| Pages in topic: [1 2] > | Setting up in the UK - accounting Thread poster: XXXphxxx (X)
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XXXphxxx (X) 
United Kingdom
Local time: 10:55
Portuguese to English
+ ...
I apologise if this has been covered elsewhere but I've searched the forum extensively and haven't found anything that covers this.
I have recently moved back to the UK after a very long stint in France. I'm aware that the first step I should take is to notify Inland Revenue and start paying N.I. contributions, however the vast majority of my clients are in Europe and I invoice them in Euros and would like to continue doing so. Does anyone please know what the correct way is to man... See more I apologise if this has been covered elsewhere but I've searched the forum extensively and haven't found anything that covers this.
I have recently moved back to the UK after a very long stint in France. I'm aware that the first step I should take is to notify Inland Revenue and start paying N.I. contributions, however the vast majority of my clients are in Europe and I invoice them in Euros and would like to continue doing so. Does anyone please know what the correct way is to manage that in terms of acceptable U.K. accounts? Do I simply post the sterling equivalent in my sales list and what exchange rate do I apply: the one on the day I invoice; the one on the day I get paid or the one on the day I transfer the funds over to the UK and into sterling? ▲ Collapse
| | | | Tom in London
United Kingdom
Local time: 10:55
Member (2008)
Italian to English
Lisa Simpson wrote:
however the vast majority of my clients are in Europe
The UK is also in Europe.
However it is not in the Eurozone (which may be what you mean) but the only problem attached to that is that your payments in Euro will have to be converted , by your bank, into GBP and there is always a charge for that, either overtly as a declared charge, or covertly as a less favourable exchange rate. But it isn't a crippling amount and depending on how exchange rates fluctuate, you may sometimes be better off than you thought !
You don't apply the exchange rate. You charge your clients in Euro and the bank does the conversion at the time of payment. The amount you actually receive into your account on the date of payment (which should be notified to you in writing each time, by your UK bank, who should also set out what the exchange rate was at the time) is the amount you earn (i.e. your taxable income).
I too came back to the UK after many years abroad. Based on my own experience I would advise you to get yourself set up properly for your first year via a good accountant, who will get you registered with HMRC etc. You shouldn't register for VAT unless you think your annual turnover is going to be more than £70k, or if you have a passion for spending extra time doing VAT returns and making the payments !
One important thing to bear in mind is that although your clients may be in other EU Member States, the services you provide to them are provided in the UK and you are therefore subject to UK tax law. You are *not* liable to pay tax or to register for anything in any other country unless you continue to work in those other countries or you have other sources of income in those other countries. But ask the accountant, who's the expert.
The accountant who will also show you the correct way to do your monthly book-keeping and your tax return at the end of the year. Stay with the accountant for a year or two until you feel able to do it yourself.
Once you get the hang of it, this is not very complicated and only takes about an hour per month. It's also an excellent way to keep track of your own finances.
But do get an accountant because all sorts of discussions are always coming up in these forums: debates about VAT, invoicing etc. Questions that really only an accountant can answer.
[Edited at 2010-09-25 19:54 GMT]
| | | | Sheila Wilson
Spain
Local time: 10:55
Member (2007)
English
+ ...
| Anticipating Lisa's response | Sep 25, 2010 |
Tom in London wrote:
The UK is also in Europe.
However it is not in the Eurozone (which may be what you mean) but the only problem attached to that is that your payments in Euro will have to be converted , by your bank, into GBP and there is always a charge for that, either overtly as a declared charge, or covertly as a less favourable exchange rate. But it isn't a crippling amount and depending on how exchange rates fluctuate, you may sometimes be better off than you thought !
You don't apply the exchange rate. You charge your clients in Euro and the bank does the conversion at the time of payment.
I think that Lisa is planning to pay her euro invoices into a French euro account then transfer an amount from time to time to her sterling account in the UK. Please correct me if I'm wrong, Lisa.
I do exactly the reverse sometimes and I write on my copy of the invoice the equivalent euro rate on the invoice date and use that in my French tax return.
However I'm not exactly sure if that's what I should be doing in France and I certainly can't say what would be correct in the UK.
So I'm interested in the answer to this question, too.
| | | | Tom in London
United Kingdom
Local time: 10:55
Member (2008)
Italian to English
Sheila Wilson wrote:
I think that Lisa is planning to pay her euro invoices into a French euro account
I don't think that would be legal. Ask a UK accountant, Lisa - with all due respect to our Proz colleagues, they're not the experts and you'll probably get about 20 different opinions !
[Edited at 2010-09-25 20:25 GMT]
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| Of course it's legal - as long you declare it on your tax return. | Sep 26, 2010 |
That's what I do all the time. All the Euro invoices are paid into my German account and then transferred from there when I need the money. I write down the exchange rate on the date the money is received in the UK and my accountant sorts out the rest.
You don't need an accountant to se... See more That's what I do all the time. All the Euro invoices are paid into my German account and then transferred from there when I need the money. I write down the exchange rate on the date the money is received in the UK and my accountant sorts out the rest.
You don't need an accountant to set up - just go to the HMRC site:
http://www.hmrc.gov.uk/selfemployed/iwtregister-as-self-employed.htm
You can do it online or call the helpline.
On VAT, you may choose to register for VAT even though it isn't compulsory. I am about to send in my first VAT return and then I'll find out how arduous it is. I have a book-keeper who uses QuickBooks and apparently it can even be done from within the software so I am not expecting a great deal of hassle from it - but I am expecting a refund, at least for the first return, and probably after that too.
On paying tax, watch out for the "payment on account". Here's an example from a training course I offer:
You set up as a freelancer on 1st May 2009. The tax year ends 5th April 2010. You must complete a tax return by 31st October 2010.
Enter income 1st May 2009 – 5th April 2010.
Your tax liability is £5000.
Payment 31 January 2011: £5000 +£2500 payment on account = £7500
Payment 30 June 2011: £2500
[Edited at 2010-09-26 04:11 GMT] ▲ Collapse
| | | | Tom in London
United Kingdom
Local time: 10:55
Member (2008)
Italian to English
| a training course | Sep 26, 2010 |
Gillian Searl wrote:
a training course I offer
what is this training course?
| | | | XXXphxxx (X)
United Kingdom
Local time: 10:55
Portuguese to English
+ ...
TOPIC STARTER | Invoicing in another currency | Sep 26, 2010 |
Sheila Wilson wrote: I think that Lisa is planning to pay her euro invoices into a French euro account then transfer an amount from time to time to her sterling account in the UK. Please correct me if I'm wrong, Lisa. I do exactly the reverse sometimes and I write on my copy of the invoice the equivalent euro rate on the invoice date and use that in my French tax return. However I'm not exactly sure if that's what I should be doing in France and I certainly can't say what would be correct in the UK. So I'm interested in the answer to this question, too.
You are absolutely right Sheila. Yes, the plan is to continue paying everything into my Euro a/c in France and then transfer this back to the UK.
If it helps you at all, when in France I used to invoice any currency other than euros separately and pay that into a UK account. I would pass the total figure for the year onto my tax advisor and accountant at the end of the year who would do my tax return and apply one exchange rate to the whole sum, apply CSG etc.
| | | | Sheila Wilson
Spain
Local time: 10:55
Member (2007)
English
+ ...
| It's certainly legal | Sep 26, 2010 |
Tom in London wrote: Sheila Wilson wrote:
I think that Lisa is planning to pay her euro invoices into a French euro account I don't think that would be legal.
As Gillian has already commented, there is absolutely no illegality in this arrangement. The only illegal thing would be if you failed to declare the income. All the money I earn worldwide has to be declared to the French tax authorities, regardless of where in the world it resides and in what currency.
The only problem is that the French tax office wants everything in euros - hence the confusion of (a) which date to use and (b) which source to use for the exchange rate
Ask a UK accountant, Lisa - with all due respect to our Proz colleagues, they're not the experts and you'll probably get about 20 different opinions !
Obviously sound advice. However, I think it's worth seeking opinions first to restrict the list and the extent of questions. Like proofreaders, accountants charge by the hour, so the better informed you are the smaller the invoice. The reply to "Do I use the exchange rate on this or that date?" is likely to be cheaper than the reply to "What should I do if my clients want to pay in euros?"
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XXXphxxx (X)
United Kingdom
Local time: 10:55
Portuguese to English
+ ...
TOPIC STARTER | Tallying invoices with income | Sep 26, 2010 |
Gillian Searl wrote:
That's what I do all the time. All the Euro invoices are paid into my German account and then transferred from there when I need the money. I write down the exchange rate on the date the money is received in the UK and my accountant sorts out the rest.
Thanks Gillian. Okay, what I'm wondering now is how this works in practice. Presumably you have a sales list for all the jobs you've done (in sterling, euros, Swiss francs etc) with a sterling equivalent which you then tot up at the end of the year to give you your gross income. If you're applying the exchange rate that is used on the currency transfer then how does this match up to your invoices? i.e. do you only transfer the total of a certain number of invoices and then your accountant breaks that down pro rata to give you a sterling figure for each individual job?
| | | | Tom in London
United Kingdom
Local time: 10:55
Member (2008)
Italian to English
| Clarification please | Sep 26, 2010 |
Lisa, please clarify:
Sheila appears to be wholly resident in France for tax purposes.
But from your own original post, if I have understood it correctly, you intend to move back to the UK and to establish yourself here.
Are you intending to become wholly resident in the UK for tax purposes?
If you are, then I can help because that is precisely what I did after living in Italy for 20 years and paying Italian tax.
[Edited at 2010-09-26 1... See more Lisa, please clarify:
Sheila appears to be wholly resident in France for tax purposes.
But from your own original post, if I have understood it correctly, you intend to move back to the UK and to establish yourself here.
Are you intending to become wholly resident in the UK for tax purposes?
If you are, then I can help because that is precisely what I did after living in Italy for 20 years and paying Italian tax.
[Edited at 2010-09-26 10:35 GMT] ▲ Collapse
| | | | XXXphxxx (X)
United Kingdom
Local time: 10:55
Portuguese to English
+ ...
TOPIC STARTER
Tom in London wrote:
Lisa, please clarify:
Are you intending to become wholly resident in the UK for tax purposes?
I moved to the UK 3 weeks ago but like Sheila I was previously wholly resident in France and paid all my tax there. I may move elsewhere in the Eurozone but at the moment I am resident in the UK.
[Edited at 2010-09-26 10:01 GMT]
| | | | Tom in London
United Kingdom
Local time: 10:55
Member (2008)
Italian to English
Lisa Simpson wrote: Tom in London wrote:
Lisa, please clarify:
Are you intending to become wholly resident in the UK for tax purposes? I moved to the UK 3 weeks ago but like Sheila I was previously wholly resident in France and paid all my tax there. I may move elsewhere in the Eurozone but at the moment I am resident in the UK. [Edited at 2010-09-26 10:01 GMT]
yes but are you *wholly* resident in the UK *for tax purposes* ? That is the first thing HMRC will want to know.
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| 1 day course on setting up as a freelancer | Sep 26, 2010 |
Tom in London wrote: Gillian Searl wrote:
a training course I offer what is this training course?
I train via Atlas Translations in London
| | | | | To be honest, not sure | Sep 26, 2010 |
Lisa Simpson wrote:
Thanks Gillian. Okay, what I'm wondering now is how this works in practice. Presumably you have a sales list for all the jobs you've done (in sterling, euros, Swiss francs etc) with a sterling equivalent which you then tot up at the end of the year to give you your gross income. If you're applying the exchange rate that is used on the currency transfer then how does this match up to your invoices? i.e. do you only transfer the total of a certain number of invoices and then your accountant breaks that down pro rata to give you a sterling figure for each individual job?
Yes I have a sales list with guestimate exchange rates. Once the money has been received in the German Euro account I transfer it to the UK GBP account. The bank sends a confirmation with the exchange rate they used which goes into the book-keeping. The invoicing spreadsheet and the money transferred do match 100% because I have a few bills that I pay in Germany before bringing the money over.
The accountant uses these exchange rates (not sure how) to establish my gross income.
And on tax residency, you are fully tax resident if you are in the country for six months and 1 day in any one tax year. The current tax year (2010-22) ends on 5th April 2011. So if you arrived 3 weeks ago I guess you qualify. If you can prove however that you paid tax elsewhere up to the point you arrived here you shouldn't have to pay UK tax on that amount. You may need to discuss that with an accountant / HMRC too.
Gillian
[Edited at 2010-09-26 13:14 GMT]
| | | | Sheila Wilson
Spain
Local time: 10:55
Member (2007)
English
+ ...
| Rate on the day the amount becomes taxable? | Sep 26, 2010 |
Lisa Simpson wrote:
when in France I used to invoice any currency other than euros separately and pay that into a UK account. I would pass the total figure for the year onto my tax advisor and accountant at the end of the year who would do my tax return and apply one exchange rate to the whole sum, apply CSG etc.
Wow! I find that surprising! I suppose the accountant knew what (s)he was doing , but it seems to me to be very approximate to use one single exchange rate to apply to an entire year's earnings.
My husband gets his Shell pension paid in sterling to a UK bank (but taxed here in France) and the euro equivalent went down by a third for many months (painful, I can tell you) but has now more or less recovered. He uses the rate on the day of payment and I can assure you he would come up with a very different figure if he used your accountant's method.
Thinking a bit more about it, I think it would be more logical for me to use the rate on the day I receive the payment since I'm taxed on amounts received rather than billed amounts (as an auto-entrepreneur). I'm a bit loath to change, though, as I made quite a killing on the EUR/USD rates a while ago with a payment that was delayed for several months.
Perhaps that's the important thing for you to bear in mind, Lisa - are you taxed in the UK on actual receipts or invoiced amounts?
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