Click here to close now.

SYS-CON MEDIA Authors: Pat Romanski, Rex Morrow, Datical, Liz McMillan, John Wetherill, Ruxit Blog

Blog Feed Post

Tax Too Taxing For 20 Million British Workers, according to Boox report

Brits hit by fines due to lack of understanding about tax obligations

  • £432 million borrowed from business accounts per month to cover personal spending
  • National Insurance Contributions a mystery to nine out of ten workers
  • 59% of UK workers don't know where 20% tax band starts
  • 50% of freelancers fail to set aside money to meet tax obligations

LONDON, JAN 13 2014: 20 million British workers do not know the basics when it comes to the amount of tax they pay, according to a new report compiled by cloud based accountant Boox. This year, 10.9 million people will be expected to complete self-assessment tax returns - more than ever before.

However, Boox has revealed that 36% of UK workers in full or part-time employment don't have an understanding of the current VAT rate, 59% do not know the salary level at which the 20% tax rate is payable and only 1 in 10 know that when it comes to National Insurance Contributions (NICs) it's 12% of their salary that goes towards NICs for those in class one.

With the 31st January self-assessment tax deadline looming, the pressure is on for people to file their self-assessment tax returns correctly, and on time. Overall, HMRC dished out fines to 850,000 people who failed to file their self-assessment tax returns on time in 2012, incurring £85million in penalties. This year with an anticipated 10.9million Brits expected to complete returns, it seems like British workers are in need of a 'tax and financial admin 101'.

Tax is taxing
Over 1.2 million of the UK's 4.2million freelancers are making errors, missing deadlines and as a result, having to pay fines when filling in their tax returns according to the new Boox Report.

Despite bearing greater responsibility for managing their tax obligations, freelancers are no better informed when it comes to tax matters than the average UK employee. More than nine in ten do not know the percentage rate of Class 4 NICs payable on taxable profit, and 33% are not aware of the current VAT rate, with women faring worse than men as 37% of them compared to 28% of men are clueless about the current rate of VAT.

Nearly two thirds (64%) either don't know or incorrectly guessed the salary level at which the 20% tax rate is payable. However, age does play a part, as twice as many freelancers aged 65+ compared to those aged 18-34 are likely to know the correct salary level at which 20% tax is payable.

29% of freelancers who have made an error in their tax return or missed a deadline have had to pay a penalty or fine, and 46% of them are in the 18-34 year old age bracket, suggesting a lack of experience or knowledge is hampering their efforts to complete their tax returns correctly.

"With this year's Boox Report we set out to understand the level of understanding British workers, freelancers and the self-employed have when it comes to tax affairs and we've uncovered some pretty glaring gaps in knowledge and poor basic practices," said Phillip Venn, Commercial Director at Boox, who conducted the report. "With more people than ever before required to complete self-assessment and the freelancer market looking buoyant in 2014, it's vital that we help people understand their tax obligations, and make managing personal finances as straightforward as possible."

Managing finances
In general, half of all freelancers prudently reserve money from each invoice to meet their tax obligations, while one third wait to find the money until their tax bill is due, although one third still admit to making bookkeeping errors. Freelancers are improving however, as compared to 2012, errors made in 2013 are down.

18-34 year olds are actually ahead of their older peers in some areas. When it comes to setting money aside to settle future tax obligations this age group (65%) is most likely to put money aside for tax obligations compared to just 45% of the over 65s.

£432 million borrowed from business accounts
When it comes to the division of personal and business affairs, freelancers who operate as a limited company are legally obliged to have a separate business account to their personal account, so for the remaining freelancers, just under half (44%) keep separate bank accounts for personal and work purposes. However, that doesn't mean they remain separate, as 37% of freelance workers admitted to borrowing money from their business account for private use, amounting to a staggering £432 million* borrowed.

Within this group, it emerges that men borrowed considerably more (almost double) in the last month than women, at an average of £362 and £191 respectively. Moreover, almost a quarter of men (24%) said that they had borrowed over £500 in the last month.

However, despite being the most likely to set money aside to settle future tax obligations, those most likely to borrow from their business accounts are 18-34 year-olds, with 67% saying they have done so at some point in the past. Only 20% of 55-64 year-olds admitted to doing the same.

"We can see from our research how tempting it is for freelancers to use their business accounts when they are short of cash, but that means it's going to be harder for them to pay their tax bills when the time comes. We're keen to help them get into good financial management habits and understand the ins and outs of tax in a simple manner," commented Venn.

There are also regional differences between how much freelancers are borrowing from their business accounts, with those in the South East borrowing over twice as much as those based in Wales.

-ends-

Notes to editors:
For more information, please download a free copy of the report: http://www.boox.co.uk/the-boox-report/

* 4.2 million UK freelancers / self-employed workers x 37% (said they borrowed from their business account) x £278 (the average amount borrowed by these workers) = £432 million

To interview Phillip Venn, Commercial Director of Boox, please contact:
Amy Ronge
[email protected]
0207 025 7545

About the survey
Opinium Research carried out an online survey of 1,011 contractors/freelancers/self-employed workers (UK adults aged 18+) from 2nd to 6th December 2013. Opinium Research also carried an additional omnibus survey of 1,000 UK adults aged 18+ in full or part-time employment from 2nd to 6th December 2013.

About Boox
Boox provides a fast and simple service for freelancers and contractors to administer a tax efficient business using a combination of professional advisers and cloud-based software. Boox provides their accounting services to contractors operating their own Personal Service Companies (PSC's).

Source: RealWire

Read the original blog entry...

More Stories By RealWire News Distribution

RealWire is a global news release distribution service specialising in the online media. The RealWire approach focuses on delivering relevant content to the receivers of our client's news releases. As we know that it is only through delivering relevance, that influence can ever be achieved.

Latest Stories
We’re entering a new era of computing technology that many are calling the Internet of Things (IoT). Machine to machine, machine to infrastructure, machine to environment, the Internet of Everything, the Internet of Intelligent Things, intelligent systems – call it what you want, but it’s happening, and its potential is huge. IoT is comprised of smart machines interacting and communicating with other machines, objects, environments and infrastructures. As a result, huge volumes of data are bein...
In his General Session at 16th Cloud Expo, David Shacochis, host of The Hybrid IT Files podcast and Vice President at CenturyLink, will investigate three key trends of the “gigabit economy" though the story of a Fortune 500 communications company in transformation. Narrating how multi-modal hybrid IT, service automation, and agile delivery all intersect, he will cover the role of storytelling and empathy in achieving strategic alignment between the enterprise and its information technology.
There will be 150 billion connected devices by 2020. New digital businesses have already disrupted value chains across every industry. APIs are at the center of the digital business. You need to understand what assets you have that can be exposed digitally, what their digital value chain is, and how to create an effective business model around that value chain to compete in this economy. No enterprise can be complacent and not engage in the digital economy. Learn how to be the disruptor and not ...
SYS-CON Events announced today that the "First Containers & Microservices Conference" will take place June 9-11, 2015, at the Javits Center in New York City. The “Second Containers & Microservices Conference” will take place November 3-5, 2015, at Santa Clara Convention Center, Santa Clara, CA. Containers and microservices have become topics of intense interest throughout the cloud developer and enterprise IT communities.
"NuoDB is a transactionally consistent SQL database that does scale out, that does all the things you want in a cloud. If you want more transactional throughput, if you want higher availability if you want to run in multiple data centers this is a technology that can scale and still provide a single logical consistent database," explained Seth Proctor, CTO of NuoDB, in this SYS-CON.tv interview at Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Thanks to widespread Internet adoption and more than 10 billion connected devices around the world, companies became more excited than ever about the Internet of Things in 2014. Add in the hype around Google Glass and the Nest Thermostat, and nearly every business, including those from traditionally low-tech industries, wanted in. But despite the buzz, some very real business questions emerged – mainly, not if a device can be connected, or even when, but why? Why does connecting to the cloud cre...
IBM has acquired Blue Box Group, Inc., a managed private cloud provider built on OpenStack. Customers benefit from the ability to more easily deploy workloads across hybrid cloud environments. Financial details were not disclosed. Enterprises are seeking ways to embrace all types of cloud to address a wide range of workloads. Today's announcement reinforces IBM's commitment to deliver flexible cloud computing models that make it easier for customers to move to data and applications across cloud...
The WebRTC Meetup, where WebRTC enthusiasts exchange ideas, is being held on Wednesday, June 10, from 7 pm – 9 pm at the 4th WebRTC Summit, June 9-11, 2015, at the Javits Center in New York City, NY. The WebRTC Meetup is being hosted by the New York WebRTC Developer Group. WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web communications world. The 4th WebRTC Summit continues our tradition of delivering the late...
There is little doubt that Big Data solutions will have an increasing role in the Enterprise IT mainstream over time. 8th International Big Data Expo, co-located with 17th International Cloud Expo - to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA - has announced its Call for Papers is open. As advanced data storage, access and analytics technologies aimed at handling high-volume and/or fast moving data all move center stage, aided by the cloud computing bo...
SYS-CON Events announced today that MediaTek Labs will exhibit at SYS-CON's @ThingsExpo, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. MediaTek Labs is a global ecosystem initiative supporting Wearables and Internet of Things device creation, application development, and services based around MediaTek chipset offerings. Developers can use the MediaTek LinkIt™ ONE development platform and the LinkIt ONE HDK to easily access the features and functions of the...
IndependenceIT has been selected by nGenx to power Windows-based DaaS and application delivery on Google Compute Engine to support the delivery of GoldMine Cloud software. For independent software vendors (ISVs) like GoldMine, this expands the theater of operations to increase revenue opportunities while reducing software management and maintenance liabilities. IndependenceIT was selected by application and desktop pioneer, nGenx, to deliver its “Bring Your Own Cloud” strategy to GoldMine and o...
ProfitBricks has an early preview of its new Docker hosting platform. The ProfitBricks Docker platform enables its customers to build fully-portable applications within the ProfitBricks cloud. Unlike other Docker platforms, ProfitBricks’ Docker provides developers and system administrators with a platform with dedicated resources that autoscales the Docker hosts. Early access customers will be able to utilize up to 2,500 CPU core hours as part of ProfitBricks’ early access Docker preview.
“We are a managed services company. We have taken the key aspects of the cloud and the purposed data center and merged the two together and launched the Purposed Cloud about 18–24 months ago," explained Chetan Patwardhan, CEO of Stratogent, in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Based upon his work with progressive brands, thought-leader and author of the book, Big Social Mobile, David Giannetto, SVP at Salient Management Company, will provide his unique perspective on how companies of tomorrow will operate as enterprises that seamlessly follow consumers from the physical world, through digital creating a multichannel omni-experience that improves the customer experience while increasing their brand loyalty, customer value and penetrating new consumer segments. His se...
"BSQUARE is in the business of selling software solutions for smart connected devices. It's obvious that IoT has moved from being a technology to being a fundamental part of business, and in the last 18 months people have said let's figure out how to do it and let's put some focus on it, " explained Dave Wagstaff, VP & Chief Architect, at BSQUARE Corporation, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.