New sole trader, please help !

susane_h

I am very new to this so any help would be much appreciated

I have a full time job and have been planning a career change over the last 2-3 years to become a complementary therapist. I have recently registered as a sole trader and would like to know whether I am able to offset the cost of training courses and materials bought for my therapies
over the last 2-3 years against my PAYE tax. I'm still in the process of setting up so probably won't have any money coming in during this tax year

Is it also possible to claim the cost of office equipment/furniture bought before I registered, and a portion of my bills if I work from home without risking having to pay capital gains tax if I then decide to sell my flat

Is it worth having an accountant this year given that I will probably only be declaring expenses ?

Thanks in advance for your help

Petmidget

Your training costs I am afraid are not deductable, though there is a way round this for a small pain in the backside (if there are significant £5k+, it may be worth doing). HMRC regard them as capital in nature and as an investment rather than expense.

Top up training, refresher courses and new but related skill courses once you start will be deductable in most cases.

Furniture/equipment would depend on specifically what it is and whether it is used for business, but in essence yes at least a portion should be claimable either as expenses or as capital allowances.

The use of home element should not effect you in a CGT fashion, it is a bit of a red herring, it can effect it but in 99% of cases doesnt. You can claim a reasonable proportion of your household expenses in accordance with the amount of space used in your business.

If you are likely to file a loss in the first year you should apply to have that loss carried back against PAYE income in previous years, this is known as "early trade losses rules". This will generate a refund of tax previously paid.

I would say whether you have an accountant is a choice depending on how comfortable you are with the ever growing complexity of the UK tax system or whether you prefer to pay someone else to take away the hassle.

susane_h

Thanks very much for that. What is the way round claiming the training costs back that you mentioned. I spent quite a lot of money on those training courses...

Petmidget

It isnt guaranteed as can be challenged.

But HMRC guidance is a lot more forgiving to companies.

So you set up a company, enter the costs of the training as a loan from yourself, there are rules allowing pre-trading expenses. The guidance accepts that training to employees (directors count as employees) is regarded as an allowable expense.

This incurs some additional costs over time but not that much. You could also benefit further from running your business through a company depending on how it fairs.

Though to do this simply to recover some in the expense in tax is not worth it unless a company overall fits your plan and rest of your business.