You still pay income tax on dividends, but I'm pretty sure there's no national insurance or student loan deductions.
Self-Employment
- Thread starter LiE
- Start date
You still pay income tax on dividends, but I'm pretty sure there's no national insurance or student loan deductions.
I would also advise getting a business bank account, you dont have to for self employed but if the revenue ever investigate you they would usually just go through that, if you use a personal account they will go through absolutely everything. I would rather keep it seperate tbh.
Associate
I use an Excel spreadsheet - is there anything better to use? I.e. some free legal money software?
Soldato
I had no end of problems trying to get a business account due to some bad marks on my credit file from years previously. I tried everywhere and no one would give me a business account, they certainly dont make it easy and business accounts cost you money usually.
Assuming you follow a couple of simple rules there is no issue at all using your nomal account. Just remember to make a note when you pay cash in ( where its come from ) so if the revenua ask 3 years down the line you know what it was. And make sure you always make a note of which invoice a paid in cheque applies to.
If the revenue do decide to inspect you they will inspect ALL your accounts anyway, so there is no way you could ever "hide" anything anyway. Most people who are inspected and get toasted have been doing cash jobs and just shoving the money in the bank.... they will want to know where money thats paid in has come from, saying "dunno could have been off me dad" wont cut the mustard.
I would certainly reccomend a business account if you run the sort of business that has its own premises or many business accounts that are paid via BACS or CHAPS etc... things could get complicated very quickly.
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Associate
- Joined
- 23 Jul 2006
- Posts
- 944
As said by some above, get a decent accountant and under no circumstances use a "friend of a friend" unless you are very sure they are really good at their job, i did this and ended up losing over £15k in vat i could have claimed back as said accountant told me not to register for vat 
Caporegime
As said by some above, get a decent accountant and under no circumstances use a "friend of a friend" unless you are very sure they are really good at their job, i did this and ended up losing over £15k in vat i could have claimed back as said accountant told me not to register for vat
Were you producing zero rated or lower rate supplies? If not, then you'd have ended up paying over more than you could have claimed back.
Do you have to register for VAT if you turn over less than a certain amount?
Ooh as we're asking general questions then I have one. This year I'll be doing a course that costs around £6k. The course is kind of related to my work and once complete I could charge my clients more just for the kudos factor. I'd class it as CPD though I can see how some would say it's not directly relevant. Given that, can I net off the cost of the course when doing my tax?
You have to register if you turnover more than £67,000 however before that amount im sure you can if you want to.
No you don't. As pull said, you have to if you turn over any amount over that threshold, but below that threshold it's purely optional. For some businesses it is in their interest to register, for example if you mainly deal with business clients who are VAT registered and wish to claim the VAT back, it's easier for them to do so with a VAT number. For most sole traders it's not necessary.
My personal opinion here is it's not worth limited company status or vat registration. For that sort of turnover keep it simple and use some simple financial software like Sage, Quickbooks or Excel and if you're not confident enough to fill in your own tax return then pay an accountant to do so. With that turnover you only have to fill in the summary page so your earnings are as simple as total turnover - total expenses = income. You won't have to declare what your expenses break down into at that level.
Back to the original questions.
1. You're already doing this the correct way for a sole trader. I wouldn't complicate the accounts at this stage and until the turnover goes over about £14K you don't even have to provide a breakdown of your expenses.
2. In your position all the fuel you use for business use is considered an expense. You charged £30 for the job but used £10 fuel, your taxable income on that is £20. Keep all your fuel receipts, both personal and business, so if you're ever asked about it you can show that you haven't just been putting all your fuel through as expenses. I found this quite easy because I had a bike that was only used for the business.
Soldato
Dont ever fill in the 3 line summary, its a well known fact that the revenue target a higher percentage of tax returns which have filled in the summary as they generally dont use an accountant and can get a quick buck out of them.
what a load of rubbish. ignore what he said as it isn't true. anyway he you do have hmrc enquire into your return you should have no worries if what you entered is correct and can be backed us by your records. hmrc are humans and accept that genuine mistakes do get made and treat then accordingly.
pointles un-founded scaremongeringlike mark's post doesn't help anyone.
Soldato
ITs not a load of rubbish, every accountant(myself included) knows this or should do. Its easy pickings for the revenue. I'll see if I can find something in one of our accountancy journals and scan it in for you.
OK I've been reading around and am completely confused with whether my CPD is deductible or not. Some more information - I am an IP/contracts law consultant and will be starting the BVC (barrister training) part time in September. It's a two year course costing around £6k a year (run by a private company). Now this course will teach me a lot of new skills that will be useful to my work, but will also update my existing skills (negotiation etc). It would seem that courses that do the first aren't deductible, whilst courses that do the latter are - so I'm really confused as this does both!
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What's the best way to work out the business mileage? Is it a simple case of keeping track of how many miles you do for work, and claiming 40p per mile as the cost to the business?
Caporegime
That's to do with reimbursing mileage costs to employees using their own cars. If you're a sole trader you'd just deduct the actual cost of the petrol and then claim capital allowances on the business element of the cost of your car.
How would you work out the cost of fuel based on mileage if the car is used for personal and business?