Working out expenditure if under personal allowance?

nicksters

Wonder if anybody can help me?

I am self employed and completing my tax return for 09/10.

If my income is under my personal tax allowance do I still have to work out my expenses? It's going to take ages to work all of my expenditure out and if I am under the bracket for paying tax I don't want to do this unless I have to.

Thanks for your help.

ncthomas1

If you dont work out your expenses, how will you know your profit/ loss? That has nothing to do with being under/ over your personal allowances? Surely as a self employed person you would need to know if you were making/ loosing money anyway, regardless of whether you had to fill in a tax return.
Also, if you are "Under the personal allowances" I would say it could be quite unusual that you have this mass of expenses that will take too long to calculate? Either you have been spending lots and lots of tiny amounts, or there is something else wrong? Do you not run a business bank account where you can establish the expenses from there?
In answer to your question though, Yes, you need to tell HMRC your INCOME and you EXPENSES, as any losses you wish to claim to carry forward have to be accounted for correctly.
p.s. I am an accountant so kind of know about these things! Always best to do your tax return well before the Jan deadline next year eh?!
Good luck though, post again if you are mega stuck and I will do my best to answer

nicksters

ncthomas1 wrote: »

If you dont work out your expenses, how will you know your profit/ loss? That has nothing to do with being under/ over your personal allowances? Surely as a self employed person you would need to know if you were making/ loosing money anyway, regardless of whether you had to fill in a tax return.
Also, if you are "Under the personal allowances" I would say it could be quite unusual that you have this mass of expenses that will take too long to calculate? Either you have been spending lots and lots of tiny amounts, or there is something else wrong? Do you not run a business bank account where you can establish the expenses from there?
In answer to your question though, Yes, you need to tell HMRC your INCOME and you EXPENSES, as any losses you wish to claim to carry forward have to be accounted for correctly.
p.s. I am an accountant so kind of know about these things! Always best to do your tax return well before the Jan deadline next year eh?!
Good luck though, post again if you are mega stuck and I will do my best to answer

Thanks for your reply. I am a Childminder so yes I do spend alot of little amounts that do add up and can also claim for a percentage of my gas, electric council tax and this varies week on week depending on how many hours I have minded. No I do not have a business bank account, most of my purchases are in cash for under £10! And yes you are right much better to do this way before the deadline but I haven't so that's my look out, but it will be done before the deadline just looking for some advice as to how to make it quicker this year as my income was much lower than other years.

BoGoF

Well strictly you don't have to claim any expenses, but your taxable income will be your turnover figure. But in your case if you have no tax to pay not claiming expenses then you are quite within your rights not to do so.

So if you want to put your Tax Return in with no expenses then you can do so.

ncthomas1

Strictly you dont have to claim expenses, I suppose technically that is correct, but WHY would someone not want to get tax relief on money they have spent???? Its got nothing to do with being "Within your rights not to do so" as if it would be illegal not too, it would be just downright daft not to put them in?!! This lady may have tax credits/ other income that relates DIRECTLY to her taxable figure that she provides, so NOT putting them in means that she is increasing her overall income figure, and could therefore be increasing the figure she tells tax credits, and therefore reducing any claim she may have with them. Why would she want to do that? Nicksters - Seriously, spend an hour with a big cup of coffee and a pile of receipts and a biro and just do them, I promise you that is what I would do if it were me. Ok, so you may not even be getting Tax credits now, but what if you need them NEXT year, and they want the income from this year, as per your tax return, and you didnt put your actual profit/ loss down due to these receipts being left out. You would be stuck then! Hoep this helps.

BoGoF

I don't understand your point about claiming the tax relief - how would someone get tax relief on the expenses if they don't earn enough to pay tax in the first place?

You may have a point if she is claiming tax credits but if she doesn't why spend half an hour of your life on a pointless exercise?

nicksters

I only wish it was an hour! Percentages week on week of gas, electric, water, council tax, then mileage, food, ballpit entrances, parking, toddler groups, gyms etc takes forever. Yes I know that's what i signed up for and each year I do it, was just trying to cut corners this year with it being a low Income figure!

BoGoF, that was exactly my point about spending my time if it was a pointless exercise!

Perhaps I would be more willing to do it if it affected anything at all like Tax Credits but it doesn't, but yes I suppose in the future it could.

Thanks to the both of you for your advice!

dori2o

You don't have to calculate any expenses ifyou don't want.However, what if your expenses are greater than your turnover, i.e. you made a loss, you could carry that loss forwards to use against future years profits reducing your liability in future years.

chrismac1

I am ready to be shot at here, but here goes - my quick and dirty 5 minutes of time shot at your claimable expenses:

Repairs and maintenance = 10% of your sales as agreed between NCMA and HMRC
Motor expenses - estimate your mileage to the nearest 100 miles and mutiply by 40 pence
Use of own home - I'm really going to get shot for this one! - £8 for every week you were minding the children
Telephone & mobile - assess how much of your phone time is spent on the business to the nearest 10% and multiply by your annual bill
Licences and insurance - as per annual bills

That should cover about 90% of your allowable expenses for the year. Top cover yourself, add a note on the face of the tax return explaining any estimates you have used. Job done.