Any accountants present (sole trader confusion)

I have confused the **** out of my self lol Every one i have spoken to has told me something differnt.

I am starting my own buisness doing carpentry and locksmithing, now i have confused my self.

I want to be sole trader only, not vat no ltd.

I have been setting this up for quite a while but declared self employed start of this tax year.

Now if i have spent ££££££ starting the buisness up with my own personal funds, what happens to this, is this take non taxable or is i just forgotten about.

im confused :cry:

i need to sort an accountant but i would just liek to know this please lol

If the money invested was used (as in tool/equip/vehicle purchase etc etc) whilst you were declared sole trader, then it can be claimed back come tax return time (this is called income & expenditure).

Being as the money invested in the first place would have been earned somewhere prior (PAYE most likely) then tax has already been paid on it therefore its untaxable a second time round*. And just for the record, HMRC dont just forget about things lol

On the flip side, say youve invested £10k for example (and claimed £10k of expenditure receipts), but in your first trading year you only clear £8k in invoiced profit (for example), that leaves £2k difference and you can end up with a tax bill, as oppose to a tax rebate as you'd hypothectically be claiming a larger figure back then youve actually earned to start with.

*You can/do/will get tax'd twice on funds if you use subcontractors.

Ok say i have spent £10,000 on buying a van, clothing, tools, ect ect

This money came from what i earnt paye

i will just be paying tax on what i earn and wont be able to write any of that of against it :(

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Originally Posted by djbrowney

I have confused the **** out of my self lol Every one i have spoken to has told me something differnt.

I am starting my own buisness doing carpentry and locksmithing, now i have confused my self.

I want to be sole trader only, not vat no ltd.

I have been setting this up for quite a while but declared self employed start of this tax year.

Now if i have spent ££££££ starting the buisness up with my own personal funds, what happens to this, is this take non taxable or is i just forgotten about.

im confused :cry:

i need to sort an accountant but i would just liek to know this please lol

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As a sole trader you are taxed on what you make ie income - expenses - capital allowances on your equipment bought (which is presumably why you put the money in ) claim any expenses incurred before trading including equipment in your first year

what you put in or take out is irrelevent

would be different as a limited co

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Originally Posted by djbrowney

Ok say i have spent £10,000 on buying a van, clothing, tools, ect ect

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Was this spent before registering as sole trader? If so, then unfortunatly you wont be able to offset it against any future income :( (I dont think anyway :S)

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Originally Posted by djbrowney

This money came from what i earnt paye

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Thats not a problem, in the highly unlikely circumstances of it being qeustioned, your old P60's/bank statements can prove any origin of these funds & that revenue was paid at source (at source being the employer paid it).

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Originally Posted by djbrowney

i will just be paying tax on what i earn and wont be able to write any of that of against it :(

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Correct, however, once your registered as a sole trader, any further purchases, be it tools, clothing (for work ;) ) equipment, fuel, vehicle repair/service, office supplies/stationary/ink, vehicle hire, PPE blah blah blah can all be offset against income :thumb:

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Originally Posted by Nova00

As a sole trader you are taxed on what you make ie income - expenses - capital allowances on your equipment bought (which is presumably why you put the money in ) claim any expenses incurred before trading including equipment in your first year

what you put in or take out is irrelevent

would be different as a limited co

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So does this mean i can claim my expensses for my tool i have bough recently but not in my sole trader period ie before april this year :thumb:

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Originally Posted by Mike

Was this spent before registering as sole trader? If so, then unfortunatly you wont be able to offset it against any future income :(



Thats not a problem, in the highly unlikely circumstances of it being qeustioned, your old P60's/bank statements can prove any origin of these funds & that revenue was paid at source (at source being the employer paid it).



Correct, however, once your registered as a sole trader, any further purchases, be it tools, clothing (for work ;) ) equipment, fuel, vehicle repair/service, office supplies/stationary/ink, vehicle hire, PPE blah blah blah can all be offset against income :thumb:

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ah ok buddy looks like i have just sent a awful amount of money down the ****ter then :cry: :cry: :cry: :cry: :cry:

you mention no VAT, this depends on how much income you have. it used to be about 35K for a year i think.

have a look on direct gov for info, is a gold mine and helped me the other day for a similar situation.

and keep every bit of paper work EVER. it will make your life loads easier come tax man time.

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Originally Posted by djbrowney

ah ok buddy looks like i have just sent a awful amount of money down the ****ter then :cry: :cry: :cry: :cry: :cry:

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Im not 100% sure on it though, as Ive never had to/tried to do this :S but from my expereince at running 2 business simultaneously AFAIK it cant be done, but like I say Ive never tried it nor even looked into it lol

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Originally Posted by Mike

Was this spent before registering as sole trader? If so, then unfortunatly you wont be able to offset it against any future income :( (I dont think anyway :S)



Thats not a problem, in the highly unlikely circumstances of it being qeustioned, your old P60's/bank statements can prove any origin of these funds & that revenue was paid at source (at source being the employer paid it).



Correct, however, once your registered as a sole trader, any further purchases, be it tools, clothing (for work ;) ) equipment, fuel, vehicle repair/service, office supplies/stationary/ink, vehicle hire, PPE blah blah blah can all be offset against income :thumb:

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can I correct the position

Where the qualifying trade was set up and commenced on or after 6 April 1995 the qualifying pre-trading expenditure should be treated as incurred on the day on which the trade, profession or vocation is first carried on. It therefore enters into the calculations of the profit or loss for the first year of assessment in which the trade profession or vocation is first carried on. No separate claim for loss relief is required. http://www.hmrc.gov.uk/manuals/bimmanual/BIM46355.htm

i had just written of all the money i had spent on setting it up until today when a guy said i could claim back all the stuff in my first year of trading but hay ho will have to see what the accountant says because no one seems to know lol

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Originally Posted by Nova00

can I correct the position

Where the qualifying trade was set up and commenced on or after 6 April 1995 the qualifying pre-trading expenditure should be treated as incurred on the day on which the trade, profession or vocation is first carried on. It therefore enters into the calculations of the profit or loss for the first year of assessment in which the trade profession or vocation is first carried on. No separate claim for loss relief is required. http://www.hmrc.gov.uk/manuals/bimmanual/BIM46355.htm

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Well thats just gobledegook to me lol lol lol

Like I said, AFAIK you cant claim it BUT then again Ive never looked into it as Ive never been in a business position where Ive had to attempt it.

http://www.businesslink.gov.uk/bdotg...cId=1084596842

if that link isnt correct then that site was linked from direct gov, and seems to be what you need.

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Originally Posted by Mike

Well thats just gobledegook to me lol lol lol

Like I said, AFAIK you cant claim it BUT then again Ive never looked into it as Ive never been in a business position where Ive had to attempt it.

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Link is HMRC website - please take my word for it the quote is correct

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Originally Posted by bmw156

http://www.businesslink.gov.uk/bdotg...cId=1084596842

if that link isnt correct then that site was linked from direct gov, and seems to be what you need.

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i dont a traing course with them monday and are doing two on tuesday but looking through the site i cant find what i wanted :thumb:

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Originally Posted by Mike

Was this spent before registering as sole trader? If so, then unfortunatly you wont be able to offset it against any future income :( (I dont think anyway :S)



Thats not a problem, in the highly unlikely circumstances of it being qeustioned, your old P60's/bank statements can prove any origin of these funds & that revenue was paid at source (at source being the employer paid it).



Correct, however, once your registered as a sole trader, any further purchases, be it tools, clothing (for work ;) ) equipment, fuel, vehicle repair/service, office supplies/stationary/ink, vehicle hire, PPE blah blah blah can all be offset against income :thumb:

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not true mate done a few courses with hmrc and if the money was spent for setting up the business it can be claimed as for the van if you havent just bought it there are 2 methods to claiming, you either claim 45p/mile traveled for work for the first 10k and 25p after or the actual cost so you can claim the depreciation on the van as a % of cost based on cot either 10 or 20% plus expenses so repairs insurance and fuel

all tooling is claimable as a 1 off expense even if you owned it before setting up you have to put a market value on the item at time of set up and use that figure, was told by hmrc is the goods were bought within 3 months prior to setting up and you have recipts the full amount is claimable, you can claim £3/week for increase inbills caused by the business without having to prove your bills have changes i know £156 ain alot but better than paying tax on it, if you have broadband you can claim a % of that if you use the net for business same with both land line and mobile, if you have a dedicated work number you can claim the full amount

would highly recomend you contact hmrc and ask them about the courses they offer there realy useful

i think the vat threashold this year is 75k turnover its at least 70k anyway

Like I said Rich, Ive not overly sure as Ive never been in a position to have to try to claim pre business set up cost so meh lol

You can also claim back work storage (unit rental) %'age of utility bills aswell, cant remember how much tho :S and your also entitled £10 per month non receipt claimable out going ;)

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Originally Posted by Mike

Like I said Rich, Ive not overly sure as Ive never been in a position to have to try to claim pre business set up cost so meh lol

You can also claim back work storage (unit rental) %'age of utility bills aswell, cant remember how much tho :S and your also entitled £10 per month non receipt claimable out going ;)

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if he aint doing anything from home other than books though proving the % of utilitys can be a pain in the ass im just claiming the £3 a week its easier lol and will never be checked as your allowed to claim it the milage allowance increase from 40p to 45 means i can claim 14.5k for running my car this year lol when the actual fuel cost is 7.5k so that leaves me 7k to maintain and insure it lol

cheers blue peg, gonna try and get on one of there courses :)

Do you guys use an accountant or do the work yourself ???

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Originally Posted by djbrowney

cheers blue peg, gonna try and get on one of there courses :)

Do you guys use an accountant or do the work yourself ???

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Its easy enough to do yourself if its just a sole trader with no subcontractors or employees. It gets bit confusing when you start using outside labour & have 3 to £5k tax bills every month for the privilidge :(

self assesment its a piece of pee if you keep ya books uptodate you dont need an accountant the hmrc do 3 courses ive done two and am on the 3rd next month 1 is initial set up and tax, next is what is claimable and they will look at your individual business, and the other is self assesment, have allready done mine off on the course to check it but they went through it on the last one so im sure what ive done is fine.

gutted i cant claim for my training tho to get some tax back from last year , training prior to set up is no claimable but after in certain casses it is and my next test is claimable bonus lol

how long are the courses buddy :)

4 hours ish each contact your local chamber they should be able to point you in the right direction

In my book i have a list of "expenses incurred prior to commencement of trade" as i bought my van and most my equipment while i was employed so when i threw in the towel i the bare essentials to get going.
And you can include them,i did last year for a seperate business and will be doing so when i do the new businesses return for january 11-april 11
In regards to using your home etc,i claim £7 a week for home as office and £9 for laundry,i was advised this by an accountant btw

VAT thresehold is £73K

Expenses incurred before the business started as linky from Nova00 - all I would say is make sure you have receipts to back up all of this incase they start asking questions.

HTH

P.S. You don't need to speak to an accountant per se. An experienced book keeper will know what's what I'd imagine.

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Originally Posted by Andy_L

VAT thresehold is £73K

Expenses incurred before the business started as linky from Nova00 - all I would say is make sure you have receipts to back up all of this incase they start asking questions.

HTH

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Tbh,even if you dont,the amount in most cases is hardly worth a mention,i have receipts for all mine except my van (lost it somewhere) which was an ebay purchase so could print the details from there in any case

tax is for putting posters up imo