1st Tax Return for Self Employed - help please!!!

deb

Hi,

I am employed part time and last August I also became a consultant for Virgin Vie cosmetics, selling make up, skin care, jewellery etc. I am registered as self employed and now have to do my first tax return. I have good records of what I have ordered each month, the retail value and the discount given (as we get commission for sales).

I really need some advice on what expenses I can claim for and how I do this (e.g. mobile phone, broadband, laptop etc, mileage, use of home for business etc). I rang a local tax advisor but their charge is £200 + VAT which would be a really big chunk of my earnings (about 2k) as I am really in this for the fun. Any advice **really** appreciated.

Thanks, debxxx

WHA

Start with working out "how much more" are your expenses because of your self employment. How much more is... your mobile phone, your home phone, etc., how many miles have your driven in your car - claim that at 40p per mile. How much more are your home expenses (heat and light). Unfortunately, there is no "magic" formula - you may be called upon to justify your calculations. For things like broadband, how much time do you spend on the computer for "self employment" compared with private - if it is say 50:50, then claim 50%. Use of home starts at £2 per week but can be more if you can justify it. If you spend a lot of time working from home, as self employed, you can claim a proportion of ALL your home costs, but as you are also employed, and no doubt spend a fair amount of time on "non business" activities, your proportion of your household costs is likely to be very low.

Also don't forget, your taxable profit is based on goods sold in the period, including monies not yet received - it is not just on money paid. Likewise, you only claim as an expense, stocks you have sold/used - anything still on hand at the year end has to be deducted from the expense and can only be claimed as an expense next year (or whenever it is used/sold).

deb

thanks for your response WHA - it all sounds very complicated. Do you think it is possible for me to do this myself or do I really need to get an accountant? It all feels really daunting to be honest. Like I said - I really started doing this for the fun - there is not big money involved (for me at least). I have no idea what Mr Taxman would deem reasonable. I would say that prob 75% of my mobile costs are for the business - but what about, for example, my broadband and land line rental - without these I could not do the job as I place all my orders/pay for everything online etc. Also my laptop - I had already bought this but I also need it to do the job...

dejongj

I would say that if you find it all daunting, stick with actuals! I.e. have your itemised phone bill and mark the ones that are business calls, likewise with your landline....Likewise with mileage to go to/from the parties and to pickup the supplies...

I think you'll find it hard to justify you need a laptop and internet for Virgin Vie as I know many (and so does HMRC) who don't have any equipment like that....If you are employed also and have the 'parties' in the evening at your home, you would have been at home anyway so you can't reasonably charge heating and lighting to your self-employed status as expenses....

Stick to the actuals above and beyond your 'normal' live and it will be deemed reasonable....

Keep it simple and use common sense and it is not difficult at all....

tyllwyd

I've only got a low income, and I tried to balance up the cost of an accountant against my total tax bill if I didn't claim anything back. I thought that I would end up paying out more to the accountant than I could claim back anyway, so I decided to be very cautious about what I claimed as expenses and did the accounts myself. To be honest, I get very stressed sometimes about whether I should have an accountant.

betterbargains4u

Hi
I found this thread very interesting as I too have just received my first ever tax return.
I was just about to post a thread asking this question...

On the tax return it states that
You must get your tax return to us by the later of:
30 September 2007 and two months after this Notice was given, if you want us to calculate your tax, or
31 January 2008 and three months after the date this Notice was given if you calculate your tax yourself. If you miss this date you risk a penalty.

I am now confused. I thought that I could send in my tax return by the 30th September, so they could work out my tax, but the way it reads, it looks like I have to send it in by early June??
If this is so, will I then declare any monies earned up to this time, even though the tax return is for the year ending April 5 2007?
Can someone please clarify this.

Townley&Co

betterbargains4u wrote: »

Hi
I found this thread very interesting as I too have just received my first ever tax return.
I was just about to post a thread asking this question...

On the tax return it states that
You must get your tax return to us by the later of:
30 September 2007 and two months after this Notice was given, if you want us to calculate your tax, or
31 January 2008 and three months after the date this Notice was given if you calculate your tax yourself. If you miss this date you risk a penalty.

I am now confused. I thought that I could send in my tax return by the 30th September, so they could work out my tax, but the way it reads, it looks like I have to send it in by early June??
If this is so, will I then declare any monies earned up to this time, even though the tax return is for the year ending April 5 2007?
Can someone please clarify this.

The 30th September is the deadline if you want them to work out the tax for you.

Any later, you have to do it yourself, or get an Accountant.

[EDIT] The tax return is for 6th April 2006 to 5th April 2007 ONLY

Cheers

betterbargains4u

Hi Townley & Co

Many thanks for your reply
Can you explain what the two months after this notice is given bit is all about?

AnW'sMum

betterbargains4u wrote: »

Hi Townley & Co

Many thanks for your reply
Can you explain what the two months after this notice is given bit is all about?

I had my first tax return to complete today and thought exactly the same as well. But when I re-read it You must get your tax return to us by the later of the word later is key.

If they sent the tax return out on 31st August then it would have to be returned by 31st October for HMRC to calculate your bill as that is 2 months after notice is given.

That's how I understand it, hope that makes sense.

lebly

Just have to say I have just filled in my first tax return on line - so easy it is a very useful and helpful tool. You do not have to do it in one go and explains it as you go and points out any mistakes etc as you go! Go t my paper one in post and that would have sent me running away screaming. Have a look at the online one and do bits you can and go back and fill in rest later. Hope it helps

cosyc

Best thing about the online version after you answer a few tick questions you only see the bits you need to answer not the whole form.