SOA and self employment

HateBanks

Hi,
OH and I going bankrupt very soon. I work from home, and can count some rent, council tax and bills for business expenses.
On my SOA do I use my 'profit' figure as my income as per my tax return, and then my 'personal' portion of the bills as expenses?
When working out housing benefit etc the council disregard two thirds of my income and base their figures on that, would OR do the same, or do I pass on figures from HMRC, which are slightly different?
Thank you.

sizzler

Firstly Hi,

Can I just ask if you intend to continue with self employment after you go BR? Do you know the rules for self employment under BR?

HateBanks wrote: »

Hi,
OH and I going bankrupt very soon. I work from home, and can count some rent, council tax and bills for business expenses.
On my SOA do I use my 'profit' figure as my income as per my tax return, and then my 'personal' portion of the bills as expenses?
When working out housing benefit etc the council disregard two thirds of my income and base their figures on that, would OR do the same, or do I pass on figures from HMRC, which are slightly different?
Thank you.

If you are continuing Self Employment.

With ref to SOA use profit from business as declared to HMRC.

Personal portion for personal bills and household expenses etc not business expenses as these should of been deducted during calculating your HMRC figures.

Lastly go with HMRC figures and OR may change them slightly, but if accepted by HMRC they should be reasonable to most ORS.

Hope this helps. sizz

HateBanks

Hi, Sizzler, thank you.
Yes, I do intend to continue with self employment, I am sole trader, trade under my own name, and have no 'business debts' to speak of, although some debts were incurred with running of business. What rules do I need to be aware of?
I have also read that I will need to fill in a paper tax return whilst BR, do you know if this is the case?
many thanks again for your time.

Heycock

Hi Hatebanks.
I'm self-employed and have just had my early discharge. To answer your initial question....your income for the SOA is your estimated (or actual if you're up to date) NET profit plus any WTC. You might also have to include any contribution to household income from your partner. When I put my wife's income in, I first deducted what she paid out on her own personal outgoings(eg credit, mobile etc).
You don't need to put down any business expenses on the SOA because you've already used a net figure for income. Household expenses...use the same split as you've agreed with HMRC. In fact as Sizzler said, use those figures as a starting point. Chances are the OR will accept them.
In fact it's doubtful if the OR would say anything if you used %100 of the figures. But that's up to you.
Returns...Do returns as normal up to the point of BR. Even though your liability is included in the BR, HMRC still need to be able to lodge the figure with the OR so that they get their fair share of any dividend the OR may pay out at the end of the three years. If you submit online you should be OK up to the BR point on your old Unique Tax Reference. I did mine last week with no problems. For returns after the BR date, you'll have a new UTR. There's nothing to stop you from continuing to submit online but you'll have to re-register as a new account under the new UTR.
This is because, although you are carrying on the same as before, you are in HMRC practice, a new start-up business.

By the way, because unfortunately we still have to pay tax on our earnings from the date of BR. I included in my outgoings on the SOA a sum to cover monthly NI and provision for future tax liability. This seems to be acceptable.:beer:

HateBanks

Heycock wrote: »

Hi Hatebanks.
I'm self-employed and have just had my early discharge. To answer your initial question....your income for the SOA is your estimated (or actual if you're up to date) NET profit plus any WTC. You might also have to include any contribution to household income from your partner. When I put my wife's income in, I first deducted what she paid out on her own personal outgoings(eg credit, mobile etc).
You don't need to put down any business expenses on the SOA because you've already used a net figure for income. Household expenses...use the same split as you've agreed with HMRC. In fact as Sizzler said, use those figures as a starting point. Chances are the OR will accept them.
In fact it's doubtful if the OR would say anything if you used %100 of the figures. But that's up to you.
Returns...Do returns as normal up to the point of BR. Even though your liability is included in the BR, HMRC still need to be able to lodge the figure with the OR so that they get their fair share of any dividend the OR may pay out at the end of the three years. If you submit online you should be OK up to the BR point on your old Unique Tax Reference. I did mine last week with no problems. For returns after the BR date, you'll have a new UTR. There's nothing to stop you from continuing to submit online but you'll have to re-register as a new account under the new UTR.
This is because, although you are carrying on the same as before, you are in HMRC practice, a new start-up business.

By the way, because unfortunately we still have to pay tax on our earnings from the date of BR. I included in my outgoings on the SOA a sum to cover monthly NI and provision for future tax liability. This seems to be acceptable.:beer:

Hi Heycock, and thank you.
OH and I going BR together so income and expenditure all the same, he has Incap Ben as his only income anyway. I usually just slip under the tax threshold, as my income is low, and had no tax or class 4 to pay 2009/2010 and will certainly be below for the new allowances, is it £10000 as from April this year? I do have some arrears on NI which I believe can be included in BR, but will put money away for that for year 2011/2012 and include it in my SOA for OR.
We are trying to get together the money for BR and will do it asap, but £900 is hard to come by, although easier now I have stopped paying credit cards and loans! Onwards and upwards, eh?
Thanks again :T

sizzler

Hi there again, just got in from work.

Ok looks like getting some help.

BR and self employment.

When you go BR the date of your BR your self employment ceases. All monies owed to accounts tax NI or Vat etc are included in your BR. Any money owed to you becomes part of your estate and is taken by the OR to pay your creditors.

If you tell the OR you wish to continue and they aprove this which is quite normal you can start trading as a sole trader the next day. Th is will be the new start date for your self employment.

You must as A Bankrupt not trade in any other name aprt from what you traded as. You can not be a company director or involved with the running of a limited company.

You must also tell all people that you wish to get credit from ie accounts for materials etc you are BR if you require credit over a certain amount I am not sure of exact figure but think it is £400. Someone will correct me on that.

Please also remember you may get a nil Tax code and you will get a new UNique Tax Payer Reference.

It is very hard to get credit for day to day running costs. Any credit you do get will be extremely high.

You will find it virtually impossible to get a business bank account even after discharge.

I run mine from a coop cashminder account which are available to most Bankrupts but have limited Facilitys.

Any More questions please ask.

Best of Luck sizzler:)

tigerfeet2006

It's £500 Sizz and as self employed you don't get a Nil Tax Code.

tigerfeet2006

Links in my sig Would recommend you chat to Business Debtline about your situation and options.

sizzler

tigerfeet2006 wrote: »

It's £500 Sizz and as self employed you don't get a Nil Tax Code.

Thanks Tiger feet.:)

I did but took two months before starting my self employment again after my BR.

Heycock

Hi again.
(Just deleted my last post because I meant it to go elsewhere!)

As well as taking debt advice, have you had a meeting with a benefit advisor....Don't need to know details of OH but have you looked into DLA (Disability Living Allowance) if it's a long term problem? Housing benefit? Council Tax benefit?
Also, from what you've said of your circumstances have you applied for Working Tax Credit? It's not just for people with children. Any working person is potentially eligible!
:beer:

the_bright_side

My wife got a business account with Nat West 12 months post discharge. We wrote a very thorough business case and financial forecast which helped.