Latest news with #selfemployed
Yahoo
an hour ago
- Business
- Yahoo
Westpac's huge mortgage change set to benefit millions
Westpac is changing its borrowing rules to benefit the millions of self-employed people across Australia. At the moment, many lenders require those who work for themselves to present far more evidence of their finances than someone who is employed through a company. Marina Michael, a mortgage broker who specialises in self-employed Aussies, told Yahoo Finance every bank had a different appetite for these types of borrowers. Traditionally, every lender needed at least two years of financials, including your individual tax returns, company tax returns, and your notice of assessment. But the Big Four bank is aiming to make this process slightly easier by slashing the amount of financial evidence by half. Tax time mortgage warning for millions as dad exposes $500,000 issue Woolworths payment change hits dozens of supermarkets today Aussie earning $300,000 a year in job after completing three day course For comparison, people employed by a company usually only need to provide three months of documentation to show they're in a good position to take on a loan. Westpac hopes that by dropping the requirement for sole traders to just one year, it will speed up application move comes after the bank saw a 30 per cent surge in the number of sole traders applying for loans. An estimated 15.7 per cent of all working Australians are self-employed, according to Australian Bureau of Statistics data. 'By introducing a one-year income assessment, we are making the home loan process faster and simpler by requiring less documentation, helping more self-employed Australians to secure their home or investment property sooner," James Hutton, Managing Director Mortgages at Westpac, said. "Additionally, reviewing just the latest year of income can help with providing a clearer representation of recent business performance and borrowing capacity. 'This is also backed by the expertise and experience of our home lending teams, who understand the unique needs of self-employed applicants and can guide them through the home lending process." Hutton explained that self-employed people were required to present more financial documentation because their income can be "more variable, or require additional verification" compared to regular payslips. Great Southern Bank recently released research showing 40 per cent of people thought it was harder to get a home loan as a small business owner. They acknowledged that being seen as too high risk, the complex process of getting all the documentation needed, and their own instability of income were the biggest issues preventing them from getting approved. Sydney dentist Frank Farrelly told Yahoo Finance he was recently knocked back by a mortgage broker for a loan to upgrade his home due to being self-employed. Even though he had decent savings and his husband is a lawyer, the broker said their application was "riskier" because Farrelly runs his own dental practice. 'Staff wages have gone up, costs of everything else have gone up, but it's also everyone feeling the pinch, so it's hard for us to justify price rises," he said. 'At the same time, we're getting a lower number of people through the door. Business conditions are poor, which I think is across the economy in general.' Sydney builder Tim Nelson has been through this process twice and has welcomed Westpac's policy change. 'The process did involve a stack of paperwork. Any change that cuts down the time and admin for business owners like me is going to mean more time for what really matters – delivering for my clients, building my business and supporting my family,' he said. Michael explained that self-employed applicants were seen as riskier because, historically, businesses failed within the first two years. Recent data showed more businesses have entered insolvency in the 2024-25 financial year than in any previous year. According to the corporate regulator, there were a whopping 14,105 businesses that were unable to pay their debts, which was a 26.8 per cent jump from the 11,053 recorded in the year prior. 'Cost increases – rents, insurance, interest rates, wages, electricity and gas – weaker consumer demand, especially in discretionary areas and the ATO's renewed collections activity are the key themes,' CreditorWatch chief economist Ivan Colhoun said. 'The ATO was more lenient on companies during the pandemic, when there was so much uncertainty and at times great business stress from the unique circumstances the pandemic produced." This is why lenders can be so hesitant when handing out big sums of cash and why they require far more information than your average borrower. Westpac now joins Commonwealth Bank and a few other non-bank lenders who only require the most recent financial year of documentation for a self-employed loan. Some lenders can also offer low doc home loans where they accept alternative documents such as business activity statements (BAS), bank statements, or an accountant's letter instead of full tax returns. However, they can often come with higher rates and fees.
Daily Mail
13 hours ago
- Business
- Daily Mail
Britain's pensions time bomb: Two in five young workers and 62% of self-employed face huge hit to living standards in retirement - because they aren't saving enough
Britain's pensions time bomb was laid bare today amid warnings millions of people face hardship in retirement. Research by the respected IFS think-tank has found 39 per cent of younger private sector workers are not saving enough to avoid big falls in living standards. Some 13 per cent are not even on track for to reach the 'minimum' post-tax income - the equivalent of £13,400 for a single pensioner or £21,600 for a couple. The problems are even bigger among self-employed, with 63 per cent not expected to meet the so-called 'replacement rate' for incomes and 66 per cent not even reaching the basic level. Low-earners are particularly likely to fall short of the minimum retirement funding, with a third not saving enough. But the transition from work to retirement is set to be particularly painful for middle and top earners. Half of those aged between 25 and 34 who are in the higher 50 per cent to 75 per cent of incomes, and paying into defined contribution pots, are set to experience a major drop in their living standards. The Pensions and Lifetime Savings Association (PLSA) defines a minimum standard income as a post-tax income of £13,400 per year for a single pensioner or £21,600 for a pensioner couple. That is after housing costs and based on living outside London. The IFS report recommended that a target should be set for the state pension to be a proportion of earnings, 'to improve predictability'. Currently under the triple lock it rises annually by the highest out of earnings, inflation or 2.5 per cent. It suggested minimum pension contributions by employers should be extended to 'almost all' employees from the first pound of their earnings. Default pension contributions should also be increased when individuals reach the average wage, so that lower earners have their take-home pay protected. The think-tank's review called for a simpler system for self-employed people to build up private pensions. And it suggested a 'small fraction' of the savings from increasing the state pension age should be put towards enhancing universal credit for those approaching retirement. 'Means-tested support for pensioners should be streamlined to boost take-up, and housing benefit should be made more generous for the growing number of pensioners residing in the private rental sector,' the report added. The changes would reduce the proportion of 25 to 34-year-olds projected to miss their income 'replacement rates' by 14 percentage points. Just 6 per cent would fall short of the PLSA minimum retirement living standard, the report estimates. Paul Johnson, Director of IFS and co-Director of the Pensions Review, said: 'There is much to celebrate about the current UK pensions system. 'The current generation of retirees is, on average, doing much better than any previous generation. 'Pensioner poverty is way down on the very high levels in the 1970s and 1980s, and is indeed below that for other demographic groups. The IFS report laid out proposals it suggested would dramatically reduce numbers of workers facing hardship in retirement 'The state pension has been simplified and is now much more generous to many women than in the past. 'Many more employees have been brought into workplace pensions by the successful roll-out of automatic enrolment. 'But there is a risk that policymakers have become complacent when it comes to pensions. Without decisive action, too many of today's working-age population face lower living standards and greater financial insecurity through their retirement.' Former Tory Cabinet minister David Gauke, who helped oversee the review, said: The government should provide a secure pension income, further increases in the state pension age should be accompanied by more support for those hardest hit, and both employees and employers should gradually contribute more to help achieve greater financial security in retirement.'
Yahoo
15 hours ago
- Business
- Yahoo
7 ways to lower your taxable income this year — and trim your 2025 tax bill
The tax filing deadline has come and gone and no doubt you'd rather think about the next summer BBQ — or pretty much anything else — rather than tax planning. But now is a great time to take steps to ensure that the next time the tax deadline rolls around, your bill is as low as possible. Here are seven steps you can take now to reduce your tax bill and pay the IRS only what you need for 2025. Putting more money into your pre-tax retirement plan has two very sweet benefits: You're helping your future self by building your savings, and you're lowering your taxable income today, thus reducing your overall tax bill. For 2025, you can contribute up to $23,500 to a 401(k) or similar qualified plan, an increase of $500 from the 2024 tax year. If you're age 50 or older, you can make catch-up contributions up to the following amounts in 2025: Ages 50 to 59 and 64 and older: You can contribute an additional $7,500. Ages 60 to 63: You can contribute an additional $11,250. Another way to reduce your taxable income is by contributing to a traditional IRA. The maximum contribution is $7,000 in 2025 ($8,000 if you're 50 or older). There's just one catch: If you (or your spouse) have access to a workplace retirement plan, then there are income limits on deducting that IRA contribution. (If a workplace retirement plan isn't available, there are no income limits on deducting IRA contributions.) If you're self-employed, you can contribute to a solo 401(k) plan or SEP IRA to lower your taxable income for the year. (Each of these plan types has different contribution limits and eligibility rules.) Learn more: Current tax brackets and federal income tax rates If some of your investments didn't perform well this year, you may be able to lower your taxable income by selling them — a strategy known as tax-loss harvesting. This involves selling investments at a loss to offset gains from other investments. If your capital losses exceed your gains, you can deduct up to $3,000 of those losses from your ordinary income. Before selling, it's wise to review your portfolio and ensure you're making the right decision for your long-term financial goals. Also, be aware of the wash-sale rule. If you sell an investment at a loss, you can't repurchase the identical investment within 30 calendar days before or after the sale. Doing so triggers a wash sale, and the IRS will disallow the loss on your current tax return. Learn more: How to deduct stock losses from your taxes Deferring income to the following year is another strategy that allows you to reduce your taxable income. For example, you can push capital gains into the following year, or ask your employer to delay your year-end bonus. If you're self-employed, you might be able to hold off on invoicing a client. But be cautious. The IRS may consider income as received if it's available to you, even if you haven't taken physical possession of the cash. For example, if you receive a check in December, but wait until January to deposit it, the IRS will still treat it as income received in December. A flexible spending account (FSA) allows you to make tax-free contributions from your salary to pay for qualified medical expenses and dependent care. For 2025, you can contribute up to $3,300 to a medical FSA and $5,000 to a dependent care FSA for most taxpayers. Before deciding how much to contribute, carefully consider your anticipated expenses for the year. Generally, you have to forfeit any unused funds at the end of the year. However, depending on your employer's plan rules, you may be able to roll over up to $660 into the next tax year or receive an additional 2 ½ month grace period after year-end to use any remaining funds. Get started: Match with an advisor who can help you achieve your financial goals Whether provided by your employer or opened independently, a health savings account (HSA) can help reduce your tax bill — but you must have a qualified high-deductible health plan. Contributions go into the account on a pre-tax basis, thus reducing your taxable income, and withdrawals are tax-free if you use them for qualified medical expenses. For 2025, the HSA contribution limits are: $4,300 for individuals $8,550 for familIes If you're age 55 or older, you can contribute an additional $1,000 as a catch-up contribution. Unlike an FSA, HSAs funds can roll over from year to year. And, if you have the resources to pay for health-care costs out of pocket now, you have the option to invest some or all of your HSA funds for the future. Learn more: How to use your HSA as a retirement plan If you typically don't have enough deductible expenses to itemize your deductions, a bundling strategy may boost those dollar amounts, allowing you to itemize and potentially reduce your taxable income. Bundling refers to paying upcoming expenses early — before year-end — instead of waiting until the new year. Some examples include: A mortgage payment (which may qualify for the mortgage interest deduction) Medical expenses Charitable donations For example, you can make a contribution to your favorite charity at the beginning and end of the same year. This can push your total deductions above the standard deduction threshold, allowing you to itemize and reduce your taxable income further. Learn more: Standard deduction vs. itemized deduction: Pros, cons and how to decide And finally, if you withdraw money from your 401(k) before the age of 59 1/2, you'll generally face a 10 percent penalty on top of your regular income taxes, unless you qualify for an exception. Some exceptions include first-time home purchases, certain disaster-related expenses and medical emergencies. For this reason, it's wise to explore alternative funding options and reserve your 401(k) for retirement whenever possible. Learn more: 10 easy tax deductions and credit to trim your tax bill Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
Don't Have a Full-Time Job? 4 Ways You Should Adjust Your Retirement Planning
If you're self-employed or working part time, your path to retirement likely looks different than the plan of someone in a traditional 9-to-5. Without built-in benefits or an employer-sponsored retirement plan, it's up to you to create your own safety net. Read Next: Explore More: These four steps can help you build a stronger foundation and plan with more confidence, no matter how unconventional your workweek looks. Also see three essential tips for a winning retirement savings plan. 'With 'traditional' retirement planning, typically there is a built-in retirement savings vehicle and automated savings in the form of a 401(k),' Christine Lam, CFP, ChSNC, investment advisor representative at Financial Investment Team, wrote in an email. Not all employers offer 401(k) options to part-time employees, but Lam pointed out that the rules around this have changed due to the Secure 2.0 Act. 'If an employer does not offer 401(k) benefits to part-time employees, then it is the responsibility of the individual to set aside money for retirement,' Lam explained. That means opening up a retirement savings account and making regular contributions. According to Lam, traditional IRAs or Roth IRAs offer the most flexibility for freelancers and self-employed individuals, as the only requirement is for individuals to have earned income. Other options include a solo 401(k) or SEP IRA. 'It is equally important to set up an automatic savings schedule to max out these plans since deferrals are not being deducted automatically from a paycheck as a traditional 401(k) plan would do,' Lam advised. Check Out: In most cases, full-time employees also have access to insurance benefits, including health insurance, disability and life insurance. 'As a part-time worker, you may need to budget for private health insurance (which can be costly) and secure your own disability and life insurance policies, which are an added expenditure,' Lam explained. Because these costs can add up, she recommended having a detailed budget of monthly expenses. As of May 2025, the average monthly benefit amount for retired workers was $2,002, but working part time can result in lower lifetime earnings, and ultimately, a smaller Social Security check in retirement. 'This is because Social Security looks at your past 35 years of working history and pulls the highest earning years to determine your future benefit,' Lam wrote. 'Working part-time could result in lower earnings, which will in turn lower future Social Security benefits.' That means even if you're consistently working, part-time income may not be enough to build up the earnings history needed to maximize your benefits later on. 'Many Americans rely on Social Security to replace around 40% of their income in retirement years,' Lam continued. 'So having a detailed financial plan that factors in future income and expenses prior to making the retirement decision will be especially important for long-term part-time employees.' For part-time workers, retirement isn't always tied to a specific age or date. Without the structure of a full-time job, you may not feel the same urgency or burnout that often pushes people to retire. 'Thus, they can potentially want to work longer, or incorporate a semi-retired lifestyle or delay retirement plans altogether, which can help phase them into retirement,' Lam wrote. More From GOBankingRates Mark Cuban Warns of 'Red Rural Recession' -- 4 States That Could Get Hit Hard Are You Rich or Middle Class? 8 Ways To Tell That Go Beyond Your Paycheck 10 Cars That Outlast the Average Vehicle This article originally appeared on Don't Have a Full-Time Job? 4 Ways You Should Adjust Your Retirement Planning Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Times
3 days ago
- Entertainment
- Times
I'm fighting my ovaries with maths. Can we afford a second child?
'SISTAHHHH! SIIIIISTAAAAHH!' Wow. Absence really does make the heart grow fonder. The baby doll that went AWOL during the house move, formerly a background character to the main cast of toys, has been upgraded to sibling. Cute. I am reassured by the tight embrace my son has his sister-doll wrapped in (a friend's kid took a wooden hammer to her Tiny Tears), but I also feel guilty. Because the jury's still out on whether Baby: The Sequel will be commissioned. A few pals are in the same boat. First-time parents in our mid-thirties, we're conscious of the ticking clock and get all gooey-eyed when our phones ping with throwback photos from the newborn days, but we also wonder if we can realistically afford to do it again. In Scotland we pay twice as much for childcare as parents in England. My son's part-time nursery fees are just shy of £1,000 a month because he's under three and not yet eligible for funded early learning. Statutory maternity pay is so dismal — I'm self-employed and received about £750 a month for nine months, which is the norm — that taking a decent amount of time off work isn't viable without a generous employer, healthy savings pot or high-earning partner. Plus, an employment break can dent your career prospects. Motherhood penalty and all that. • What changed when I had a baby? Around the world in four mothers' stories I realise 1) how lucky I am to have a kid. He's the best. And 2) how utterly joyless it is to crack open a spreadsheet before getting between the bedsheets (sorry, sorry). But I doubt I'm the only one fighting my ovaries with maths. Only-child families are becoming more common in the UK and it's thought that by 2031, half of all families in this country will be raising just one child. Financial pressures aren't the only driving factor, of course. We're starting families later in life; we're less inclined to buy into the myth that only children are spoiled/selfish/strange (Musk, Bezos and Trump all have brothers and sisters, fyi); some cite environmental concerns as a reason not to expand their brood. Being one-and-done is a valid choice. Just a shame it's sometimes being made for us. Eighteen emails, 15 text messages, 51 Instagram messages, 37 WhatsApp messages and a LinkedIn message. Not a rundown of the communications I've received from HelloFresh this week but the number of times Philip Braat, a former lord provost of Glasgow, contacted his ex-partner in the aftermath of their break-up. Braat — nominative determinism strikes again — has pleaded guilty to stalking, which will hopefully encourage others to recognise this all-too-common form of harassment for what it is. What's more shocking about Rod Stewart: that he's pro-Farage, or that he now looks identical to a woman who worked in my local Woolies in the Nineties? Bet a few Lanarkshire residents had to switch off his Glasto set after experiencing the Pavlovian urge to raid a pick'n'mix. 'Tis the season to acquire a Scottish island. Two million quid will buy you Inchmarnock, near Rothesay, but if you've got more to splash then I'm quite taken by the Hebridean island of Shuna (£5.5 million, has own castle). Just don't rub your neighbours up the wrong way by making inquiries as to whether it's possible to introduce heated jets to a pocket of the sea for a more temperate wild swim, as one uber-rich island owner is rumoured to have done a few years ago. After a new selection of Scottish words joined the Oxford English Dictionary last week, I looked up a few others and noticed the dictionary pulls examples of use from social media. I wonder if @johnburns90 knows that below the word 'toalie' is his tweet: 'Just done a toley at work on my lunch hour.' I think we'd be friends.
