Welcome!

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
With more than 30 Kubernetes solutions in the marketplace, it's tempting to think Kubernetes and the vendor ecosystem has solved the problem of operationalizing containers at scale or of automatically managing the elasticity of the underlying infrastructure that these solutions need to be truly scalable. Far from it. There are at least six major pain points that companies experience when they try to deploy and run Kubernetes in their complex environments. In this presentation, the speaker will d...
While DevOps most critically and famously fosters collaboration, communication, and integration through cultural change, culture is more of an output than an input. In order to actively drive cultural evolution, organizations must make substantial organizational and process changes, and adopt new technologies, to encourage a DevOps culture. Moderated by Andi Mann, panelists discussed how to balance these three pillars of DevOps, where to focus attention (and resources), where organizations might...
The deluge of IoT sensor data collected from connected devices and the powerful AI required to make that data actionable are giving rise to a hybrid ecosystem in which cloud, on-prem and edge processes become interweaved. Attendees will learn how emerging composable infrastructure solutions deliver the adaptive architecture needed to manage this new data reality. Machine learning algorithms can better anticipate data storms and automate resources to support surges, including fully scalable GPU-c...
When building large, cloud-based applications that operate at a high scale, it's important to maintain a high availability and resilience to failures. In order to do that, you must be tolerant of failures, even in light of failures in other areas of your application. "Fly two mistakes high" is an old adage in the radio control airplane hobby. It means, fly high enough so that if you make a mistake, you can continue flying with room to still make mistakes. In his session at 18th Cloud Expo, Le...
Machine learning has taken residence at our cities' cores and now we can finally have "smart cities." Cities are a collection of buildings made to provide the structure and safety necessary for people to function, create and survive. Buildings are a pool of ever-changing performance data from large automated systems such as heating and cooling to the people that live and work within them. Through machine learning, buildings can optimize performance, reduce costs, and improve occupant comfort by ...
As Cybric's Chief Technology Officer, Mike D. Kail is responsible for the strategic vision and technical direction of the platform. Prior to founding Cybric, Mike was Yahoo's CIO and SVP of Infrastructure, where he led the IT and Data Center functions for the company. He has more than 24 years of IT Operations experience with a focus on highly-scalable architectures.
The explosion of new web/cloud/IoT-based applications and the data they generate are transforming our world right before our eyes. In this rush to adopt these new technologies, organizations are often ignoring fundamental questions concerning who owns the data and failing to ask for permission to conduct invasive surveillance of their customers. Organizations that are not transparent about how their systems gather data telemetry without offering shared data ownership risk product rejection, regu...
CI/CD is conceptually straightforward, yet often technically intricate to implement since it requires time and opportunities to develop intimate understanding on not only DevOps processes and operations, but likely product integrations with multiple platforms. This session intends to bridge the gap by offering an intense learning experience while witnessing the processes and operations to build from zero to a simple, yet functional CI/CD pipeline integrated with Jenkins, Github, Docker and Azure...
René Bostic is the Technical VP of the IBM Cloud Unit in North America. Enjoying her career with IBM during the modern millennial technological era, she is an expert in cloud computing, DevOps and emerging cloud technologies such as Blockchain. Her strengths and core competencies include a proven record of accomplishments in consensus building at all levels to assess, plan, and implement enterprise and cloud computing solutions. René is a member of the Society of Women Engineers (SWE) and a m...
Dhiraj Sehgal works in Delphix's product and solution organization. His focus has been DevOps, DataOps, private cloud and datacenters customers, technologies and products. He has wealth of experience in cloud focused and virtualized technologies ranging from compute, networking to storage. He has spoken at Cloud Expo for last 3 years now in New York and Santa Clara.
Enterprises are striving to become digital businesses for differentiated innovation and customer-centricity. Traditionally, they focused on digitizing processes and paper workflow. To be a disruptor and compete against new players, they need to gain insight into business data and innovate at scale. Cloud and cognitive technologies can help them leverage hidden data in SAP/ERP systems to fuel their businesses to accelerate digital transformation success.
Containers and Kubernetes allow for code portability across on-premise VMs, bare metal, or multiple cloud provider environments. Yet, despite this portability promise, developers may include configuration and application definitions that constrain or even eliminate application portability. In this session we'll describe best practices for "configuration as code" in a Kubernetes environment. We will demonstrate how a properly constructed containerized app can be deployed to both Amazon and Azure ...
Poor data quality and analytics drive down business value. In fact, Gartner estimated that the average financial impact of poor data quality on organizations is $9.7 million per year. But bad data is much more than a cost center. By eroding trust in information, analytics and the business decisions based on these, it is a serious impediment to digital transformation.
Digital Transformation: Preparing Cloud & IoT Security for the Age of Artificial Intelligence. As automation and artificial intelligence (AI) power solution development and delivery, many businesses need to build backend cloud capabilities. Well-poised organizations, marketing smart devices with AI and BlockChain capabilities prepare to refine compliance and regulatory capabilities in 2018. Volumes of health, financial, technical and privacy data, along with tightening compliance requirements by...
Predicting the future has never been more challenging - not because of the lack of data but because of the flood of ungoverned and risk laden information. Microsoft states that 2.5 exabytes of data are created every day. Expectations and reliance on data are being pushed to the limits, as demands around hybrid options continue to grow.