First tax year as self-employed

brc

Hi, everyone!

I registered as self-employed after the 6th April 2009 therefore my first return will be due after the 6th April 2010.

I am just wanting some advice really, to check whether so far I am doing things right as because it is my first year I cannot really afford an accountant therefore I am going to try and sort everything myself.

Luckily for me I work on a commission only basis and all this income is paid by bank transfer into a separate bank account I have just for the business.

I have noted down all my incomings and also circled them on my bank statement. For my few outgoings I do have invoices and again circled on my bank statements and explained what they are.

I believe there is a set price per week/month which is deemed ok for using my bedroom as an office at home?

I also purchased a new PC for around £600 which is needed to run my business, I have the invoice for this but how much can be claimed for?

Many thanks in advance for any advice, I just want to do everything 100% correctly!

Cheers
brc

PlutoinCapricorn

Have you registered for the online tax return service? This is by far the best way to submit, which you will be able to do soon after April 6th right up to Jan 31st 2011.

This gives you ample time to prepare everything, and you can work on your return on and off until you are ready to submit it.

If your self employment income is below a limit - £30,000 currently I think - all you need do is give total SE income, total expenses and capital items: they will not want the details. You do need to provide evidence if HMRC investigate: invoices issued by you should match the circled amounts, and you do need receipts or evidence of expenditure.

As for running costs, the £3 per week allowance is for employees only. You need to decide on the proportion used for your business.

brc

PlutoinCapricorn wrote: »

Have you registered for the online tax return service? This is by far the best way to submit, which you will be able to do soon after April 6th right up to Jan 31st 2011.

This gives you ample time to prepare everything, and you can work on your return on and off until you are ready to submit it.

If your self employment income is below a limit - £30,000 currently I think - all you need do is give total SE income, total expenses and capital items: they will not want the details. You do need to provide evidence if HMRC investigate: invoices issued by you should match the circled amounts, and you do need receipts or evidence of expenditure.

As for running costs, the £3 per week allowance is for employees only. You need to decide on the proportion used for your business.

Many thanks for your helpful reply, it is appreciated!

In answer to your questions:

1) No, I have not yet registered with the online service however straight after the 6th April 2010 I shall register.
2) My income is well below £30,000 - an estimate would be about £10,000 income for the 09/10 tax year.

Regarding capital allowances, I guess the new PC would come under this and not as an expense. Is it a % of the purchase price I can claim for, or is it the full purchase price which is £600? I purchased solely for business use, but I also do some personal stuff on it now and then.

From what you say, my return sounds simple enough!

Kind regards,
brc

Thea

Hi

You can claim for your pc but only the proportion relating to your job. Also Tax doctor.co.uk did my return and where excellent. Few emails and phone calls and it was done for £100! They were very helpful and explained so much that i could do my tax return by myself this year.

Dont forget any sort of mileage you do in relation to you job and keep all paper work. They wont ask now but can do i think its up to 5 years after the tax year has ended.

PlutoinCapricorn

When the tax form arrives shortly after April 6th, it will have notes with it that will help you to complete the online form.

Small items are often put in with expenses, and some people might put the PC in if they do not need to list everything separately. I put a very cheap printer in. It really should be written down as a capital item though.

If you don't need tax advice for your personal affairs and can manage your own book-keeping then you should be able to complete your return unaided - there is plenty of help available on MSE. The main thing is not to leave it until the last minute.

thewad

I started in April 2008 so a couple of points for you.
When I filled the return I had to itemise individual things such as fuel, advertising, equipment purchased etc and I was under £30,000.

If your declaring more than £500 as your tax payable you will have to pay some on account for the next year which came as a shock to me.

e.g. your tax bill comes to say £1200 - you will have to pay £1200 for the 09/10 year plus £600 on account for the 10/11 year on or before 31/01/11
On or before 31/07/11 you will have a 2nd installment on account of £600 to pay for the rest of the 10/11 year.
It came as a shocker for me as I had only put money away to pay the normal 08/09 year.

John

Thea

thewad wrote: »

I started in April 2008 so a couple of points for you.
When I filled the return I had to itemise individual things such as fuel, advertising, equipment purchased etc and I was under £30,000.

If your declaring more than £500 as your tax payable you will have to pay some on account for the next year which came as a shock to me.

e.g. your tax bill comes to say £1200 - you will have to pay £1200 for the 09/10 year plus £600 on account for the 10/11 year on or before 31/01/11
On or before 31/07/11 you will have a 2nd installment on account of £600 to pay for the rest of the 10/11 year.
It came as a shocker for me as I had only put money away to pay the normal 08/09 year.

John

Good point, it came as a shock to me to and i didnt realise about the class 4 ni contributions also.

thewad

Caught me out too 8% on anything above about £5600 profit isn't it??

John

brc

thewad wrote: »

I started in April 2008 so a couple of points for you.
When I filled the return I had to itemise individual things such as fuel, advertising, equipment purchased etc and I was under £30,000.

If your declaring more than £500 as your tax payable you will have to pay some on account for the next year which came as a shock to me.

e.g. your tax bill comes to say £1200 - you will have to pay £1200 for the 09/10 year plus £600 on account for the 10/11 year on or before 31/01/11
On or before 31/07/11 you will have a 2nd installment on account of £600 to pay for the rest of the 10/11 year.
It came as a shocker for me as I had only put money away to pay the normal 08/09 year.

John

I did not realise this, so it is good to know. The HMRC website could make this a little clearer I feel. So, if I don't earn as much in the next tax year, I assume that they will refund the difference?

thewad

In essence yes but you will also have to pay on account again.
I've also heard, don't quote me though, that next time you won't have to itemise just a straight forward profit and loss.
Also if your struggling to pay in full you can, at the moment, pay in installments.
Think they brought it out this year due to the number of people struggling with no work and recession.

John