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How to pay zero inheritance tax 

Statistically most people won’t die leaving enough assets to need to pay inheritance tax. Although, to be pedantic, it isn’t the deceased person who pays the inheritance tax anyway.

For those with a little more wealth then you can avoid inheritance tax completely by giving away anything over the current limits and then living for another 7 years. (This means that you shouldn’t leave your tax planning to the last minute) 

The snag is that you need to give away those assets UNCONDITIONALLY. I.e. you can’t give your house to your kids on condition that they continue to let you live there. You have to TRUST them to do the right thing.  

So, the question is, how much do you trust your potential beneficiaries? 

(I’ll share a little more serious inheritance tax planning next time) 

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How to survive a crisis 

After spending a couple of years working in an IT department and part of the Disaster Recovery business resilience is always high on my agenda. And having been being responsible for the IT department preparing an engineering company for any potential Y2K (Year 2000) crises means that I am quite used to risk assessing businesses.

But these days I run 3 small businesses without anything like the level of resource available to me back then. We are small but strong because we use a lot of technology and employ a brilliant core team. We are therefore hugely dependent on both the technology and the people.

Which is what prompted this post.

I was just about to set off on a two week holiday followed by 3 days at Xerocon when my Business Manager, the ever efficient Kate, notified me that she would be off for a major operation. While I was away! And while our newest team member has only been with us for a month!

When I finally uncurled from my foetal position I assessed the situation and realised that we were actually in quite a strong position because of all our ‘usual’ preparations and processes.

So here are the things that we do right:

  • We keep documented procedures on our shared drive. They’re not as up to date as we’d like but they’re a good start and Kate has a few days to refresh anything. This means that we’re not too dependent on any single individual.
  • We always try to stay well ahead of deadlines. As at today (22 June) we only have one year end due 31 July and two for 30 Sept. We’ve chased these clients enough times that it is now entirely their responsibility. Confirmation statement information is chased early so we have a few weeks in hand. Bookkeeping is updated monthly, if not weekly. As part of my holiday I had even written 3 of these blogs in advance so this makes the fourth one.
  • We all work fully remotely so, if I need to log in while abroad, everything is set up.
  • We operate a shared Inbox so everybody can see client messages 
  • We have a fabulous answering service (I highly recommend Emma Fryer and the Answer It team) who will answer and pass on messages to us and also call back our clients if required 
  • We have VOIP phones so we can call from our business line anywhere in the world.
  • Our practice management system holds all client info and emails so that any member of the team can see what has been going on. We encourage the team to add permanent notes and current reminders too. These can always be improved.
  • Our practice management system tracks all client deadlines and send automatic reminders so nothing is missed. 

So, I think we’re going to be all right, and our small team will be able to run without one of our key people and with just the lightest of touches from me. So I’m going to enjoy my holiday.

(TLDR we survived Y2K and the National Grid continued to provide power to all UK homes during my employment)

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Pay your spouse a salary 

This is a favourite bit of advice from ‘Dave at the pub’ and he may well be right as it reduces the corporation tax that you pay. If your spouse works in your business, then it would be right and fair to pay them for that work. Remember that all expenses must be ‘wholly and necessarily for the purposes of business’ so, if your spouse doesn’t work in your business, it could be fraudulent.  

We always ask our clients to provide a realistic job description (if we do your bookkeeping then you can’t include this as one of their tasks! Nor can you claim diary management if you trade from a mobile phone and book all your own appointments) and an estimate of the number of hours worked. This should show that the salary is reasonable for the work they do. You should pay them at least minimum wage and deduct relevant employment taxes.  

Please don’t try to claim that minor children are working in your business! There is separate legislation covering minors in the workplace and you will need to get authorisation from their school and the local council as well as your insurance company. 

Save corporation tax, pay PAYE/NI 

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Content that converts – what to share to attract better clients 

Most content is focused on the business itself sharing company news, awards won, and generic advice. This is all fine for building credibility but it doesn’t really drive engagement or enquiries. 

Instead of broadcasting try helping. 

Your content should put the client (or prospect) sharing advice on problems that your audience face daily. Use simple, jargon-free language and demonstrate a proper understanding of the issues (this is where AI posts often fall down) 

Here are three types of high-performing posts that you can try: 

1.Problem led eg Struggling with cash collection? Here’s what you can do … 

2.Insight and expert opinion eg Why many business overpay tax and what to do about it  

3.Real stories and examples (anonymised) including lessons learned and outcomes achieved. 

Posting regularly (you choose the frequency that you can manage) builds consistency and don’t forget that you can repurpose the content in different formats. Our weekly Tax Tips are also recorded as videos AND are collated in our Tax Tips book which is updated annually. 

Done is better than perfect. Just get that content out there! 

Give a clear call to action such as an invitation to one of our informative monthly webinars or encourage signups to your mailing list or offer a helpful downloadable resource (our checklists are popular) 

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Sole trader £1k allowance or utilising losses 

£1,000 income allowance 

If you have a small side hustle or startup with income (not profit) of less than £1,000pa then you don’t need to report this to HMRC 

BUT 

you might choose to do so. 

If the business is making a loss, then you can either offset this ‘sideways’ against your other personal income in the same year to reduce the overall tax paid OR carry it forward to set against future profits from the same business and therefore minimise future tax. This sideways loss relief is particularly useful if you are starting your business as a side hustle to your main employment. 

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The power of niche positioning and how specialising can help you to win more clients 

Have you ever tried to hit some of those moving targets in tan online shooting game?  

How much time do you spend wavering between targets? And how many potential targets do you miss as a result? On the other hand, if you are clear about your target and track it for a while, you have more chance of hitting it. 

Vague, generalist messaging doesn’t resonate and it is hard for prospect to see the relevance of it to them. 

Having a strong niche means that you can share messages and advice that are relevant to your audience and feel as though they were written just for the person reading them. This brings in higher quality leads and leads to faster trust as they feel that you truly understand them 

1.Choose your niche which may be clients you enjoy working with and where you are able to deliver the most value (providing that they have sufficient profit to pay you, of course) 

2.Update your website messaging 

3.Update your social media profiles and refresh your content 

4.Share case studies relevant to your niche 

5.Share advice for their specific problems 

Be known for something and your message will be much clearer for the right clients. 

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Why referrals aren’t cracking it any more

For decades referrals have always been the most reliable source of growth for established businesses but these days word of mouth is no longer enough. Buyer behaviour has changed and prospects are researching you online before they even speak to you. Even referred clients will Google your business and take a peak at your website before picking up the phone.

We need to move from passive marketing to visible expertise.

Prospects trust experts that they see regularly and this builds confidence before the first meeting. This consistent visibility also reduces price sensitivity as the prospect feels they are taking less of a risk with a ‘known’ business.

Marketing isn’t about hard selling. It is about showing up with helpful content. It’s about helping your prospects rather than boasting about yourself.

3 actions to strengthen your online presence

  1. Optimise your social media presence with clear, niche messaging that speaks to your reader. Post value driven content and then take time to truly engage with your network by commenting on their own posts instead of just broadcasting at them.
  2. Regularly create useful content by answering common client questions. Share insights, not just updates and don’t forget that you can repurpose content across different platforms.
  3. Build a simple email list that helps you to stay front of mind. Share you insights monthly (our tops tips are deliberately short enough that we can share them weekly. It’s also the length of post that I like to write). As you draw closure to your prospects on your list you can take the time to nurture them.
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Be your own cheerleader!

As a business owner you’re often on your own making decisions and living with the consequences. Even if/when you have a team you’re still ultimately responsible for running the business.

As a kid my parents were often overseas but, whenever they were in the country, my mother would be in the front row of every performance, waving away. When I ran the Bristol 10k for the first time she even borrowed my daughter’s pompoms and cheered me on. And for my ironman triathlon in 2017 the whole family turned up with wigs and inflatable palm trees and they played the LOUDEST music which motivated all the runners throughout the long, gruelling marathon element that finishes the 226.3km (140.6 miles) of this hardcore event.

As an introvert who prefers to avoid the spotlight I found all this EMBARRASSINGLY supportive. But it’s also good to have somebody in my corner. No matter what. Unconditionally.

Who supports you in the lonely role of running your business? Who is there for you on a bad day/week/month/year?

Business coaches can help (I like to think that I provide this support for my clients) but it’s also important that you build a whole network around you. The accountancy world is very collaborative so I’m lucky to have people around me who understand my issues a bit better than my adoring family.

But again, the buck stops with you and YOU are responsible for motivating yourself through the dog days.

I recommend:

  1. Keep a list of your successes to refer to when imposter syndrome strikes 🎉
  2. Keep a list of quick fixes when you’re struggling to start something eg I like to get outside, preferably by water but, if short on time, I have recorded 1min of waves breaking on a beach. 🔧
  3. Keep a reminder close by of your reason for your business. I have a shell on my desk that is a visual and tactile reminder that I am building my life as a digital nomad. 📌
  4. Keep a playlist that will lift your mood 🎵

What do you do to motivate yourself?

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Claiming VAT on mileage

Last week I mentioned the increase in the flat rate mileage allowance from 45p to 55p (for the first 10,000 miles). But did you know that you can also claim VAT on part of this allowance? The amount that you can claim is the VAT on the fuel element which varies each quarter and depends on the engine size of your car.

This is the same rate used for company car fuel and you can find the latest list here.

https://www.gov.uk/guidance/advisory-fuel-rates

eg if your fuel rate is 17p you can claim 17p/1.2x.2=2.83p VAT on the 55p.

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Mileage rate for private cars used for business 

It’s long overdue but, finally, the HMRC allowable mileage rate has been increased from 45p per mile to 55p per mile (for the first 10,000 miles per tax year). This change has been backdated to April. 

All other mileage rates are unchanged.