Full Time Job and Self Employed

weedav

Aagh! Tax IS taxing!

I have looked and looked, and googled and searched and I'm still not sure I quite understand my own situation. I hope somebody wise here at MSE can help me!

I am in full time employment earning £30,000 and pay tax through PAYE. I work a shift pattern, and since the beginning of February have been starting to earn some cash from photography work.

I do intend to registed as self employed at the IR, however I am unsure how to take into consideration any expenses I incur through any earnings I make from the photography work. I am intending to upgrade to a professional camera, and have bought studio lights etc. Does my full time salary and PAYE tax deduction mean I can't claim these as expenses?

I estimate that my earnings from Photoagraphy before April would be around £2000, I will have spent about £2000 on equpiment by then.

I hope somebody can help, and please let me know if you need any more information to help me get to the bottom of this.

Many thanks!
Dav

Lifeisbutadream

You need to speak to an accountant.

As far as I know there are some things that you can claim against in full and others in part - basically anything that you use and has gone - e.g fuel can be claimed in full and anything such as machinery that you still own can be claimed in part - but I dont know how much.

Sorry I wasnt much help..

vinecote

you can use your money earned in paye to pay for photo expenses.
even if you dont earn much in photo work and your new gear makes your photo earnings a loss.
the loss can be carried forward to next year.
if you new camera is dear depreciate it over 4 years to spread the expense.
if you use you car to do photo work keep a record of the miles you do.
even if you are just going to buy a film keep a note and then charge an expense as mileage.
not sure what rate to charge but inland revenue can tell you depending on the size of your car.

WHA

Your equipment purchases will get "capital allowances" as governed by HMRC rules which basically means 50% of the cost is allowed as an expense in year 1, followed by 12.5% in year two (i.e. 25% of the remaining 50%) and so on.

Your taxable profit will be the turnover (sales and value of work done), less legitimate/allowable business expenses which may include travelling, stationery, telephone, capital allowances on the equipment, etc.

If it creates a loss (i.e. expenses higher than income) you may well be better claiming the loss against your employment income (through the annual tax return) to get 22% tax back on the loss. This is usually better than carrying the loss forward to the next tax year.

You MUST register self employed within 3 months of starting. Declaring your income/profits/losses needs declaring on a tax return, the first being for the tax year ended 5 April 2007, due for submission 31/1/08. Registering and declaring are two completely different matters - you don't need to know your earnings at the registration stage.