Regular Job + Self employed

shaneshaneshane · 14 December 2014 at 4:53PM

Hi MSE Forumites

I currently have a full time, regular employed job but I am thinking of starting up a business (on the side) in around mid/late March time, of course this will be very close to the end of the tax year... I know the drill about becoming self employed registered etc.

What I am asking is, is it possible that if say, I have an expenditure of £2k to start the business up which is all VAT deductable expense and due to the timescale, no work comes my way before the end of the tax year, therefore my profit/loss reads -2k for 2014/15.. would this be offset against my employed earnings (Which are way above the personal allowance) therefore gaining a £400 refund? or would that loss for 14/15 just be disregaurded and forgotten about?

Thanks

Savvy_Sue · 16 December 2014 at 2:34AM

I believe that you can set your losses from self-employment against your tax from employment, but a clear paper trail would be wise, and don't expect to be able to do that for more than the first couple of years without causing HMRC to ask questions about whether it is a real business or a hobby.

shaneshaneshane · 16 December 2014 at 3:57PM

Thanks for the reply Sue.

A clear paper trail? By that I am guessing you mean purchase receipts etc?

Savvy_Sue · 16 December 2014 at 4:02PM

shaneshaneshane wrote: »

Thanks for the reply Sue.

A clear paper trail? By that I am guessing you mean purchase receipts etc?

Yup. You'll also have to produce simple accounts to demonstrate the costs / profit / losses. HMRC won't generally ask to see your receipts but you should keep them, in case.

Notes with them explaining what / why / % of business use also sensible. A receipt for £30 which doesn't say what it was for is not that helpful. Also if it's something you might also use personally then you need to take that into account, eg a printer which you also use for domestic purposes you'd have to work out that eg 90% was business use and split costs accordingly.

BTW I'm no expert in this area, I hope (I'm sure) if I say something stoopid the accountants will correct me. Talking of which you might find an initial session with an accountant useful, even if you think it will be simple enough in subsequent years to DIY there's some merit in getting things right from the start!

sheramber · 16 December 2014 at 7:51PM

Check that what you are claiming is expenses and waht , if any are capital allowances.

HMRC have help sheets available on the HMRC website under self assessment, then self assessment return , then self assessment notes.

weatherlobe · 17 December 2014 at 2:48AM

You have the option of offsetting the initial self employed loss against any other Income for that year (PAYE income you say) - EXCEPT any profits from property rentals (if you are in that field) as it is a different Schedule - OR choose to carry the loss forward into 15/16. - If you have a tax adviser discuss that with him. It can be a close call dependent upon whether your Self Employed venture really takes off in 15/16. It maybe a question of forgoing an immediate tax rebate for a future benefit of a lower tax bill for 15/16 and possibly subsequent years. Setting Back or Carrying forward losses is a complicated area where good advice is paramount

shaneshaneshane · 17 December 2014 at 5:47PM

Thanks for the advise Sue, noted.

sheramber wrote: »

Check that what you are claiming is expenses and waht , if any are capital allowances.

Forgive my ignorance, but aren't they both the same financially? One is for disposables and one is for long term assets?

weatherlobe wrote: »

You have the option of offsetting the initial self employed loss against any other Income for that year (PAYE income you say) - EXCEPT any profits from property rentals (if you are in that field) as it is a different Schedule - OR choose to carry the loss forward into 15/16. - If you have a tax adviser discuss that with him. It can be a close call dependent upon whether your Self Employed venture really takes off in 15/16. It maybe a question of forgoing an immediate tax rebate for a future benefit of a lower tax bill for 15/16 and possibly subsequent years. Setting Back or Carrying forward losses is a complicated area where good advice is paramount

You have managed to confuse me slightly weatherlobe.. is there any difference finacially between claiming the immediate rebate and having it "in your back pocket" (therefore accruing interest (to use my example in the original post) on the £400 for a year, rather than HMRC's, not talking huge sums but it all adds up I guess ) at the end of the tax year compared to carrying it forward to next year and effectively waiting an extra year for it?

Thank you.

Savvy_Sue · 18 December 2014 at 12:18AM

shaneshaneshane wrote: »

Forgive my ignorance, but aren't they both the same financially? One is for disposables and one is for long term assets?

They can be treated differently in your accounts.

shaneshaneshane wrote: »

You have managed to confuse me slightly weatherlobe.. is there any difference finacially between claiming the immediate rebate and having it "in your back pocket" (therefore accruing interest (to use my example in the original post) on the £400 for a year, rather than HMRC's, not talking huge sums but it all adds up I guess ) at the end of the tax year compared to carrying it forward to next year and effectively waiting an extra year for it?

That's why he said

weatherlobe wrote: »

Setting Back or Carrying forward losses is a complicated area where good advice is paramount

We can only give very general advice: getting some 'proper' advice could save you a lot of time, money and confusion.

Regular Job + Self employed

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