It is TAXING

icecurtain

Dear fellow money saving people

I have a few querys

I am currently in the forces at the moment and paying NI and Tax through my main wage.

I have also registered as self employed and I am carrying out some work as a contractor with a local company with a view to go full time, when I leave the forces in two months.

My questions are

1) I have to have a car get to and from work and visit customers max amount 150 miles per week, as the customers are within 1 hours drive. The company do not provide transport what if any tax relief can I claim?

2) I also require a PC at home and a laptop to carry out some of my work. What if any tax relief can I claim?

3) I will also receive a lump sum from leaving the forces. (£56K already spent by Mrs..!!) normally this is tax free but as I am self employed will I have to pay any tax on this?

4) I am assuming that I will have to pay 40% tax on any self employed income as my forces wage already is circa 45K. (But this stops on 10 Apr 10) But my self employed income is less than £67K

5) The last question is when to get summit a invoice for the contract work pre 5 Apr 10 or post two issues here my lump sum due on 10 Apr10 and reduced wage as at 10 Apr 10.


You advice would be greatly appreciated

fengirl_2

In answer to your questions:
1. You cannot claim any relief as you have not yet paid tax. However, by including all your business running costs in your accounts, this reduces your tax bill. For the car, you can either include all the car running costs in your accounts and then add back the proportion relating to private use when you come to self assess. In additiion, you can claim capital allowances on the car. The other, and much more simple method is to include 40p pm for every business mile travelled up to 10,000 miles and then 25p pm. This allowance is designed to cover all vehicle running costs so you cannot afterwards claim capital allowances as well.
2. You claim capital allowances on these items on your self assessment.
3.No - the fact that you are self employed is irrelevent.
4. For this year, yes, but for next year, probably not.
5. We dont advise on tax evasion.

icecurtain

Thanks fengirl for your answers just couple more as I have never been self empolyed. A bit obvious as I have be in the forces for 24 years.

Point 5, is not because of tax evasion, I have always paid all my taxes on time thanks to HMForces. I have the chance to submit a invoice before or after 5 Apr as it is not very much. I will pay the same tax won't I ? I thought as I have to do a self assement only when I am paid it means that I won't have to do one until late 2011. I hate extra paperwork!

On point 1 as my old car is in need of regeneration hopefully the scrapage allowance will help there. You mentioned you can claim capital allowances on the car does this included the cost or part of the car or just travelling costs?

PlutoinCapricorn

HMRC expect you to report income according to which tax year you did the work and invoiced the client. You may actually get the money early in the next tax year, but as you submit in arrears you will have been paid by then.

I expect that people do hold borderline assignments over until the next tax year though.

I hope that this makes sense.

fengirl_2

You claim capital allowances on the whole cost of the car, but the allowance is then restricted to the business proportion.

System

It's worrying that senior SNCOs/senior SO3s (based on a pay of £45k) in the Forces are not capable of looking up this stuff themselves.This is the sort of thing that the resttlement people should be able to advise or even a brief visit to HMRC could have given you the answers.

!!!!!! people of this rank are the ones who are supposed to advise the younger ones.

icecurtain

Thanks Jimmo for restoring my faith. I was beginning to wonder why anyone would even think about using a forum to find out some useful or up-to-date information. After all I found the entire internet is so easy to navigate especially the HMRC website.