Student loan repayments – voluntary/low balance

Many of us spring chickens (32 at time of writing) without rich parents, took out hefty student loans to spend on white cider and silly clothes.  Some of us have paid it back already, but many are still clearing it, bit by bit.

Should I make voluntary repayments?

Your student loan is likely to be one of the lowest interest rate loans you’ll ever have.  So if you have other borrowing, especially high interest things like long term credit card debt or payday loans, then clear those off first.

If you don’t have other debts and do have spare cash, it’s personal preference.  Some want to be free from the burden, others would prefer to spend their cash on fun stuff and worry about the debt later.  Given it’s fairly low interest, the latter isn’t necessarily irresponsible.

I’ve made voluntary repayments, so I don’t have to make the compulsory repayment, right?

WRONG!  If you’re employed, student loan should be deducted from your salary via PAYE when you earn enough.  How much will depend upon your salary, with no adjustment for any voluntary payments you may have made.

Similarly if you’re self employed/a Ltd Co owner, you’ll make repayments based upon the earnings reported on your personal tax return.  Again, this amount will not be reduced by any voluntary payments you may have made.

If I make a voluntary repayment, can I get it back?

Short answer to this is no.  Possibly there are some extreme situations where it may be allowed, but don’t count on it.

Therefore, do not make a voluntary repayment of your student loan unless you’re confident you know what other liabilities you’ve got coming up, and are sure you still have the cash to spare.

Will my repayment reduce when I’ve nearly repaid my student loan?

No.  On the personal tax return, the student loan box is a simple yes/no choice.  There’s no “yes, but I only owe a little bit” option.  Therefore if your earnings lead to a repayment of (say) £5k, but you know you only owe (say) £1k, tough.  You have to make the £5k payment with your normal personal tax bill.

HMRC will pay it over to the SLC.  A little while later the SLC will do their calculations, realise it’s cleared, and refund the excess to HMRC.  HMRC will then repay the excess back out to you.  This will take a while (remember they’re both public sector departments!).

We’ve seen people who have attempted to deliberately underpay the earnings based repayment on the grounds they knew the liability was lower.  They tried explaining to HMRC why they were doing that, but the response was “tough, if you do that, we’ll pursue the rest like any other liability”.

What can I do to stop the above?

Keep an eye on your balance.  Whilst it’s big relative to your earnings, just make the compulsory repayments, with extra voluntary repayments only if you really want to.

When it gets fairly close to being repaid in full, especially if the balance left is lower than your likely repayment based on personal tax return, give the SLC a call.  Tell them you want to clear the balance, give them your debit card details, and pay it all off.

That way, on your next personal tax return you can ignore the student loan box.

For those interested, I managed to do this last year, so after a decade was finally free from my student loan, hurrah!

What are SA302s and how do I get them?

Typically the first time someone hears about an SA302 is when a potential mortgage lender asks to see them.

Why lenders like SA302s
Why lenders like SA302s

What is an SA302?

An SA302 is a summary of all your personal income for any given tax year, as produced by HMRC.  HMRC will only be able to send you one for a period where you’ve submitted a personal tax return, as it’s effectively them giving back information you/your accountant have already provided to them.

Why do lenders like SA302s?

Whether or not you get a loan is typically based at least in part on whether the lender feels you can meet the monthly repayments.  Your income is a good way of assessing that.  When people want to borrow lots of money (eg to buy their dream home), they have an incentive to inflate their income.

When submitting tax returns, typically there’s the opposite incentive.  Tax bills are based on earnings, so where there’s flexibility, people will try to make their income look as low as possible.  The lender seeing this figure should therefore give them a prudent view.

Lenders will probably want to see SA302s for the last 2-3 tax years.  Obviously whether this is feasible or not depends upon how long you’ve been doing personal tax returns, and how up to date you are with them.

How do I get an SA302?

If you submit your personal tax return for a year using HMRC’s online tools, you should be able to download that year’s SA302 from your portal login.

Most personal tax returns will be submitted via third party commercial software.  Unfortunately this means you can’t currently access the SA302 online.  The only way to get them (at time of writing) is to give HMRC a call on 0300 200 3310, answer the inevitable security questions, and ask them to be posted out to you.  This typically take a couple of weeks, so makes sense to ask for these before/in the early stages of house hunting.

Can’t my accountant provide a reference?

Yes…but different lenders ask for different things.  Some will insist upon SA302s whilst others will have their own bespoke forms for your accountant to complete (which often have ridiculous questions…but that’s another story).

Depending upon the software your accountant uses they can probably provide you with an unofficial SA302 for any year they’ve done a tax return, though the lender will likely want to see one directly from HMRC (on HMRC letterhead etc).  Reason being it’d be easy enough to use software to draft a return with very high earnings, print the SA302, then revise the earnings down to more realistic figures and submit.

 

From my perspective as an accountant, it makes sense for lenders to have a common set of info requested to decide whether or not they want to lend.  SA302s are as good as any, and if HMRC would enable them to be downloaded online for tax returns submitted via third party software, it could become a fairly painless exercise.

Five most common FreeAgent user mistakes

We’ve been working with FreeAgent for about 4 years at time of writing, with currently 250+ clients actively using the software…in that time we’ve inevitably had to fix a lot of mistakes.  Many can be made even by very intelligent users following a logical (but slightly flawed) set of steps.

In no particular order these are:
Duplicating sales by wrongly explaining bank receipts,
Duplicating costs by using bills and wrongly explaining bank payments,
Duplicating bank transfers,
Incorrect VAT treatment on international sales,
Taking out more cash than you’re entitled to.

1) Duplicating sales by wrongly explaining bank receipts

Cause – Raising an invoice, then when it’s paid, marking the bank receipt as “sales” instead of “invoice receipt”.
Problem – By doing this, you’ve got the turnover (and potentially VAT) from the sale in the accounts twice, and despite the customer having paid, your invoice will still show as unpaid because the receipt isn’t correctly allocated to the invoice.
Potential further problem when client tries to fix(!) – What normally happens is a little further down the line the client sees the invoice showing as unpaid, so clicks “mark as paid”.  This doesn’t solve the problem.  Yes it means the invoice is now showing as paid, but it means FreeAgent adds a manual entry to the bank, duplicating the receipt.  So your bank no longer tallies up with reality.
Rectify – Go back to uploaded bank receipt and change from “sales” to “invoice receipt” and allocate to the appropriate invoice.  If you’ve already done the “mark as paid” thing, then you’ll need to manually delete the bank entry that created.  If you’ve filed VAT returns, locking the transactions, then you’d probably best speak to your accountant rather than DIY a fix as you’ve likely got a few knock on issues.

2) Duplicating costs by wrongly explaining bank payments

Cause – Exactly the same as above, but with bills.  People raise a “bill”, then when they pay it, explain the money out of the bank as “payment” instead of “bill payment”.
Problem – Again, this means the cost is in there twice, and whilst the cash has come out of the bank, the bill still shows as unpaid.
Rectify
– Change the money out of the bank from “payment” to “bill payment” and allocate to the appropriate bill.
Recommendation – We personally recommend simply not using bills.  For most small businesses where realistically costs are small and virtually always payable immediately, there’s no need.

3) Duplicating bank transfers

Cause – Explaining both sides of the same transaction independently so FreeAgent sees them as two separate, unrelated transactions.  So, you’ve got a savings account attached to your current account and you’re doing just what your mommy/accountant told you to do and putting some cash aside for your taxes/a rainy day.  Great.
However, what often happens is you first upload the current account statements, and explain the payment out of the current account correctly as a transfer to the savings account.  You then upload the savings account statement, and the receipt you mark as a transfer from the current account.  Right?  Well, sadly not.
Problem – When you explain the current account side as a transfer to the savings account, FreeAgent automatically puts a balancing transfer in to the savings.  Then if you explain the uploaded transfer in to the savings as a transfer in, it automatically puts a balancing transfer out in the current account.  So you end up with it in both accounts twice, throwing out the balances on both bank accounts.
Rectify – What you need to instead do is look for the “use existing manual entry” option when explaining the savings side (or  whichever side you explain second).  This tells FreeAgent that the uploaded transaction isn’t new, it’s simply the uploaded version of what FreeAgent already knows about from you explaining the other side.  So choose one of the uploaded transfer transactions, and amend the explanation, opting for usage of the existing manual entry.
Alternative – If a savings account only has transfers to/from the current account and the occasional bit of interest, you can potentially never bother to upload statements to the savings account.  The transfers should appear automatically from you correctly explaining the current account side, so you should simply need to manually enter the bank interest every now and again.

4) Incorrect VAT treatment of overseas sales

Cause – Manually marking sales to international clients as 0% VAT instead of telling FreeAgent the client is international (difference between “zero rated” and “outside the scope” of VAT).
Problem – If you’re on the “normal” VAT scheme, whilst doing the above is wrong, it won’t cause _too_ much of a problem.  Your VAT liability will be correct, just the net sales figure will be wrong.
However, if you’re on the flat rate scheme (FRS) as many freelancers/contractors are, then you lose out massively with this mistake.  Reason being international sales should be outside the scope of VAT, which means they are NOT included in FRS calculations.  Zero rated sales (how it’s treated if you simply manually alter the VAT rate to 0% on an invoice) ARE included in FRS calculations.  Making this mistake can therefore mean you pay over your FRS % on all your international sales when you shouldn’t be, which could be expensive.
Rectify – When you get an international client, ensure you use the “contact” section of FreeAgent properly.  Set the country drop down correctly (as this impacts VAT, it’s not just for show on the invoice), and ensure where no VAT is to be charged that the “Charge VAT” drop down is set set to either “Only if contact is also based in UK” (what it defaults to) or “Never”.
Exception – Perhaps worth mentioning here that if your international client is an end consumer (rather than VAT registered business) and is in the EU, then normally you would still charge them 20% UK VAT, so the above setting should be changed to “Always”.

5) Taking out more than you’re entitled to.

Cause – seeing lots of cash in the company bank account, forgetting/ignoring the fact you’ve got VAT/corporation tax bills on the horizon, and taking more cash than you should out for yourself.  Ok, so this problem isn’t remotely restricted to FreeAgent misuse, but thought it worth mentioning anyway, as it is something new small Ltd Co owners often struggle with.
Problem – Firstly, it’s illegal to take a dividend that puts the company into an insolvent position.  Reason being you’re defrauding the creditors, taking funds from the company that you’re not entitled to, as they should be set aside to clear company debts.
Secondly, it then means at some point not too far down the line the debt becomes payable, and your company quite probably doesn’t have enough cash to pay it.  At this point you moan to your accountant about how taxes are really high and life’s unfair, and are amazed that they have little sympathy.  At this point, you then either don’t pay the tax (leading to potential penalties and/or interest), or you scrabble around personally to try to find some cash to put back into the company to clear them.  Either way, not good.
Rectify – Ok so this isn’t much help if you’ve already done it…but my only advice is don’t allow yourself to get into that position in the first place.  FreeAgent makes this as easy as it can for you.  The very bottom right figure of your FreeAgent overview page should be marked “Carried forward/distributable”.  Provided your FreeAgent account is up to date and accurate, that’s the absolute maximum you can take as dividends whilst still leaving enough assets in the company to pay debts building up.  I wouldn’t recommend clearing it down to £nil every time, doing that means you’d literally just have enough to clear debts…with possible problems if a client doesn’t pay you, or unexpected costs arise.  Always a good idea to keep a healthy buffer in there, and also consider your personal tax position before declaring dividends.

Accountants/experienced users, any common ones you feel we’ve missed off?  Add them in the comments below!

Santa’s sleigh dilemma

I know what you’re all thinking…does Santa own his sleigh personally and claim mileage, or have it as a company sleigh?

Unfortunately he didn’t respond to my freedom of information request sent last week, apparently I asked at a busy time of year…so I’ve done a few calculations of my own.

How many miles?

One thing we know for a fact is that he covers a lot of miles.  Thankfully clever boffins before me have already done the calculation and decided Santa does approximately 200,000,000 miles a year (all on Christmas eve).

Mileage claim

If he were to claim mileage, and assuming the sleigh is treated as a car, he’d get 45p/mile for the first 10,000, 25p/mile for the rest.  Total expense claim = (10,000 x 45p) + (199,990,000 x 25p) = £4,500 + £49,997,500 = £50,002,000.

I’d guess the above figure would trigger a red flag at HMRC, it’s a little larger than the travel claim for most one man businesses.  However, he should be able to produce a diary showing he made the substantial journey on Christmas eve.  HMRC should be able to verify some of the distance covered using Google Maps/AA Route Planner, and possibly even get some confirmations from individuals around the world that Santa did deliver (and pinch any nibbles left out for him).

Company sleigh

If on the other hand it’s treated as a company vehicle the expense claim would be very different.  The company would get tax relief for all the costs of running the sleigh:

  • Servicing – this should be cheap as there aren’t many mechanical parts, and the elves are able to do most tinkering required at mates rates.
  • Insurance – should also be cheap, Santa’s old enough to have a hefty no claims discount.
  • Fuel – generous parents of good kids provide much of the reindeer food required.
  • Depreciation – Santa’s had the same reindeer for ages, so they appear to have a very long useful economic life meaning low depreciation.
  • Road tax – Santa’s sleigh is declared SORN for 364 days of the year, and doesn’t even use the road network on the remaining day.

So, doesn’t look like Santa’s company would have any significant costs to offset against corporation tax, and there would be very little VAT to reclaim.

Benefit in kind

We also have to consider Santa’s taxable benefit in kind.  It’s notoriously difficult for a company vehicle to qualify as a “pool car”, especially when it doesn’t appear anyone else is allowed to use it.

  • CO2 emissions – 8 large reindeer running very fast (about 6,500,000 miles per hour by some estimates) and an overweight man exhaling heavily as he “ho ho ho”s do lead to hefty emissions.  This is before we factor in the impact of elves producing all the toys, and the coal for the naughty kids, as these don’t relate directly to the sleigh.
  • List price when new – 8 magical reindeer would attract a very high price at auction.  Similarly a sleigh with sufficient capacity to carry presents for all the kids in the world will need to cope with a payload of an estimated 2,000,000 tonnes.  Parkers Guide unfortunately doesn’t provide a valuation of Santa’s sleigh, but it’s likely to be very high.

Given the above, it’s safe to assume that the taxable benefit in kind on Santa would be huge.

Conclusion

Santa will almost certainly use the mileage method.  Doing so will lead to a massive expense claim, whilst the actual cost suffered by Santa is relatively low.  Indeed, based on the above, all accountants should be recommending their clients buy sleighs personally to use in the business.

Topsy turvy tax rates

There’s loads of different taxes out there to sting you whatever you choose to do…but for the purpose of this blog I’m just looking at personal taxes.

In my opinion, these are completely at odds with what they should be.  This is regardless of whether you look at it from a perspective of fairness, or what we as a country should want to encourage.

Below is a table of how much tax you’d pay if you only had one type of income, being taxed by the method selected.  For this purpose I’m including NICs and assuming that the CGT qualifies for entrepreneurs relief, using 2012/13 tax rates/thresholds).

[table]

,£30k earnings,effective %,£150k earnings,effective %

Salary,£6.782,22.6%,£59.813,39.9%

Rental/bank interest,£4.112,13.7%,£53.598,35.7%

Dividends,£0,0%,£31.965,21.3%

Capital gains,£1.910,6.4%,£13.910,9.3%

Inheritance,£0,0%,£0,0%

[/table]

So as you can see, getting that much money as a salary means you pay the most tax.  A bit less if it’s from property rental/bank interest (mainly due to lack of NICs).  Less still for dividends (some will rightly argue corporation tax will have already been paid on these), then capital gains, then finally inheritance (again the dead individual would likely have paid tax when they generated the wealth).

It strikes me that there’s not far off an inverse correlation between how much hard graft you have to put in to get the cash taxed in that manner, with the effective tax rate paid.  Ok so bank interest is fairly high up the list tax-wise and involves no/negligible effort…but nobody’s getting rich from bank interest these days!

So, why is it this way?

Cynics would say that those in power tend to come from wealthy families (and/or are heavily lobbied by wealthy families), so they’re keen on keeping inheritance and investment income taxed at a lower rate.

I think the main argument for it being this way is due to ease of collection/difficulty to avoid.  PAYE does a great job of taking cash off employees before they get it…plus employees can’t offset many costs against their income, nor do they find it easy to move overseas to avoid UK tax.  Also the majority of the population work for a living…relatively speaking very few get significant amounts of the other forms of income.

However, ease of collection is a questionable reason from a moral standpoint.  “Like taking candy from a baby” doesn’t mean you should take as much candy as you can from babies.

I’m aware I can’t get on my high horse about this, where we can we try to help clients move most their earnings away from salary and into lower taxed forms.  I guess my response to that would be “blame the game, not the playa”…and perhaps also “papa’s gotta eat”.

Why you should go niche in your business

Very few of us will become the next Tesco or Amazon and take over the world.  Given that, becoming the “go to firm” in a small niche can be the key to financial success.

Being a big fish in a small pond gives you multiple benefits:

  1. Expertise – If a plumber approaches you and some general web design competitors, chances are they’ll be impressed by your industry knowledge so more likely to go with you.
  2. Search engines – for a new small business, ranking well for “web designer” is nigh on impossible.  Ranking well for “web designers for plumbers” won’t be.
  3. Less price sensitive – if you’re the expert in your niche, people looking to purchase within your niche will be prepared to pay a bit more for your skills.
  4. Streamlining – you’ll be able to do the work quicker as there’ll be less to learn for each job.  To some extent you can automate or copy/paste certain things.  Obviously take care with this, but again using the example of plumbers, they’ll likely only have a local geographical reach, whilst you can easily have a national reach.  Therefore a plumber in Cornwall shouldn’t be too concerned if another plumber in London/Edinburgh has a similar website.

Bad points? – The main argument against “niching” tends to be that you’re greatly limiting the size of your potential market…but as long as that smaller market is big enough for you to thrive, who cares?!  I have no idea of the stats, but I’m sure for a one person web designer they could make a very healthy living even if they limited themselves to just plumbers.

Expand that niche – Of course if they wanted to expand, they could easily go for electricians or other tradesmen.  I’m sure if marketed to this (larger) niche well, it could generate enough work for a small team to be kept busy.

Maslins has heavily skewed towards FreeAgent using contractors/freelancers.
MVL Online only offers solvent liquidations to cash shell companies (means we can heavily streamline).

“Success”? – In my first paragraph I deliberately said “financial success” rather than “success”.  I know lots of people who have started their own business doing something they absolutely love to do.  They have no dreams of huge growth, but enjoy the variety that each varied new client brings.  They would consider themselves successful, and I’m not arguing with that.

Inevitably the more you niche, the less variety you get in, which for many may mean boredom.  So whether to niche may in part depend on whether you want to enjoy doing a variety of work in your chosen field, or whether you want to build a scalable business with systems and/or staff.

Why the VAT flat rate scheme is overrated

UPDATE NOV 2016 – the below was written long before the Chancellor made a further attack on the FRS for “low cost traders”!  There is still the simplicity angle that some users will enjoy, but many who did make a small profit from it too will find that from April 2017 they no longer will.

Original post from 26 Nov 2013 below:

In the world of contractors/freelancers, the flat rate scheme (FRS) is a well known VAT “trick” which many believe saves them loads of cash.  That’s not always the case.

FRS is on gross invoice

For those it does benefit, it’s rarely as good as they think.  Say you’re an IT consultant, you charge 20% VAT to your clients and pay 14.5% FRS…so you pocket 5.5% for yourself, right?  Wrong.  The 14.5% is paid on the gross invoice.
– you raise a £1,000 net invoice
– add £200 VAT charged to the client
– pay 14.5% on £1,200, being £174
– you only pocket £26 (£200 – £174), so 2.6%, or 2.167% of the gross amount.

Can’t reclaim input VAT

Perhaps obviously, you lose the ability to reclaim VAT on your purchases.  As demonstrated above, if you incur more than £26 worth of input VAT per £1,000 of VATable (more on this later) sales, you’re worse off being on the FRS.  £26 isn’t a lot.

Yes, you can reclaim when you spend >£2,000 in one go on capital assets, but that’s unlikely to be a regular occurrence…and if it is, its it because you’re buying things you don’t need just for the tax breaks?  Rarely a good idea.

Subcontract work out?

Quite a lot of contractors/freelancers at some point subcontract work out to others (or possibly buy and resell equipment to clients).  If these suppliers of yours are VAT registered themselves, you’ll quickly lose out, potentially by a lot as you’ll be getting hefty VATable invoices coming in.

When looking at your profit margin on work subcontracted out, if you’re on the FRS, consider the gross cost as your cost.  Some people mistakenly think they’ll only have to pay over FRS % on their profit margin as they feel the rest isn’t really their turnover.  Wrong.  When you subcontract (or buy and resell equipment), both your turnover and costs rocket, even though your profit only increases by your margin.

Example:
– you agree to £5,000+VAT’s work, you subcontract to someone else for £4,000+VAT.
– not on FRS, your profit would be £5,000 – £4,000 = £1,000.
– on FRS, your profit would be £6,000 – £4,800 – (14.5% x £6,000) = £330.
– £670 worse off by being on FRS for this one transaction.

Sell overseas

Many contractors/freelancers at some point also sell to outside the UK.  You need to be careful here as the VAT can get complex, but more often than not these sales will be outside the scope of UK VAT.  Whilst this means you don’t pay FRS % on that turnover as these aren’t VATable sales, bear in mind it also means you’re not making the “profit” from FRS on that turnover.

As an aside – ensure your accounting software knows these sales are outside the scope of VAT rather than exempt/zero rated.  FreeAgent tip – this generally means making sure you enter the “country” drop down properly within the “contact”…do NOT just manually change the VAT rate on the invoice to 0% or you’ll still pay FRS % on it).

You’re stuck with it for a while

If you join the FRS, you need to stay on it for at least a year before you can leave.  Reasoning for this is to stop people co-ordinating all their big VATable bills to be annual, and ensure they’re on the “normal” VAT scheme for that quarter whilst FRS for the remaining three.

Downside of this means you need to think ahead 12 months when making the choice whether or not to join.  If your current situation suits it, but then things change 3 months in, tough, you’re stuck with it.

Therefore if you’re just starting up and don’t know how things will pan out, best to play it safe and keep away from the FRS.  You can always join it later once you’ve got a better idea of how things will work.

Flat rate surplus is NOT your profit from FRS

Your bookkeeping software may well give you a flat rate surplus figure, up there next to turnover.  This is the bit of VAT you get to pocket on all your sales.  However, it doesn’t factor in the “lost” VAT that you would have been able to reclaim if you weren’t on the FRS.  When on FRS all your company expenses will be shown gross of any VAT.  Some people misunderstand that, and think that as long as the flat rate surplus shows a positive figure, they’re benefiting financially from being on the scheme.

Conclusion

So…long story short is whilst lots of people do benefit from the FRS, it’s typically far less than they think, and I’m sure many more actually lose out without knowing it.

Tax avoidance from the Game of Thrones characters

So I’m new to blogging…but here’s my starter for ten.

Famous people love tax avoidance.  Game of Thrones characters, despite being mythical, are no different.  Some of their main attempts explained below:

Tyrion LannisterTyrion Lannister:

– As hand of the King, Tyrion is part of the government.  This enabled him to claim Casterly Rock as his primary residence, and his lavish King’s Landing property funded as a second home by the taxpayer.

– He managed to argue that all expenditure on alchemist wages and materials for the Wildfire used in the Battle of the Blackwater qualified for R&D relief.

– Tyrion’s father Tywin handed Casterly Rock down as a potentially exempt transfer for IHT.  Whilst Tyrion resents his father, he’s hoping the old man outlives gift by 7 years to avoid IHT on his death.

Eddard (Ned) Stark:Ned Stark

– As the North is a “disadvantaged area”, the Starks were able to gain NIC holidays on salaries for their troops, enabling them to fund an army cheaper than their enemies.

– Ned’s proud of living at Winterfell.  What’s less well known is he was moved there by the council after having a sufficiently large family (including bastard sons and hostages) that they outgrew all the local council houses.

– As any Stark will tell you, “Winter is coming”, so Ned and his family are very grateful to Gordon Brown for bringing in the winter fuel payment.

Daenerys TargaryenDaenerys Targaryen:

– Daenerys does not live on Westeros, so is not tax resident there, giving her many tax benefits.

– She was careful to receive the dragon eggs as a gift from her husband only after their marriage.  This meant they were exempt from capital gains tax as a transfer between spouses.

– Now the dragons are growing and increasing in value, she’s convinced HMRC that dragon rearing is a trade rather than investment.  This is vital, as it means on any future disposal they’ll benefit from entrepreneurs relief.

Theon Greyjoy:Theon Greyjoy

– Theon is a “non dom” as he was born on the Iron Islands and retains family there, but having lived on Westeros for a while he is tax resident.  This enables him to choose whether or not to use the remittance basis.

– Having recently had his manhood removed, Theon is looking to see what additional disability benefit this may entitle him to.  Relative to other characters his disability is minor, but he’s still trying to argue it reduces his earning potential.

Petyr BaelishPetyr Baelish:

– Petyr’s income mostly comes from his brothels.  Whilst evasion rather than avoidance, as most transactions are in cash, he keeps a lot of the profit off the books, thus out of the taxman’s hands.

– The above hasn’t proved too much of a problem for Tyrion or Theon, regular visitors.  They don’t ask for a receipt as they know full well that even the best tax advisers in the Seven Kingdoms can’t justify a prostitute as a tax deductible expense.

Jon SnowJon Snow:

– Jon took the “cut off your nose to spite your face” attitude to tax avoidance.  By becoming a member of the Night’s Watch he gave up any entitlement to land or riches, meaning there’s less for him to pay tax on.

– A benefit of the Night’s Watch is that living accommodation on The Wall is considered necessary for proper performance of his duties.  This enables him to pay for it out of his pre-tax income.

 

The above is in no way endorsed by HBO, images courtesy of GameofThrones wiki.