self employment and tax credits

helb2112

Hi all this is my first post so i hope im doing this right.My husband is a self employed carpenter and just wanted to confirm that the tax credits people want to know his profit after tax and deductions as this is obviously a smaller amount than his gross. thank you for reading Helen

Elaine_Wilson

They base the award on his profit after deducting allowable expenses and capital allowances.

Income tax and his self employed national insurance are not allowable deductions.

bubblegumcola

My husband is self employed also and we have recently contacted the child tax credit people as our income has dropped by alot. Its definitely the profit once you have deducted allowable expenses. Do you have an accountant who does your tax or do you do it yourself? I'm sure if you do it yourself then the inland revenue can give you a list of what you can and can't claim for. You'd be able to claim for mileage, stationary, tools, electric, materials, phone, pc equipment. I just give the accountant a list of all the journeys (inc mileage, date and reason) and then a pile of receipts we have collected over the tax year and he works it out for us - usually disallows some of it but never sure why he disallows some!! I think if you run your business from your house then things like heating they only allow a third for business use.

If I was you then I'd check out the inland revenue website, I'm sure that would help.

We are now getting much more child tax credit and have been told we may get more but they have to wait for a final figure from our accountant which we can't give them til after the end of the tax year.I think they want to make sure we really have dropped so much income before they pay the rest out, being cautious I suppose. So we are being underpaid til they get the correct figure and then we will get the rest we are owed. They don't make it easy for self-employed!! I could really do with the money now.

[Deleted User]

The following information is an extract from the HMRC guidelines

Income from self-employment

If you are self-employed (either on your own or in partnership) and you
have completed your 2007–2008 Tax Return, enter your profit for the year
from 6 April 2007 to 5 April 2008 from:
• box 3.10 on the Short Tax Return (SA200)
• box 25 on the Self-employment (short) pages
• box 71 on the Self-employment (full) pages

• box 14 on the Partnership (short) pages or the Partnership (full) pages.