s constantly decreases.
4. I know there is a hyper inflation elsewhere - Argentina, Turkey, Wenezuela, Nigeria etc., but I don’t think we should compare UK to this countries - USA, Germany, France, Japan, Canada - generally speaking G7 of which UK is a part, is our comparison and a poor countries with unstable economies…
5. During COVID every single country has increased its borrowing and helping people or businesses. The obvious effect was inflation, but high taxes right now? It’s mostly because of the poor performance of UK economy. Brexit is losing us 0.5% every single year. Since 2008 productivity is stagnated. UK is lagging behind its peers, and without real growth, spending needs to come from somewhere. If they can’t generate higher taxes naturally from growing economy, they need to increase taxes. So pandemic is partly to blame but definitely not entirely.
This needs to be pinned a lot of the info given was biased and came with a lot of incorrect conclusions. The tax we are paying isn’t funding anything they make money from thin air I think I more honest conversation should be had with an actual economist to get a wide scope of what the function of tax is and what it does for us. So these percentages and fees are put into context.
@@ife9455 The government is able to print money, and this is true, but first of all it creates inflation, as the sudden injection of huge amount of money which doesn't come from economy destroys its value (hence the government needs to spend more on public services). And then they need to create bonds which covers this printed money. If they were able to create money from thin air without any securities, there wouldn't be a problem with national debt, which is a huge problem for the government, as it is costing more and more. So yes, our taxes goes for public services, government can print money, but it needs to generate debt to do so.
I’m a tax accountant and find it baffling schools teach nothing about tax, yet the government expects everyone to do a ‘self assessment’. This countries a scam 😂
Why would they want to teach about tax😂 it’s something parents should teach their children
@@Daughterofjah3 what? You do realise most parents don’t know much about tax
Completely agree! It's madness the amount of things you have to teach yourself
@@savvywallet that’s why this podcast was not only entertaining but important, keep it up and subbed
Same in every country (definitely mine, which is not the UK) as far as I see.
But on a previous comment, as someone who had a "Gov't Job" for about 30 years, would be considered middle class, this is what happens to most of us during our working years and we catch ourselves after we retire or close.
We get caught up in living above our means, taking unnecessary loans & expenses because financial institutions, schools, hotels, airlines , retail outlets, insurance companies etc. sell us a dream that they know we have money to buy. And we buy the dreams because ( we believe) we're earning money, instead of saving as much as we can for the 30 or 40 years of our working lives.
The system is not designed to enrich us. Learning how to manage and make money will enrich us.
Such a intelligent woman who clearly cares for people’s well being beautiful soul💜
Thank you ♥
speaking as an american working in london, this is why i learned to code and currently build and ship apps on the side with MRR’s of 2500-4000 P/M as well as play poker whilst working my day job in banking, its so pathetic how the people i work with are beyond desperate to become managers for an extra 300/400 quod a month (which i make every other day on the side in addition to my wages) the UK is insidious in the way its designed to keep you from true success
Awesome man! Is your main job programming too?
Poker. Do you lose much? That sounds so risky.
True talk
Awesome YT handle bro. Iykyk
First time viewer.. Loved it. Benedicta was wonderful. One thing I will add is...do not leave it until the 31st Jan to call through to HMRC to make payment on or towards your tax bill or to arrange a payment plan, as the lines are busy and you may not get through, so will no doubt pay a late payment fine. So try at least to do a week if not more before the deadline.
Better still, make payments on account as it helps you to phase out costs.
another sheep you lot make me sick
Ideally before Christmas because come January all the accountants seem so busy and just about do your accounts before the deadline 🤦🏾♀️
Why not to do it online? Straightforward, no need to hire anybody. I am really surprised how some people have no idea about basic things...
100% agree with that! HMRC take no hostages when it comes to late fillings. Even when zero tax is owed! Thank you for your kind words ☺
I've only just come across this page. Financial literacy is so important and yet so lacking. Bravo
I run a business, very scalable yet I keep it small because:
1) Reaching VAT threshold will mean my products are 20% more expensive. Even after ofsetting VAT rebate, I'll still be more expensive, losing my price advantage.
2) Don't want to deal with VAT shenanigans.
3) Don't want to cross 50k income as almost half of what I earn will be gone. Its almost like diminishing return, I would rather spend that time to raise my kid. He will be a better investment.
So my take is, this country dosent want you to get rich..
I think Benedicta's closing point of the poverty mindset goes beyond business owners. Too many of us view tax as a penalty, when really they are the dues of living in a 1st world, functioning society with services that don't fund themselves. The least we can all do is give back.
This is the only comment that makes sense here thank you! It’s really mind blowing how nobody wants to pay tax but want to be living in the modern world.
Economics should be a compulsory subject to teach people these basics
Tbf I think the anger is more the fact that we know the tax we pay could do better but our government just want to increase that tax without increasing the services
There is so much clarity in this conversation. Very good and sensible talk.
They don't need Taxation to run the country. Money (fiat papers) is printed from air like computer generated numbers. Taxation is a means to give value to paper money. That is, Taxation is a means to manage fiat circulation..
!!!
and manage how much fiat money people have, by way of control
@@willdatsun Very true
SUMMARY Gross income £120k
Earn £120,000 in 2023/24 and you'll take home £74,838 across the year. This takes into account the national insurance (NI) change in January 2024.
The NI change does mean your take-home pay will vary:
From January, you'll take home £6,284 a month
Before January, you'd have taken home £6,221 a month
Over the year you'll pay £39,432 income tax and £5,730 in national insurance.
Almost 40% of you income or 150 days you working for the Government regardless what you are doing.
Nice breakdown. I worked for a tax-free salary for a decade (Middle East), and returning to the UK 🇬🇧 has been a shock to the system. I will leave the UK 🇬🇧 soon for many reasons, but tax is one of the main reasons! I'm a higher rate taxpayer. Last month, I paid over £5k in taxes. PAYE is a scam!
Disgusting system
@@LET-ME-EDUCATE-YOUhow is life in the middle east compared to here ?
If you don't mind me asking what was your take home pay whilst in middle east Vs uk@@LET-ME-EDUCATE-YOU
They call it gross because it’s disgusting
No clearer example of the old feudal class system than the tax system. PAYE = slave , Ltd companies= slave owner, Charitable Trusts= nobles
Yip never work for the Man, sorry girls or the Ladies.
Very true. Same goal, but newer system.
The tax system is super depressing for us employees. Brilliant episode and I love the vibe from Benedicta
The dividend rate being quoted around 8% in this video is not correctly represented - don’t forget that by the time you draw a dividend out of a business and put that into your pocket - you have already paid corporation tax through your business on the profit you’ve made at 19% below 250k profit and then 25% for above that - to get a real number you need to account for BOTH in order to draw a comparison to earning a salary on standard PAYE. Well put together video though guys, great to be discussing this 👌
How did Rishi Sunak only pay 23% tax on millions earnt 😢
Because government make the rules and capital gains are taxed at lower rates - the theory being this is a return on previously tax income that was invested. This encourages people in theory to take risks with capital, in reality the compounding means the rich choose when to realise gains while getting richer like a wealth snowball.
@@garycroft8213 Gordon Brown changed the rules on capital gains tax, lowering the rate of tax, but also removing indexation. So if inflation for the period of ownership of the asset is 20% and the asset has increased 20%, there is no actual gain, but you will still have to pay CGT. Additionally, if CGT is due, it means that the assets are not held in a tax free wrapper (ISA or SIPP) so any dividends in the period would also have been taxable. So while what you say is true, it is also incomplete.
@@MrMr-ceaseanddesisterI just got lost here. Too deep for me. Interesting info - thanks.
The VAT threshold is ridiculous. My son has a street food business and as soon as he reached £85,000 turnover he had the increase his prices a little and absorb the balance. He went on to double his turnover and in doing so had to employ 2 people. He is no longer as profitable as he was when he first launched. The threshold is the killer and VAT should be scrapped on hot food, or the threshold increased to £250,000. That way, more jobs will be created, saving the government paying out benefits.
Less money and I bet more stress.
I had exactly this experience with the VAT system. Even without employees I earned more turning over £80k than £160k. I eventually just decided to work less, and I am much happier for it. VAT should be abolished entirely, taxing people on turnover makes no sense whatsoever, all it does is discourage small businesses from growing and becoming more successful. There's no point in working hard if you are only going to be penalised for it.
So important to talk about money; the younger generation need this info for sure.
Benedicta, I could listen to you for hours. You put this subject matter across at the perfect level for the average person. I have learned more from listening to you on a podcast then I have my entire life relating to this subject. I also like the way you explain the "narrative" behind the UK Tax system. I've never heard it explained like that before. Especially with regards to keeping "employees" within a "pay band". It makes perfect sense. Keep doing what your doing. Your helping thousands of people wake up from this financial matrix.👌👍
This is so nice. I moved to the UK last year and felt I need to know how manage my earnings here. Thanks for the knowledge shared.
@taiwoolorunyomi6794 I think you better get out while you are not entangled here. Tomorrow with regret will be too late. You will get trapped, I promise you!
The funny thing is anyone on lower earnings always point to higher earners and say we don't pay enough tax... When the reality is we get absolutely shafted in tax.
It's the billionaires that are using loop holes keeping money off shore that are avoiding the tax. Not your average 6 figure earner.
First time viewer & new subx - this has been life changing! No hype! Running with this! Thank you!
Thanks for educating us on the tax system in the uk. We usually get the American tax system, which is different from our in the uk. Thanks for explaining about taxes. It's a good thing that you are doing to help for the people understand.
An alternative perspective to intellectualy biased opinions. Born in the UK to a working class family I started my first business with £500 and went on to become chairman of my own group of companies. Taxation is essential to fund our welfare system and which although somewhat tarnished still the envy of many other nations. To create success in employment or business ignore risk adverse armchair experts and follow your dream with passion and ruthless persitance. Kind regards Tim
Simple, put your money on a life insurance policy, pay the interest rate, ask for a loan against your money. You don't earn any income, you are just taking loans and pay them off with interest, hmrc cannot tax debt
HMRC mafia coming for EVERYBODY.
Great interview
😂😂
Thank you guys. Such an informative podcast. We never get taught this stuff in the UK education system so please keep going, helping us grow and learn.
More content like this please, this conversation is invaluable. I will be sharing with my children.
Gift aid and pension contribution keeps my 40% taxable income to a minimum. Got to be ahead of the game. I file my tax return by June each year, just to get my refund from HMRC as early as possible😂
If you have a uniform at work and launder it yourself, you can reduce your tax by filling out a form to claim for your laundry
This is so silly though. If you think about it.....does it mean that the rest of population go to work naked? They also need to wash the sweat 😂 Should be for everybody.
@@evamandri No. Not for non-working population. It makes absolute sense.
@@diligenceeke3023 of course I was talking about working population and not unemployed people. In fact those working in offices for a minimum wage have to buy their clothes and wash it. Contrary, blue colour workers are given uniform that they have to wash, same as others and get refund. Seriously? Who invented this nonsense?
@@evamandri The people who want to tax the life out of your money are the ones making people to device means to get some of their money back.
The self assessment on private pensions tip is a gem ! Thank you
I loved how she broke things down. I would love her to be my accounts if I had a business. But after this I might have to start one.
We need more people like her 👌🏾!!! Great episode really enjoyed watching this one.. bring her back
Very insightful! I've been running a small limited company for over a decade and what I've learned about the tax system is quite misleading. To say that the lowest tax on the dividend is 8.75% is a great offer does sound fantastic until you realise that actually the tax on the money YOU brought into the company should be taken into account, not just the bit that you pay yourself. In this case, you will be tax on the profit (minus expense) at 19% first. Then when you pay yourself from the remaining amount, you will be taxed again depending on the tax band (PAYE) and the dividend you pay yourself (from 8.75%). So The total tax is what I focus on. I don't get drawn into the fallacy that the profit belongs to the company which is actually an artificial entity. Surely the director expelled energy to work for that money?? As usual, HMRC - a private company- continues to mislead and deceive the people.
Surely if you expense as much of your living expenses through the business it still works out more tax efficient.
After 100k, you end up in the 60% tax trap especially bonus season. Salary sacrifice is your best friend
i thought it was 40% tax bracket.
@@skillfuldabest It is but you start to lose your tax free allowance so the effective tax rate is 60
@Jonnyicey if your total tax rate is 40% then surely it's effectively 40%. It's the lower tax brackets that have an effectively lower tax rate if you include the tax free allowance.
@@skillfuldabest every quid over 100k you lose 60p on tax, most consider than an effective tax rate of 60 percent.
@@Jonnyicey Yes, but i'm talking about your overall salary. Just looked it up and on £100k salary you pay roughly £33k in taxes.
Thank you for this podcast! I'm a tax accountant myself, however my specialism is VAT in the UK and the rest of Europe. But I'm a bit rusty when it comes to personal taxes so it was really useful revisiting these topics in a conversational format but also getting the scoop on what's to come. Thanks both and to your teams behind the scenes 🍀
Great episode guys! Keep these coming.. This is info we need!
Worth mentioning child benefit charge as well, only 1 parent needs to earn more than £50k for you to be required to pay some of it back! Self assessment required for this, this doesn’t get communicated very well at all and so many parents could potentially get caught out…
Not to mention if there are two parents and both earn £49,999 neither is subject to the charge. A loophole, yes.
After paying 19% Corporation Tax + the dividend tax (8.75% / 33.75% / 39.35%) - is NOT always cheaper than paying income tax
Vat too!
Corporation Tax is now 25% not 19%
@@RandomVideosFirst for profit £250k and over.
My thought too..
@@RandomVideosFirst small businesses still pay 19%
Solid advice and information. However 44:46 is INCORRECT. Interest is currently charged at 7.75% and accrues from the moment a balance is outstanding. There is no refund and it only stops accruing when the balance clears. Also Time to Pay is agreed to HMRC’s discretion, it is not a right.
The money in the company isn't your money to spend. You don't just pay 19% or 25% corporation tax if you want the money in your personal bank account.
Exactly, you still pay income tax at normal rates when you pay yourself. Also with a business you pay NI twice, employers and employees. It only makes sense to have a business if it's a big business, I can't see how anyone can make money in a small business in the UK.
On 260K+, you get pension allowance taper meaning 70%+ marginal income tax rete. The problem is that not everyone who works in a high paying job will do well in business. When you are on a very high salary, it means you have a lot of experience in a very specific area, which probably is quite technical, and to go from being an expert in one technical area to being completely responsible for a business, including sales, marketing, dealing with deliveries, I just don't see how I personally could make it work. Some technical people used to be able to be contractors, but now this loophole is increasingly being closed
Totally this. I earn about £200k. I put £60k in my pension each year so that's tax free. If I had a business its very high risk and most businesses do fail statistically speaking to me it's not worth it and I'm not convinced I would be good at building a business and generating the kind of income I have now. That said we are emigrating to the USA this year where my tax will be 13% and pay will be about 40% higher allowing a much better future for me and my family. That is a better option than attempting to start my own business to me at least.
@sl0w_racer which industry are you in out of interest
@rjv000 I'm in technology spent about 25 years building software
@rjv000 there are other things i do to save and keep more of my money not talked about here. I have 2 kids both have junior SIPPs. I invest £2880 every year into them, I then get back £720 tactics relief from the government. I have a SIPP for my wife that I manage also where I do the same. When we all leave the UK there is the '5 year rule' which means I can still get this tax relief upto a max of £2880 per each of us for 5 years even when we are not living here and that goes for me too because I won't be taking any income here. That is worth £14400 of free money over 5 years.
@@sl0w_racervery clever
Great episode! Thank you 🙏🏿
A couple of things here that i think are worth highlighting:
1. Although we do pay for the NHS and might not use it, I do not know any Americans who think their health system is superior. Our NHS, when properly funded is one of the best health systems in the world. In 2010 and even up to 2012, waiting lists, patient satisfaction, and value for money were in the top 5 and higher. It has been the treatment of the NHS through real term cuts and grant cuts to train nurses and pay cuts for doctors (who are all looking to leave), that the NHS is now in such a shambles.
2. Yes, they want us to all roughly be on the same level, except if you're super rich. Those with millions in wealth have ways to keep their money. Things like capital gains and inheritance tax and ways to avoid are what the Tories have specialised in for themselves and their super rich supporters. This is why the hand outs of the pandemic have ended up in the hands of the super wealthy, while we feel the pressure more and more. Wealthy isn't a couple of hundred thousand pounds, real wealth is measured in millions and they have ways to keep hold of their money.
Rishi earns between 20 - 30 million a year in passive income, that's up to £80,000 a day richer, every day, year on year... Does he pay tax on it? NO! And his wife's family are hundreds of times richer than he!
Income tax is one tax amongst many and it's regressive as fuck to keep us poor af. The more money you have the more you can keep. Those with the least, pay the highest proportion of their earnings to the government, through NI contributions, income tax, VAT, and inheritance taxes. The system is rigged in their favour.
💯
Yes, it is a very punitive Tax system , but from experience ( 20years practising in Tax law ) , the people who actually should be paying their fair share of Tax ( the rich/ super rich ) never do , and when they do pay any Tax , it is comparatively little ….
Im moving to Dubai, not just for the weather.
Don't tempt me 😊
Lol. Good move😊
What other countries are tax free?
@@BoujeeBossBlueprint
Most of them rich Arab nations
@@BoujeeBossBlueprint qatar
I have a brilliant accountant but I have learned that being in business you do 'ultimately' make savings on tax 'overall'. However, HMRC tax your profit 'corporation tax' and your dividend tax 'also from profit' is taxed at 8.75% until a certain amount. (There is a lot to it). It is worth mentioning, pre 2016, there was zero tax on dividends, but 'technically' you are still better off than on a PAYE salary in comparison.
There is much less flexibility in what you can consider a 'business expense' than when you are 'self employed'. They are different, something to look into if you decide to start a business. You will either go sole trader or limited. There are pros and cons to both.
Having been an employee from 16 - 28 and now a business owner, i have experienced both sided of the fence and the truth is, it comes down to your ambition, and what works best for you. I will say though, running a business is extremely stressful and there is no safety net in comparison to working solely under PAYE.
I already pay for my electric, police and ambulance don't come when you need them, roads are crumbling, If you add together all the taxes you're lucky if you see 25% left. Total scam, pay all that money and get nothing back. UK was built on low tax and now they cant keep it going on high tax. so glad I left this sinking ship
That’s because that was the exploitation of other nations that was funding the building of this nation, now that everyone is cycle, free and independent, and the resources aren’t that easy to steal this is where the UK finds itself
How can I move to isle of Mann? Do you have any advice?
Also, if I work for a UK company but live in isle of Mann, do I pay isle of Mann tax or UK tax?
@@green1880 I am not sure, but I believe that taxation is related with the passport/citizenship you hold. If you hold British, no matter where you go, you have to pay tax to Charles 3.
@@GloriAteus what if you own multiple passports/citizenships
Thanks for this! Podcast really enjoyed it. Bring her on for tax segments to have her as a regular :)
I feel that information like this is golden and not many people know these things- so our ignorance is capitalised on and we are effectively penalised. I had to pause this video put in a claim for tax relief for my work uniform and my nursing registration fees. Thank you.
Pls what can I claim tax relief on?
Do private nursing....much more lucrative ....
@@hayzofficial7229speak to an accountant Hun x
Am I not right in thinking dividend payments do not count towards your state pension? If so that is definitely worth bearing in mind. Taking some of your profit as a dividend could be beneficial depending on how much you are making, but taking it all as dividend could leave you in serious trouble in old age!
I've watch this 2ice today. It gave me a bit of anxiety if I am being honest. There's soo much to learn and not enough time😢 .. But very grateful for the information. What a ton of help. Subscribed 4 life 💪🏿
It’s never too late to start learning about personal finance, you’ve taken a step in the right direction! Appreciate you watching
Most people benefited from furlough, grant's eat out etc . I got zero pounds from this situation due to being part employed/part self employed. Then I needed 25 weeks off with a prem baby in NICU due to be on life support whilst cost of living went up racking up dept in 2022. But now I'm paying this back everyone's via my tax. We wasn't all in it together.
Stumbled across this channel by chance. I'm not the target market, but I think this is really excellent content. If Benedicta is representative of the quality of the guests in other clips, I'd recommend any young person to subscribe to the channel. Financial literacy is essential, so to explain the basics of income tax so clearly and accessibily is a great service to the viewers.
On a side note, just for once I'd like to see a TH-cam video that doesn't have a clickbait headline - explaining is not "exposing" - but that ship has probably already sailed.
Don't simply sign off accounts. Believe me when I say that accountants often make mistakes and it is your responsibility to ensure the accounts are correct. You may then want to consider getting a new accountant if the mistakes were down to carelessness because you will get the big tax bill - not the accountant.
Back to watch a second time, pure gems in this from sister!
This is the most clearly tax has been explained for me and I have an accountant well done guys!!!
Stumbled on this page. Love how my people are in tune and have made a platform talking about these things!! Subscribed immediately
The NHS also keeps you poor. It’s best to give tax cuts to families who opt for private insurance!
Lol ok and how much do you think insurance will costs for people doing this 'opting out of the nhs' that would be necessary in order to validate this tax discount...
Private insurance, doesn't work for those that can't afford it. in the USA a replacement hip cost can be over $40000
@@qrogueukmust be made out of adamantium..
Watched a snippet of tiktok. Tiktok brought me here. She breaks this down brilliantly 👏🏾
Not gonna lie, never heard of this pod before, but this was a really good and interesting. With a lot of information I’ll take on board.
Right on time!
Information on the UK tax system. Boring as hell 4 someone like me but so, so necessary.
Big thanks, will check Benedicta out and bring a sister more business. 🙏🏾
This was absolutely amazing. Thank you so so much.
I have heard of these things before, but did not know the full details.
👏🏾👏🏾👏🏾👏🏾👏🏾👏🏾🤗
Used to work in tax for 10 year and found contacting HMRC mostly simple, easy and helpful.
Apart from PAYE i've found getting refunds for business pretty easy when they were due.
The quickest department to repay would be VAT followed by corporation tax (rare to get a refund, but can happen with the most common being clients having paid with the wrong reference (using corpartion tax reference when should have used VAT's or PAYE).
I'm glad that you shared this because I've been telling people about all this stuff, I do my own accounts and have done for 15 years. I don't manage my bank accounts properly (YET) only because it's took me this long to learn all this stuff plus I've been raising a child for the last 9 years 😅 people just look at me like I'm mad and I'm going to get busted by the tax man 🤦 everything I do is what you've mentioned and is all legal...I wish these people I tell would listen and they'd save some money!
What you miss though is the richest people don’t pay income tax or National Insurance or that much VAT if they don’t spend.
The TAX SYSTEM taxes earned income from working for others ( the pay cheque ) it avoids taxing wealthy people all together.
Really beneficial discussion - thanks guys!
Thank you, glad you found it valuable!
I used to work in the Netherlands and it’s normal to talk about each other’s salaries so some employees don’t get paid more than others.
In the uk ppl were silent about it and the one people who benefit from this are the employers because they can pay different salaries to different employees. I was in a company where people were paid for the same role different wages, ranging from £20k to £36k. That’s enormous which benefits the employer
Where does all that tax go, what do they do with it??
The person that complains to the accountant is proof that we all need better financial literacy here in uk.
We ain’t been taught to reason from an early age, whereas the rich people kids have been taught these things from an early age at their private schools. Educate yourselves and then pass on that knowledge to your kids from as early as possible
Exactly. I just read the comments and was surprised by the quality of comments.
Thank you so much for this podcast! God bless you both. No gatekeeping on any knowledge. Like straight insights with real life examples. More podcasts like this. She was amazing! 🎤🙏🏾💜 so many useful gems 💎 in the U.K. we don’t talk about financial literacy enough and tax is just one of those things that we just don’t talk about.
This was 100% useful and applicable. Simple stuff that we should all know, but we don't.
Thanks Benedicta Egbeme. You are wonderful. You are a good mentor
Very eloquently simplified for a lot of us, Thank you. And of course taxing more the extremely high income to fund on the very unfortunate members of society is not only moral but necessary for the nation to function. I don't understand why someone on 150k deserves a personal allowance? How are we going to fight homelessness for example of the wealthy keep more of their money?
Learn how the tax system works and how to build your own wealth.
You do it for your family legacy
Give back to your community - though you have to work on yourself to become wealthy so you can help your family and friends if needed. Also pour community will benefit if you have money and influence
150k ain't wealthy!
Your comments is abhorrent and annoying. I'm sorry if that sounds harsh. Some people are homeless by choice through drugs, alcoholism, etc. Now some people are wealthy through hard works, sweat and blood. And then to you, morality is to take someone's sweat and blood by force and give it to some homeless guy? The person earning 150 gets taxed to smithereens and yet you are not satisfied. Why not go live in communist China?
@@Matt-vp6eq wow. Are you seriously joking? I'll tell you this.. 25k isn't poor. 14k is getting close. And try living on 11k or less. That's the real.world for the poor.
Young Black people need to be talking business, finance, and economics, not the things that's keeping you distracted.
I'll keep it really ready short...learn about delayed gratification, INVEST your money (#BITCOIN) and diversity in tech stocks. Do this to stop yourself from becoming poor slowly.
Excellent show...
Young white people too really
@neilcook1652 Yes, everyone, but for black people to get a fair share of the pie, this is the only way.
@@ittanbantan I think you’ll find it’s the only way anyone can get a piece of the pie
Hence why more Black people need to focus on that.
@@ittanbantan 😂
Poverty mindset! I know ppl like that! I’d rather have tax to pay than no money to pay tax or not having enough income to have to pay tax!
Exactly! At the end of the day, it's your net income and what you do with it that matters.
Your take is a lazy take, I am assuming you just watched a bit and decided that you have figured it all.
Even if your understanding was true, its not just laziness. I run a business, very scalable yet I keep it small because:
1) Reaching VAT threshold will mean my products are 20% more expensive. Even after ofsetting VAT rebate, I'll still be more expensive, losing my price advantage.
2) Don't want to deal with VAT shenanigans.
3) Don't want to cross 50k income as almost half of what I earn will be gone.
So my take is, this country dosent want you to get rich..
@@MrMalam1234I completely agree with you. I have the same problems
Thanks for the interview. Very interesting . I started searching for Benedicta on TH-cam. I wish more people have those open discussions on finance. Not in a fin terminology. But in a conversation form!
great pod and if there's one thing we should take away from this it is the money game is rigged. We need to look for more substantial wealth and even re-evaluate our values. Unfortunately money is the gate keeper to our desires in life, so that's why we can never truly be free.
As a new sole trader registered with HMRC This is so helpful , THANK you so very much. God bless😇
What are you selling?
My accountant ! She’s amazing & I 1000% recommend her 💖
Props for sharing info and philosophy on money and the UK tax regime. The people whose standard of life are most impacted by finances are not aware of a lot of these things. Great episode.
Just a few things to help people stay informed:
- needing a TR to claim employment expenses
- relief for pension cont. and gift aid
- the dividend allowance
- political history around the personal allowance
- taxing profit on personal items (chattels)
- the £1,000 trading allowance is relatively new
- you don't get fined £100 for late payment, it's for late filing
- on a time to pay arrangement the penalties are frozen but not the interest, the interest accrues throughout the whole time after the due date, on any unpaid balance
She's a chartered accountant not a tax person as she said - she said she has tax people in her team to leverage. Just adding comments so that people can check that they're doing the right thing.
This information is needed best podcast well done guys 🎉🎉❤