The first four Navigator principles all dealt with the human side of money. The fifth is the first to deal with money directly through spending plans and cash flow. Cash flow is the mechanism that enables you to merge life plans with financial plans to support your life goals and give clear direction to your financial strategies. It helps you to measure and balance the twin goals of leading a fulfilled life now with long-term financial security and responsibility.

A recent court case may have important implications for entrepreneurs working from home. This ruling has highlighted that entrepreneurs need to thoroughly and carefully research the rules in order to ensure compliance, or be able to present their case properly..

There are many opportunities these days to work from home, either as an outsourced employee or as a self-employed contractor/service provider. Whatever type of work you undertake (or are considering undertaking), it is essential to find out exactly where you stand as far as income tax and deductible expenses are concerned.

This recent case highlights the confusion that can result as the rules are open to misinterpretation. It involved a taxpayer who is a self-employed electrician who worked on various sites – he travelled to work by car and claimed motor expenses for the journeys. Citing a decision in the Horton v Young 47 TC 60 case, the electrician claimed that his home was his work base and all travel to work sites was exclusively for the purpose of his trade. He had no other office and all of his business records were kept at his home, which was the address used for business correspondence, and also the base where he kept his tools of the trade and equipment.

HMRC disallowed the electrician’s travels claim, saying that although he might do some of his administrative work at home; it was not the place where he carried out his trade. He was told that his travelling costs were not allowable as they were not wholly and exclusively for the purpose of his business.

The First-tier Tribunal ruled that a subcontractor (such as the electrician) needed a business base from where to arrange his work and that this administrative work forms part of his trading activity. As this administrative work, was carried out at his home, then this in fact was his business base. His appeal was allowed subject to figures being agreed.

Clearly, when claiming tax-deductible travel expenses it is essential to remember that each case will differ. However, because securing, arranging and planning work are integral to the process of contracting for work, if the claim is actually supported by the facts, a contractor’s home can also operate as a business base. This will mean that travel expenses incurred in getting to the site where the actual work is carried out may qualify as a deductible expense.

As more people are opting to work from home, it is essential to understand the rules for deductible expenses and how they should be applied.  The “Wholly & Exclusively” rules are open to interpretation and it’s important to work out exactly where you stand as far as these rules apply to you.

In this age where money talks louder than just about anything else, we need to take a step back and consider money and our attitudes towards it.

We may think that having large amounts of money will give us the freedom we would like to concentrate on the things we enjoy doing, but it’s not quite as simple as that.

In our last article "Budgeting - the emotional side" we looked at the emotional side of financial management. We discussed how it is sometimes quite difficult not to feel a little upset at the state of our finances and to become disillusioned when we look more closely at how we are spending our money and just what we are spending it on. It is not easy to see ‘how we are’ as people, and when it comes to money it is no different. In "Budgeting - the emotional side" we looked at the value of putting together a spending plan and how this could help us to gain some objectivity when looking at our own expenditure.

This article takes a more practical approach to budgeting. Because of the way the world is, it is almost impossible to plan your expenditure to a high degree; we all face an unexpected expense at some point and this can make our plans redundant. For example, a huge car repair bill can come out of the blue.

There are ways around this.

The personal budget is something that generally makes many people a little bit nervous. Having to define and maintain a budget is not easy, and some people spend their whole lives avoiding the task.

What makes the whole process of budgeting particularly painful for many though is the fact that, far from being a numbers and facts game, it often becomes something that impacts upon our emotional life. We cannot help but reflect upon our lives when we are looking at them through the lens of money. For example, by looking at our spending on our social life, we begin to think about how we are socially. If we need to get out a lot and spend a lot of money on fun and escapism for example, it may mean we are missing something in our life.