Fulltime Job & Small Biz on the side - TAX

Legacy_user

Hi

I work full time as a consultant and am paid £30K so just about in 22% tax still.

I also design websites and do some consultancy work, all of which I declare to the tax office.

My worry is that as I had a lot of outgoings for past 2 years (as business new) that the tax I am paying is not much as the expences have been high.

I also don't want to use an accountant as only really make £3-4 K extra a year anyhow.

Does anyone know any sites or any good advice on expences and what you can and can't put through?

One being a new PC?, can I take this whole amount off the profit, or do I have to break it down?

I also had a letter from the IR saying that I had not paid much tax and to remind me I need to declare everything which worried me, I did phone them and they said it was simply as I had not paid much tax for first two years...

I always thought no one expects to make a profit for first two years in a new small biz, but there ya go!

Savvy_Sue

I think the Inland Revenue's own website is pretty clear about what you can and can't claim as business expenses, so go to https://www.inlandrevenue.gov.uk and scout around! If you don't want to pay an accountant, be prepared to do your own research

System

I am doing my own research hence being on here?

besides whatever you say the tax man does not make it easy for people to pay tax, they make it as damn hard as possible to find out things...

Try looking that uP!

colin_tomlinson

If you call one of the Tax Enquiry Centres, they're more helpful than you might first imagine.

As you're already aware, tax is paid on PROFIT and not what you're paid (unlike employment), so there are benefits to being self-employed.

Specifically, the computer can be considered an expense in the year it was bought. The rules for computers are a little bit different from other "capital expenditure" items that need to be deprecitated over several years.

Depending on how much self-employed work you do, you may need to pay National Insurance Class 2 contributions. If your total profit for the year is less than a few thousand, you'll need an exemption certificate. If your profits are above a higher limit, there are Class 4 contributions as well.

Meanwhile, with regard to expenses, any travelling can be reclaimed at 40p/mile (up to 10,000 miles, 25p/mile thereafter) without any need to keep records of car-related expenses: although clearly you can't claim for petrol, insurance/etc as well. This ppm is irrelevant of mileage you're charging; so if you charge 35p/mile, you can claim a LOSS of 5p/mile!

Remember to claim for parking/tolls/stationery and other miscellaneous expenses: remember - the idea is to get your profit as LOW as possible. If you make a loss, tax paid through PAYE can be reclaimed!

If you're working from home, you can claim a fraction of your rent/mortgage and household bills. Just determine the fraction and then claim that fraction of your bills.

BEWARE: If you have a mortgage and you claim for the part of your property that is "used exclusively for business purposes", that fraction will be subject to Capital Gains Tax if you sell the property. Meanwhile, there is no such implication provided you word the expense as "sometimes used exclusively for business purposes".

There are insurance implications if clients visit your property.

I think that's about it, but don't be ready to slate the tax office (I'm NOT an employee or anything!) ... they find it just as frustrating! Remember, they're sat behind a desk doing a job just like you.

ANDYPANDY

Thanks Colin that is really helpfull! I was told if I keep a bed in my "office" so it can be classed as a spare room too that would get me off the hook as far as captital gains tax goes .... is that good advice?

bridiej

I think that is good advice, plus the council can't charge you business rates, which they can if you use one room solely for business purposes.

I have half the spare bedroom for work and the other half has a sofa bed, wardrobe etc.