Tax for sole trader / teacher as 2nd job while PAYE on 1st

PheoUK

Firstly, I'm PAYE @40% band for my main 9-5

I'm considering a small amount of dance teaching as a second job; currently a hobby.

I'm trying to work out what the tax treatment would be, in relation to my first job, and what expenses would be allowable, and how they would affect my overall tax liability.

I'm hoping someone has some ideas on the following:

- If I make a loss during the year through buying equipment etc, would this be deductible from my PAYE income? I.e. if due to setup/space rental the business does not turn a profit in yr one, do you carry the loss over, or does it reduce my overall tax bill (not no intention to go ltd at current time), therefore making me due a refund in the current tax year?

- Would training expenses be allowable against tax bill? I currently spend a relatively high amount travelling to different events to either compete, or to learn. There is normally a social aspect to this, approx 50/50 split. Would I be able to charge off some or all of the associated expenses? Or do such things have to be against a recognised training provider?

- what happens if the business never turns a profit? Are HRMC likely to turn around and say you weren't running a proper business therefore your liable for more tax?

PheoUK

Bump - anyone got any ideas? Or perhaps guest ions on where to look?

chrismac1

if you make a taxable loss on your sole trading in its first period - to April 5 2012, say - then the most common way of getting relief for that loss is by "sideways" relief against your earned income. This sets up a tax repayment, if you add your sort code and bank account to the tax return and file it on 10 April 2012 the cash will typically hit your account by 10 May, one of the few aspects of the UK tax system which can be relied on.

Training - see numerous other posts on this topic including several from me. Training to learn a trade, become qualified - Not claimable as you are enhacning your human capital. Training to maintain an existing qualifaction is maintaining your "licence to operate" so should be claimed as a business expense against income.

chrismac1

It is the intention to make a profit that is key, I've posted quite a bit on this topic on this site too. HMRC often do challenge businesses which never make a profit, some they win and some they lose. The key question is whether there was genuine commercial intent. I would argue that renting space, spending money on equipment and advertising (assuming you do some of this) is in itself prima facie evidence of a commercial intent, hence reason enough to defend any challenge you might get from HMRC - note this is unlikely to be for at least 3 to 4 years if you consistently lose money year after year. Ultimately, though, tax cases have recognised that people can have commercial intent and just be bad at business, I'd guess that Tribunals (where you go if HMRC challenge you and you appeal) would give even more leeway on commercial intent in the current economic conditions.

suso

chrismac1 wrote: »

It is the intention to make a profit that is key, I've posted quite a bit on this topic on this site too. HMRC often do challenge businesses which never make a profit, some they win and some they lose. The key question is whether there was genuine commercial intent. I would argue that renting space, spending money on equipment and advertising (assuming you do some of this) is in itself prima facie evidence of a commercial intent, hence reason enough to defend any challenge you might get from HMRC - note this is unlikely to be for at least 3 to 4 years if you consistently lose money year after year. Ultimately, though, tax cases have recognised that people can have commercial intent and just be bad at business, I'd guess that Tribunals (where you go if HMRC challenge you and you appeal) would give even more leeway on commercial intent in the current economic conditions.

134 words in reply to your own post, before you mention the word tribunals and you even capitalized it.

almost a record.

BoGoF

What I find amazing is that a self appointed !!!!!! hot accountant such as him, with all these clients finds time to post on here (during the normal working day) when this is the busiest time of year for real accountants.