Self employment - sole trader

[wull]

I was self employed years ago and can’t remember much about the tax returns, I’m going down that route again so I want to make a list of the kind of things I can deduct from my earnings to give me an idea of how much tax and NI I could potentially pay.

So what kind of things can you deduct?

[Count Steer]

Oof! That's a big question. When the missus was self-employed/sole trader she had an accountant and he always saved her more than the annual cost. Stuff like relief on some of the home costs because that was her business premises. IT kit. Car/travel etc. Might be worth chucking a few quid at an accountant. I think you can claim something like if you make £40k you can claim up to £10k in expenses and the rest is taxed as profit, but they have to be allowable costs, obvs.

PS I guess you'll have seen this...

https://www.gov.uk/expenses-if-youre-self-employed

[Buckaroo]

What he said.

My accountant paid for himself in just one year's trading.!

Have a chat with a recommended accountant.

[KungFooBob]

also, always remember that cash is tax free :p

[Rockburner]

What he said.

My accountant paid for himself in just one year's trading.!

Have a chat with a recommended accountant.

Yup,

We even have a couple of tame accountants in the "community".

[wheelnut]

You’ll be pleased to know that the revenue, for some bizarre reason, treats a bike as plant machinery.

[Mussels]

I remember being told I couldn't claim anything for dual use things, if I used the internet for personal use as well then I could claim none of it.
That meant there was little left I could claim for.

[wheelnut]

I remember being told I couldn't claim anything for dual use things, if I used the internet for personal use as well then I could claim none of it.
That meant there was little left I could claim for.

You were told wrongly. It can get complex, but you can allocate a degree of personal use to something and claim accordingly.

[wheelnut]

Remember you can introduce assets into the business as well. Tools, vehicles, etc. can be effectively ‘bought’ bybtbe business.

Get an accountant and have a chat with then before you start trading. Keep good records. Use something like QuickBooks (update it little and often while it’s fresh in your mind) which will make your accountants job a lot easier (read cheaper).

[Cousin Jack]

Another vote for getting an accountant. Saved more than he cost.

You can read up on the main stuff, but things like extra-statutory concessions can save you a mint, and knowing the fate of recent tax cases can stop you walking into a minefield.

[Mussels]

Just don't get my old accountant, looks like they couldn't be bothered and told me I could claim almost nothing.

[Couchy]

Stock up on brown envelopes, you’ll need them to get work from the bigger companies and any public authority

[Pirahna]

Don't forget to keep your National Insurance contributions up to date.

[KungFooBob]

Don't forget to tell DWP you're working less than 16 hours a week so you can sign on too.

[v8-powered]

I'm effectively self-employed, limited company.
Accountant is worth his weight in gold - I have earnings from my business and a rental property. He's saved me a fortune over the years whilst working within the law....

They aren't as expensive as you may think...

[MyLittleStudPony]

I'd suggest a combination of mezzanine financing and setting up an SPV to loan any intangible, amortisable assets back to yourself under your annual quarterly budget.

[Wossname]

I'd suggest a combination of mezzanine financing and setting up an SPV to loan any intangible, amortisable assets back to yourself under your annual quarterly budget.

That sounds like a good idea.


I said -That SOUNDS like a good idea….

[Count Steer]

I'm effectively self-employed, limited company.
Accountant is worth his weight in gold - I have earnings from my business and a rental property. He's saved me a fortune over the years whilst working within the law....

They aren't as expensive as you may think...

I think the missus paid hers £200 each year to do the tax return stuff but she kept excellent records and prepared everything in advance of the annual meeting. I think his initial and ongoing advice saved her £800+ a year. As she wound down on the work he said it made sense for her to do her own return and he just gave it a once over...not sure if he even charged. V. Nice bloke, dead straight (lives about 200 yards away).

BiL had an accountant for his Limited Company (engineering business) that was a crook, but that suited BiL who was a bit wooh and a bit werr. Took the SiL ages to get financial stuff straightened out when BiL died. (eg found £1000 in water damaged cash in the workshop!).

Probably a good idea to find somebody you trust to recommend theirs.

[v8-powered]

BiL had an accountant for his Limited Company (engineering business) that was a crook, but that suited BiL who was a bit wooh and a bit werr. Took the SiL ages to get financial stuff straightened out when BiL died. (eg found £1000 in water damaged cash in the workshop!).

Probably a good idea to find somebody you trust to recommend theirs.

Yes, do got someone good. I don't have a choice really as my wife co-owns an FCA registered business so any financial wrongdoings by me would have bigger implications.

[Zimbo]

I probably should have an accountant but just do my own tax returns, it's not hard. You can put any tools you buy etc through as business expenses (providing you can legitimately use them in your business of course) and allocate a fair proportion of your home expenses if you work from home, any mileage for business purposes at 45p per mile (first 10,000 miles). As mentioned previously, you can buy a bike for business purposes (over £2000) and claim back 100% of it's purchase price, plus the VAT, against profit in that year, as bikes are classed as plant/machinery rather than transport. Tax return time I state my total income for the business, total expenses, declare any savings interest and dividends, and pay the sum they ask for, bizarrely you don't need to actually upload any accounts, they seem happy to take your word for the figures. Obviously I keep records so I can justify the amount I claim as expenses, I keep it simple (flat rate VAT and cash accounting) and as long as my turnover and stated profit are fairly small (it's a side hustle with around 60K turnover) I guess it's not worth the tax man taking much interest. If my turnover / profit was higher they'd be more interested probably ...