[00:00:08.11] - Gordon
Hello.
[00:00:08.22] - Taylor
Hello.
[00:00:09.01] - Gordon
My name's Gordon from Drayson Design.
[00:00:10.26] - Taylor
And I'm Taylor from The Creative Tinker.
[00:00:12.20] - Gordon
And welcome to "This Week With Taylor and Gordon," a weekly podcast and vidcast, where we talk about things that have affected our businesses over the last seven days. And thank you for joining us.
[00:00:23.27] - Taylor
Thank you for joining us.
[00:00:24.29] - Gordon
It's been a busy week and I've woke up one of the days during the week and found I was a year older.
[00:00:31.12] - Taylor
Were you?
[00:00:32.03] - Gordon
Yeah, I had a birthday. And so for all those people who sent me messages, thank you so much. That was very kind of you. I had a lovely day, and here we are, back for another episode. So any news, first of all, Taylor?
[00:00:47.25] - Taylor
Not from me.
[00:00:48.22] - Gordon
Deep Seek has been causing some waves this week, which is the new AI that's come out of China, and it dropped billions from the stock prices of NVIDIA.
[00:01:01.23] - Taylor
Wow!
[00:01:02.14] - Gordon
Which is just amazing how... I mean, I don't do anything with the stock markets, but just the thought of losing billions during the day off the value of your company is just mind-blowing to me. Just because a competitor has come out with something slightly different and better and cheaper than what you do. But that's business. That's how it works, isn't it?
[00:01:23.23] - Taylor
Yeah.
[00:01:24.14] - Gordon
Shall we get straight into our topics?
[00:01:26.09] - Taylor
Yeah.
[00:01:26.29] - Gordon
Can I go first this time?
[00:01:28.05] - Taylor
Go for it.
[00:01:28.29] - Gordon
So today, I want to talk about tax. Now, when you are self-employed, you have to submit your own tax submissions, and you then have to make two payments, one payment in January on the 31st and one payment in July on the 31st. The way it works is that you pay the amount of profit that is taxed and you pay for the tax on the profit, and then you also pay a payment on account for next year's tax, and it's worked out based on this year's tax.
[00:02:07.16] - Gordon
And I've always felt that's really a little bit unfair, because if you've had a really good year, you're being penalised for the following year because they're assuming you're going to do the same or better next year. So, what it does is it brings your tax bill down because you've already paid a chunk on account from the previous year. But it doesn't always work that way. Sometimes, if you do really badly, you end up with credit, which means you haven't got as much to pay or anything to pay, in which case they might refund you. But they've been talking about the tax going digital for quite a long time now. And I don't know if I like the idea of this or not. From what I understand, and I could be wrong because it's been a while since I've looked at this, but the idea is that you need to submit your accounts either every month or every quarter and then you pay tax on that money as you go. So in some respects, you're not giving the HMRC any more money than you need to, which is a good thing for cash flow reasons. Especially if you're a small business.
[00:03:17.13] - Gordon
The downside is you're having to submit your accounts four times more often. Obviously, they are smaller accounts because you're looking at three months if it's a quarterly submission. But you've still got to do the same work four times during the year. And I'm guessing it's going to be a similar system to now, whereas if you don't submit them on time or you don't pay on time, you get fined and you get interest added. So it's going to be interesting to see how that works. And I think there's going to be software that you are forced to use so that it basically keeps HMRC informed. So you haven't necessarily got to submit your tax returns, your software will do it for you. But it does mean you need to keep that software up to date. So that's to come. This is something we've been told has been coming for several years now, and it's still not here, so I'm not sure how far away it is, but at some point I'm sure we'll get it. The system we have at the moment, though, requires everyone who is self-employed to submit their accounts by January 31st.
[00:04:30.13] - Gordon
Now, the problem is a lot of people leave it till the last minute. Now, you've got basically from April 5th, effectively, until January the 31st, and any of that time you can submit your accounts. And a lot of people do. A lot of people will get them in, middle of April, end of April. But most people that I know, at least in my line of business, leave it till the last minute. They don't plan for it, they don't put money aside for it. So all of a sudden, you get to the end of January, you submit your accounts, you wait for the tax office to tell you how much they believe you owe them. You check it against what you think you owe them. If there's any discrepancies, you then got to deal with that, and then you've got to pay the money. And so the nearer to 31st of January you leave that, the less time you have to prepare for the payment. Now, if you get a tax bill, let's just pick some numbers from the air. If you get a tax bill that's £5,000 and you find out about it on, say, the last week of January, your payment needs to be made a week later.
[00:05:48.01] - Gordon
So you've got a week to find £5,000 to pay your tax bill. If you don't pay it on time, you get fined. If you don't submit your tax on time, you get fined. And if you don't pay the full amount, you get charged interest. So it's in a small business's... It's in their...
[00:06:11.03] - Taylor
Best interest.
[00:06:11.19] - Gordon
Best interest. Thank you, Taylor. To get those in as soon as you can. Now, I found that by submitting them before the 31st of July, which is the second payment on account, it can screw you over because it takes your new figures and works out your new payment on account and expects you to pay that in July. So if you've budgeted for the amount that you've been told you need to pay in July and then all of a sudden submit your accounts and it changes that amount, well, then you've got the same problem all over again. So recently, I've been submitting my accounts after the 31st of July, sort of August, September, October. That sort of time is a good time to do it, especially if you've got someone who does it for you, which I do. I have a lady who I send all of my accounts to.
[00:07:02.09] - Gordon
She works them all out. I give them to her in a spreadsheet, so it's a nice easy way to do it. It's not like handing someone a shoe box of receipts. She works it all out for me. She comes back and works out what she thinks I'm allowed and what I'm not allowed. If I may have put something in that I'm not allowed, she will then help me when I submit it myself. We do a screen share and then we wait for the tax office to work out how much tax I owe, and then we check it together and just make sure it's the right amount. By doing that in August, September, October, it gives me several months to work out how I'm going to then pay for that tax bill. And that for me is how I prefer to do it because it gives me time to prepare. Now, the other thing that I said to you when you started is put 25% of everything you earn away into a tax account.
[00:08:00.29] - Taylor
Yeah.
[00:08:01.04] - Gordon
That way, when you get to pay your tax at the end of the year, you've got the money sitting there. In fact, you've probably got more than you need, but it's always good to have that little slush fund in there just in case. But you haven't got to go looking for £5,000 and go, "I don't know where this is coming from because I wasn't expecting my tax bill to be that big." I still say that that's a good way to go, but working out what your income is for that month. End of the month, put that 25% of that away into a separate account that you don't touch. That's the important bit. You can't just dip into it when you want to. Put it into an account you don't touch. Put it into a high interest rate account. That's even better because then you've got a chunk of money earning you money. Then when it gets to January and it gets to July, you can just say, "right, okay, how much is it? Fine. Let's pay it." And you're done. The money is there. It's all aside. You haven't spent it because you have automatically worked out how much you've taken that month and you put 25% away. Still got 75% of that income to pay all your bills and to do whatever you want, but it gets you into a way of living within your means and not having to struggle to find the tax bill because they are the first people you need to pay.
[00:09:24.28] - Gordon
Well, rent and mortgage are the first people you need to pay, but the tax people are always the first people to be paid whenever someone dies. If anyone owes money to the tax office, that's the first people that get their money. They're going to get their money either way. What's it? Two things in life are certain, taxes and death. That's pretty true, isn't it? So yes, there we go. That's my many years of experience just telling you what I do. It might work for you. I highly recommend you don't leave it to the last minute. If you are starting to look at your tax after Christmas, you've left it too late. You need to make sure that you've got it done way before that so you know what to expect in January. Anything you want to add to that?
[00:10:18.15] - Taylor
Yeah, so the way I have done it, it seems to just happen. That's just the way. But I seem to every two years, I seem to get on top of it. The first year, I got them in pretty much the day or two after the tax year ended. Then the following year, because I got them in so early, ended up getting them in in January. So then I said, "okay, I'll get them in early." Then when the tax year came, I got them in that month. Then the year after that, it goes to January, and then I get them in straight after. It's been like every other year, I seem to get them in really early, otherwise.
[00:10:58.16] - Gordon
Do you not find that really stressful, though, when you're doing it at the last minute and you've got a deadline looming and you've got other things that need doing and you can't deal with them because you've got to make sure your tax accounts are done. Do you find that maybe you need to put time aside in a certain month every year and just specify that time is when I need to do my accounts. And that way you'll know that you don't want to take work on for that period of time because you know that is going to be taken up doing your accounts. And it gives you then that peace of mind when it comes up later that you haven't then got to rush.
[00:11:37.27] - Taylor
Yeah, it definitely is something that I'm working on and trying to improve, especially reconciling my accounts month on month, I think is probably the biggest one. It means I can keep up to date any payments that were taken out incorrectly or they were taken out, but then were repaid, they get cancelled out.
[00:11:58.17] - Gordon
And the other thing is if you're reconciling by month, you can see some transactions and go, "Oh, yeah, I know what that was." Whereas if you do it a year later, you look at the transaction, you go, "I have no idea. £52 to NDS. I don't know what that is. I don't know who they are." And then there's a load of time lost by going to research and find out what it is. And sometimes you can't find out what it is, and maybe you've missed out on that amount of money to be taken off your tax because you can't say exactly what it was.
[00:12:33.04] - Taylor
Yeah.
[00:12:34.08] - Gordon
Yeah. So there we go. Some ideas on tax. If you've got any ideas on tax and you're watching this on YouTube, please leave a comment below or contact us. We have contact details on our website. What would you like to talk about, Taylor?
[00:12:47.25] - Taylor
So I discovered an app called Freedom. I believe that's what it's called. Let me just have a quick check. Yeah, Freedom. What it does is it allows you across different devices, so that's your phone, your computer, any Apple devices, any Android devices, etc. It allows you to block apps and websites.
[00:13:11.22] - Gordon
For a period of time?
[00:13:13.21] - Taylor
Well, yeah. So you can specify the period.
[00:13:16.05] - Gordon
Okay.
[00:13:16.21] - Taylor
So Apple has similar stuff to this where they have different focus groups. However, there's nothing stopping you from just turning it off. So what Freedom does is it overrides all of the settings, and it makes it, if you have the I think they call it a hard core mode. If you have hard core mode turned on, it means you can't disable it if you've started a session. So, you start a session and your websites are blocked, your apps are blocked for the given period. You get one saving grace a week. So should you have an emergency, like I need to be able to access said app, then you can unblock it and stop the session. But other than that, you are locked into the sessions.
[00:14:02.14] - Gordon
I'm guessing the reason for this is so that you don't get distracted, right?
[00:14:05.29] - Taylor
Yeah. So the reason, they way I've been using it is I've been blocking the apps that have been causing me distractions or if I'm trying to do some work and I just keep quickly checking, for example, if I got any messages from anyone, it blocks all of that, and it works really, really well. What I found sometimes is when I'm waiting for something to load, I'll just open up my phone and just have a quick look. And it's strange because it works because it comes up and says, "Oh, sorry, you can't access that." And I immediately put my phone down and just sit there and wait. And it's quite nice actually, because it stops me from context switching a lot. And something that I've been thinking about doing is using the scheduled sessions. So they allow you to schedule sessions as well that automatically will enable and disable. So, the areas that I'm thinking about is the evening. From a certain time in the evening to a certain time in the morning, it blocks certain apps that are distracting and hopefully helps me get better sleep because I can't access any of the apps. If I wake up in the middle of night, I can't quickly check any social media or anything.
[00:15:15.03] - Taylor
Then also having one scheduled so when I go to the gym. I find a lot of the time I'm checking my emails, I'm checking social, I can't quickly check any social media or anything. Then also having one scheduled, so when I go to the gym, I find a lot of the time I'm checking my emails, I'm checking social media, I'm checking Discord while I'm at the gym. As much as I try and stop myself from doing it, it's so easy because when you're waiting between sets, it's like, what do you do? So I've been thinking about setting a scheduled automation or scheduled session up for them then as well so that I physically can't do the session or I can't go on it while I'm in the session. And it should hopefully get me to the point where it's like, "well, you either go to the gym or you sit at home and twiddle your thumbs" kind of thing because there's nothing else for me to do because it's already been scheduled, it's already been blocked out. So therefore it's another step after saying, "yes, I'm going to go to the gym" and you put it in your calendar, but also at the point where you're like, "well, I can't do work, so I might as well go to the gym."
[00:16:20.29] - Gordon
It's a bit like adding parent mode by yourself, isn't it? It's like blocking apps and the use of them within certain times, but doing it for yourself and making yourself accountable, I guess.
[00:16:33.23] - Taylor
Yeah, I think it's interesting because a lot of people think that motivation just comes out of thin air and discipline just comes out of thin air, and it's not. It's actually the planned and proactiveness that you have that causes you to be more productive, causes you to get the things that you want to get done or need to get done. And I don't think there's anything wrong using external tools to help you get there. It's the same reason people have PAs, for example, that run around doing all the stuff for them that they probably could do, but they've already got better things to do, but also making sure that they are held accountable. So they get told, "oh, you've got a meeting in 20 minutes." And it's like, okay, they make sure you get to that meeting on time. Things like that. And it's kind of having your own personal one, really. So I'm going to see how that goes and see if I can get back on track with doing some of the things that I want to do. But obviously, because just within our nature as humans, we tend to get distracted and things like that.
[00:17:43.22] - Gordon
Yeah, it's having the focus and the... What's the word I'm looking for? Not dedication. But there are some people who just get distracted immediately. They're like dogs. They see something new and bright and shiny, and they go chasing after that, and then they'll see something else new, bright and shiny, and they'll just switch to that immediately. So, yeah, I hope that works really well for you. We'll put a link to the app in the show notes. So please have a look at that and you can try it for yourself if it's something that's of interest. Anything else you want to say on that?
[00:18:22.18] - Taylor
I don't think so.
[00:18:23.23] - Gordon
Okay, well, that's it from us today. Thank you so much for joining us. As always, you can find us on YouTube. Please like, share, and subscribe. Send it to anyone you think might be of interest to the sort of things we talk about.
[00:18:37.27] - Taylor
You can also go to our website thisweekwith.co.uk to find all of our past episodes.
[00:18:42.22] - Gordon
And if you prefer to listen to it as a podcast, we're on all the major podcast platforms. Just do a search for "This Week With Taylor and Gordon." We'll be back with you next Friday at 1pm. Until then, my name is Gordon and I'm from Drayson Design.
[00:18:57.25] - Taylor
And I'm Taylor from The Creative Tinker.
[00:19:00.07] - Gordon
Goodbye.
[00:19:00.13] - Taylor
Bye.
