what can be tax deductable...

[mickmcc]

Hi all, just wondering what exactly everybody claims back from the taxman, just to make sure all use newbies to the trade are getting the most out of it . p.s. as im thinking of taking the wife out for meals everyday and claiming on that haha, joke!!! But I am thinking about sponsoring a football team ie strips etc for advertising purposes guessing this would be ok, could be a good post if everyone gets involved. Thanks a bunch.
[email protected].

 

[GazTech]

Hi all, just wondering what exactly everybody claims back from the taxman, just to make sure all use newbies to the trade are getting the most out of it . p.s. as im thinking of taking the wife out for meals everyday and claiming on that haha, joke!!! But I am thinking about sponsoring a football team ie strips etc for advertising purposes guessing this would be ok, could be a good post if everyone gets involved. Thanks a bunch.
[email protected].

grumpygrouter is your man to ask...he knows how the books should be cooked....Gaz

 

[grumpygrouter]

grumpygrouter is your man to ask...he knows how the books should be cooked....Gaz

That me called Chef Grumpy now is it?

Grumpy

 

[Holohana]

i simply claim back everything that is a cost to the business be it fuel, tools, materials, clothes, stationary, staff (wife doing the books!), costs agisnt the home as i use it to run the bsiness, mobile phone & broadband, and any marketing costs such as advertising, business cards, flyers and sponsorship etc. This also includes any accomodation costs should you be working away and food allowance etc.

Of course the van goes against this as well, depreciation wise of course.

I then give it all to the accountant and then he works out whats ok and what isnt.

If its as legitimate expense then it should be claimable and offset against your tax, simple as that.

Have i missed or added andything i shouldnt have Grumpy?

 

[tysfoot]

i'm going to register as self employed in march and i didnt know you can claim so much back do you get this back at the end of the tax year in a lump sum. out of interest how much do accountants charge roughly.

So if i go self employed and i buy a 2 grand van i can claim that back ?

 

[grumpygrouter]

i simply claim back everything that is a cost to the business be it fuel, tools, materials, clothes, stationary, staff (wife doing the books!), costs agisnt the home as i use it to run the bsiness, mobile phone & broadband, and any marketing costs such as advertising, business cards, flyers and sponsorship etc. This also includes any accomodation costs should you be working away and food allowance etc.

Of course the van goes against this as well, depreciation wise of course.

I then give it all to the accountant and then he works out whats ok and what isnt.

If its as legitimate expense then it should be claimable and offset against your tax, simple as that.

Have i missed or added andything i shouldnt have Grumpy?

If you are paying your wife, ensure that you have registered with HMRC as an employer and you pay at least the National Minimum Wage, oh! and holiday pay!

Basically, anything that can be justified as WHOLLY AND ENTIRELY BUSINESS USE can be claimed against your tax bill. If you use things for personal use also, you must apportion the cost appropriately between business and personal.

Grumpy

 

[tysfoot]

Thats a lot more than i knew, i need to phone hmrc soon about this but i didnt know you can claim back agianst so much. it must be so much more worth while being self employed, up to now ive been doing cheap jobs and ive forked out so much in expenses

 

[grumpygrouter]

i'm going to register as self employed in march and i didnt know you can claim so much back do you get this back at the end of the tax year in a lump sum. out of interest how much do accountants charge roughly.

So if i go self employed and i buy a 2 grand van i can claim that back ?

Hi Tysfoot,

You don't actually "Claim" anything back as such, what you do (in very basic terms) is prepare accounts showing how much you have earned, what you have spent and you deduct one from the other to give you a "profit". This profit is then the basis for your tax calculation.

Incidently vans are classed as "Fixed Assets" and are not directly tax deductable. What you do however, is claim a "capital allowance" against your fixed assets on your tax return. For instance if you spend £2000 on a van, you would be able to claim against your tax bill £500 in the first year (25%), then 25% of the reduced balance of £1500 in the second year i.e. £375, and so on.

As for accountants charges, how long is a piece of string? Go to the likes of Price Waterhouse Coopers and you may well pay all your profit to them!!! If you use a smaller practise the fees vary so much you will need to get meeting to get an idea of the what they would charge.

Grumpy

 

[tysfoot]

Thanks for the advice mate, its hard to take in all at once, im sure when people explain in about 100 different ways ill get it, ill understand more when i go through the process myself, thanks anyway

 

[sean384]

Im also going alone in March and that made some pretty usefull reading. Thanx Boys n Girls

 

[grumpygrouter]

You don't have to wait until you have finished working in your present job to be self employed, you can register anytime if you are doing work that generates income.

Indeed, if you are doing work outside your employment, you SHOULD be registered as under current legislation if you earn money, by whatever method, you should declare it on a tax return if it is not already taxed at source. This is stipulated under the Incomes and Corporations Taxes Act, and the Revenue don't even have to ask you, for you to be breaking the law!

Don't want anybody to be under any illusions that "if they don't know, it doesn't matter". I feel it is prudent to let anybody who is doing this "on the side" know what they are doing, legally.

Cautiously yours

Grumpy
----
Just thought I would give so indicators of what can be claimed against your tax. This is from HMRC website

Decision Makers Guide - DMG35003

Allowable business expenses

Expenses which the decision maker should allow if the conditions in DMG35002 are met are all day-to-day expenses of a business including

• accountancy charges

• advertising

• cleaning of business premises

• difference between opening and closing stock (on accounts)

• discounts allowed to customers

• employees' wages before any deductions are made, including any wages payable to the domestic partner

• employer's contributions to employees' pension scheme

• employer's (secondary) Class 1 SS contributions

• heating and lighting (but see DMG35104)

• hire or rental costs (but not any capital or purchase elements - see DMG35104)

• interest payable under a credit sale, a consumer credit agreement or a hire purchase agreement (but not the capital element of payments - see DMG35019)

• legal fees associated with the business

• payment in kind for work done for the business - the monetary value is allowable

• rent and rates

• stationery

• stock purchases

• sundries, sometimes called miscellaneous items, which are small in relation to total allowable expenses provided that the decision maker is satisfied that no non-allowable expenses, for example for business entertainment, are included

• telephone, telex, fax etc (but see DMG35009)

• transport excluding any home-to-work costs - see also DMG35009 if a vehicle is used partly for private purposes

• VAT allowable (DMG31413).

Grumpy

 

[frogeye]

Having just registered a few days ago - I would like to give fair dues to HMRC - the whole process took less than 20 minutes on the phone ( very helpful ), I was offered further free help in the form of lectures etc - not as detailed as grumpy's no doubt, but good non the less I'm sure.

You have 3 months from the day you start being a 'sole trader' or self employed to telling HMRC. You can't register in advance - I found that out.

Make a loss - tools, expenses etc and it will be offset against your tax bill on earnings from other sources - other income or pensions etc. Seems reasonable to me. I will be looking for a good book-keeper.
frogeye

 

[grumpygrouter]

Make a loss - tools, expenses etc and it will be offset against your tax bill on earnings from other sources - other income or pensions etc

Also if you have no other income, losses can be carried forward and used against future profits.

Would recommend ANYBODY who is self employed organise their book keeping as early into self employment as possible. It has a habit of being put to one side until "I am less busy" only to find that 7,8,9 months down the line you find you are running out of money.

It appears that most of the people on here are computer literate and I would recommend that research in to accounting packages be done and to try and implement one of these packages into an administration regime. The software that I use (and support) is called MYOB. Have a look at [DLMURL]http://www.myob.com/uk[/DLMURL] and you will get an idea of how it looks and works. Currently their software is available at 1/2 price until 30th November as there is an upgrade due early next year.

I have also attached a summary sheet for info.

Grumpy

 

[CLAYS TILES]

nice one grumps

 

[Corky]

Great thread, I went to the MYOB site and had a look ,the prices were great .then I clicked the Ireland link ,wow big difference in price (paddy price ) Corky

 

[Ric]

Go on hmrc website and download their help guide on self employment it details all you need to know.

 

[Corky]

Will do ,thanks..corky

 

[davy_G]

Hi all,

When i did my tilign course we where given a basic accounting package in excel. It is basic but has a purchase and sales ledger with quick look summary, expense and invoice book as well.
Helps to keep a grip of everything and might be a good starting point for a sole trader by themselves. I use it and after adjusting the format a bit and running it by my accountant so everything he wanted at year end was included it is going well.

 

[grumpygrouter]

Hi all,

When i did my tilign course we where given a basic accounting package in excel. It is basic but has a purchase and sales ledger with quick look summary, expense and invoice book as well.
Helps to keep a grip of everything and might be a good starting point for a sole trader by themselves. I use it and after adjusting the format a bit and running it by my accountant so everything he wanted at year end was included it is going well.

Not a bad starting point Dave, ideally could do with all the sheets being integrated into one work book and having links between each section to aid flow of information.

If you can operate that successfully, you would have no problem using MYOB which does all the hard work for you. i.e. enter the details of your purchase, it enters the appropriate amount in the ledgers and bank if appropriate. With the system you are using, you need to move between work books and transfer some details across, giving rise to potential data entry errors.

Grumpy

 

[Perry]

just shows you boys and girls how usefull this forum is to some of us well done Grumpy not that i would think about cooking my books :chef:

 

[grumpygrouter]

not that i would think about cooking my books :chef:

Course not Pete!

Grumpy

 

[mickmcc]

Thanks Very Much For All The Replies People, Need A Bit Of Help Here If You's Dont Mind, I Currently Work In My Old Job Monday Tuesday Wednesday And I Tile On A Thurs Friday And Weekend If Needed, Ive Not Registered Yet As Only Been Going Nearly 2months, To Put It In Easy Terms, When I Buy Tiles And Materials Do I Just Keep Every Reciept I Get And Put To One Side, And When I Ring Hrmc Obviously Need To Let Them Know About My Other Job But What Differnece Does This Make To That Tax If Any. Cheers.

 

[grumpygrouter]

Thanks Very Much For All The Replies People, Need A Bit Of Help Here If You's Dont Mind, I Currently Work In My Old Job Monday Tuesday Wednesday And I Tile On A Thurs Friday And Weekend If Needed, Ive Not Registered Yet As Only Been Going Nearly 2months, To Put It In Easy Terms, When I Buy Tiles And Materials Do I Just Keep Every Reciept I Get And Put To One Side, And When I Ring Hrmc Obviously Need To Let Them Know About My Other Job But What Differnece Does This Make To That Tax If Any. Cheers.

There is no problem being employed AND self-employed at the same time. Main difference you will notice is that you will receive a tax return every year and you will be required to pay Class 2 national insurance contributions of (currently) £2.20 per week. Any PROFIT you make in excess of the personal tax allowance threshold of £5225 will attract Class 4 national insurance deductions of 8% of the balance, and you will be liable for 22% tax on pretty much all your profit because of your employment income.

Bearing in mind that your employment income will probably absorb your tax free allowance, I would allow about 25% of your profit as a "tax to pay" figure -in simple terms - and put it to one side.

As a note, you are oblidged by law to register as self employed within 3 months of commencing trading.

Grumpy

 

[webby]

Don't put your Mrs.down as employed.Put her down as a partner.Your accountant should then work the tax due proportionately between you.That doesn't mean equal tax but it will work out cheaper overall.My accountants bill is about £450 per annum.

 

[grumpygrouter]

Don't put your Mrs.down as employed.Put her down as a partner.Your accountant should then work the tax due proportionately between you.That doesn't mean equal tax but it will work out cheaper overall.My accountants bill is about £450 per annum.

Husband and wife partnerships will have equal tax liability unless a "partnership agreement" is legally drawn up specifying the partnership split (potential cost involved here). The wife will also need to be registered as self employed and pay Class 2 NI contributions also.

Should the marriage have problems and results in a split, all sorts of legal problems can arise and because of this it is STRONGLY advised that a proper agreement is drawn up by a solicitor before the trading is commenced.

Grumpy

 

[wayne]

grumpy if i get a van on contract hire can it all be claimed back for tax purposes.

 

[grumpygrouter]

grumpy if i get a van on contract hire can it all be claimed back for tax purposes.

Yes Wayne mate, contract hire is fully tax deductable as it is fully offset against income, unlike Hire purchase or lease purchase which is charged as a fixed asset on the balance sheet. An "operational lease" works along the same lines as contract hire for accounting purposes.

Grumpy

 

[DHTiling]

Wot would we do without our grumps......:grouphug:

 

[wayne]

only asking as missus works nights and i have 2 little kids and can only fit one in my combo. need a van with a double seat at the front so im looking at a vivaro or a citroen dispatch

 

[Sean Kelly]

Grumpy, back in November you wrote 'transport excluding any home-to-work costs - see also DMG35009 if a vehicle is used partly for private purposes'. This has confused me, as I now do site work. I have to travel (by car) from my home to the site. This is 52 miles a day (round trip). Incidently, this travel is through London and takes me on average 3.5 hours a day! My question is, can I claim the 40p x 52 miles allowance? Also, am I allowed to claim the cost of lunch. Thanks Sean