When you self employed and you have kept all your food reciepts dry cleaning etc for the year can you calculate the whole lot together and submit the figure to the revenue or do you have to itemise each reciept.
Presume there is a list somewhere on the net of all you can claim for any one have a link to it and would you need reciepts for the likes of accomadation if renting etc.
want to learn how to submit my own returns without having to go an accountant if thats possible.
only have this year to submit and after this going to go down the company route as reckon i would work out better but if i start company now would have to submit both returns of self employed and company for this tax year so am i right in thinking i am better off leave the setting up of a company till the new tax year?
IF you claim small business exemption you dont have to put in detailed accounts- Just money in and money out, HMRC do call in a few accounts each year and check against reciepts but you would be very unlucky to be one of those.
The small business exemption only applies to HMRC (customs and excise) and companies house the VAT man if you fall under VAT regs wants full disclosure- abbbreiviated accounts wont do
thanks rikki for quick reply
so for me small private company prob under 50k a year i would imagine i wont have to put in detailed accounts but just a few quick questions u may have answers too
can i still charge vat? ( i know there is some scheme where as u charge something like 10% but know little on it) would this be included in the small business exemption if i was to do this?
would i have to get an accountant to sign off my books every year?
there would only be prob one employee which would be me
when would the year start from with regards to tax return s is it from the day the company starts or from a general day for everybody like april ?
thanks in advance
Ned It sounds like attending a couple of those free HMRC courses would be the best course of action for you, including setting up a business, becoming a director, & how VAT works. Take a look at hmrc.gov.uk/bst/
As for the small business VAT scheme, once registered for it, you’d charge the standard 20% on your invoice, you keep 10% and pay HMRC 10%. Again the “how VAT works” course will explain all this
peirre:
As for the small business VAT scheme, once registered for it, you’d charge the standard 20% on your invoice, you keep 10% and pay HMRC 10%. Again the “how VAT works” course will explain all this
hmrc.gov.uk/vat/start/schemes/flat-rate.htm
Not quite right. I run a small business and use the flat rate scheme.
The flat rate for transport is 10%. but that doesn’t mean you get to keep 10% of the VAT you charge.
Here is how it works: I charge a customer £100 plus VAT for work I have done. The customer’s bill will be £120 including VAT. I have 10 customers (all being charged the same for the example) in a VAT Quarter so I earn 10 x £120 = £1200. I calculate 10% of the £1200 making £120 VAT due to HMRC VAT man. I keep £80 of the VAT I charged my customers. This seems great as I have made money from the VAT. However the down side is I can’t reclaim any VAT on my purchases so if my purchases included VAT of more than £80 I lost on the deal. (There is an exemption for items costing more than £2000 which VAT is reclaimable, I reclaimed the VAT on my van).
Note that the calculation is made on the sum of your takings for the quarter, not by working out each invoice seperately which saves a lot of administation time. Time is money so less time spent on admin leaves more time for earning. (or playing)
As you can see, on a turnover of £1200 including VAT you keep £80 or 8%, you pay HMRC £120 or 12%. This is on a10% flat rate.
If you do make a profit from VAT it adds to your overall profit so you will pay income tax on that profit.
nedflanders:
When you self employed and you have kept all your food reciepts dry cleaning etc for the year can you calculate the whole lot together and submit the figure to the revenue or do you have to itemise each reciept.
Presume there is a list somewhere on the net of all you can claim for any one have a link to it and would you need reciepts for the likes of accomadation if renting etc.
want to learn how to submit my own returns without having to go an accountant if thats possible.
only have this year to submit and after this going to go down the company route as reckon i would work out better but if i start company now would have to submit both returns of self employed and company for this tax year so am i right in thinking i am better off leave the setting up of a company till the new tax year?
If your turnover is under £70k you can just lump the whole lot together. Basically it’ll be gross income, tax deductible expenses (one figure) and net profit will be calculated. You’ll need to do a separate one listing any bank interest, pension payments etc but its not hard.
As for accommodation, the golden rule with tax returns is if you don’t have a receipt, don’t claim for it in case you get audited.
Why is going Ltd company better? Its just more paperwork.
Conor:
Why is going Ltd company better? Its just more paperwork.
You are indeed correct Conor there is more paperwork involved, but speaking from bitter experience as a sole trader who got taken for nearly 100k after a co went bust on me, but I did (in my judgement) the honourable thing and paid my subbies in full. With hindsight if I’d been a Ltd Co I’d have had limited liability and could have walked away. I still wouldn’t have BTW but that option would have been open to me.
Nearly 6 years watching every penny until I paid back every penny left me with a slightly different outlook TBH.
tanks for all the replies its been a great help
conor do you add up all your reciepts (whats allowable) add up all your income and subtract the total of reciepts from income and figure you get you pay tax on ?
When does tax year for self employed start presume its april.
Maoster i aggree with you and one of the reasons i want ltd company is as you say also i want to try and buy a flat under the ltd company which will prob prove near impossible to get a loan but will give it a try.
when you form a ltd company does the tax year start from the date you form it or is it the same date for all companys for eg 1st april ?
nedflanders:
When does tax year for self employed start presume its april.
Thats not nessesarily true, it depends on if your a sole trader or Ltd Co.
Sole traders usually have 1 or 2 dates in the year to do the self assesments & tax returns (someone will be along to give more detailed info)
nedflanders:
i want to try and buy a flat under the ltd company which will prob prove near impossible to get a loan but will give it a try.
AFAIK Your gonna need 2yrs+ of accounts to show the lender to get a loan/morgage
nedflanders:
when you form a ltd company does the tax year start from the date you form it or is it the same date for all companys for eg 1st april ?
AFAIK Its usually the date you form the ltd Co. I my case, its sometime in march, However my accounts don`t have to be done until the end of the year, and any (2011-2012) corporation tax has to be paid by 1st January 2013, but I pay it early in Oct/Nov. But as its suits me, I usually get in touch with the accountant in may to get the ball rolling, so everything is sorted by the end of June, thus leaving me to enjoy the whole of July on holiday.
IMO If I was you I would try to avoid a start up date that clashes with the sole traders self assesments etc, as no doubt 3/4 of the accountants in the country will be busy then sorting them out, leaving little time for you & the rest
But you can after registering the company, & while you finalise the other aspects of the company (banking, accountant, HMRC VAT etc) suspend it & put it on hold, then when your ready to start working & make money notify HMRC the company is up and running
Watch every penny from the start, that way no one can accuse you of anything.
If you delve deeper into the Govt. and their agencies, you will realise that they can and will try and get EVERY penny off you if you leave yourself exposed.
Trust no one, not even yourself!