Self Assessment calculation -- no personal allowance?!

laurenced

nomunnofun wrote: »

I would be concerned about the accuracy of your self assessment given, if you will forgive me, the nature of your questions.

Did you make £15000 PROFIT? i.e. turnover (takings, sales) less expenses?

The calculation will calculate on the basis of what you enter whether it is correct or complete fiction.

That figure is gross income, but my expenses are tiny since I'm a web developer so I suppose I'm assuming it's almost all profit for tax purposes. I do some work in a client's office, but I also work remotely from home relatively frequently (I have no fixed hours, so I've not gone down the road of calculating deductions along those lines).

I can't pretend to be anything but a novice when it comes to tax

PlutoinCapricorn

The POAs come as an unpleasant surprise to many people, but there is no need for this. Finding out the rules for Tax and NI in advance is always a good idea, and as others said putting aside a percentage so it is ready when the demand comes is good practice.

laurenced

PlutoinCapricorn wrote: »

I am confused by what you said about PAGES: these are normally only given to you to complete when your freelance income is above £60K or so. You need to tick a box or something to get the right, simple form: I did mine last September so can't remember!

Under the limit you just input 3 totals, no breakdowns.

Hmm I get the full form with lots of pages! The summary page looks like this, after all the questions have been answered:

PlutoinCapricorn

Found it! The turnover limit is now £70,000. You will be asked whether or not you exceeded this, and if not you will be shown the "short form", which has just 3 totals boxes.

laurenced

PlutoinCapricorn wrote: »

Found it! The turnover limit is now £70,000. You will be asked whether or not you exceeded this, and if not you will be shown the "short form", which has just 3 totals boxes.

Hmm I don't remember that question -- I just clicked Next on each page and filled in what was relevant to me, and that took me through the entire thing.

I might scrap it and start again to see if it makes a difference.

PlutoinCapricorn

That sounds like a sensible idea. Leaving it until the 31st is a bridge too far, but you are still in a position to take things slowly.

I have a 3-page Tax Return spreadsheet that I maintain monthly. One page is for income, one is for expenses and one contains totals all ready to transfer to the online form, together with my own tax calculation just to double check.

For self employment that brings in under £70k, gross total of payments received from clients, gross total of legitimate expenses, and gross profit (first figure minus second figure) are all that HMRC wants.

By the way, do you know about the Class 4 NI 9% levy? This too comes as a shock to people who don't familiarise themselves with the rules before going SE.

PlutoinCapricorn

We may have been talking at cross purposes as I have never earned enough to have even seen the full return that you need to complete if your self employment has brought in more that £70k. In any case, short form and full form really refer to the paper forms!

So long as you see and reply correctly to the under/over £70k question, you should be ok.

Claiming all legitimate expenses is one way to reduce tax: are you sure that you are claiming everything?

laurenced

PlutoinCapricorn wrote: »

We may have been talking at cross purposes as I have never earned enough to have even seen the full return that you need to complete if your self employment has brought in more that £70k. In any case, short form and full form really refer to the paper forms!

So long as you see and reply correctly to the under/over £70k question, you should be ok.

Claiming all legitimate expenses is one way to reduce tax: are you sure that you are claiming everything?

Heh me neither, not even remotely close! I don't know why it defaults to that form.

I should investigate the expenses a bit further, but I can't really envisage it making that much of a difference. The only obvious thing to me are cycling expenses (I cycle to clients a lot) and perhaps something for the time when I work for home. I (stupidly) don't have records for these things, though, and I can't imagine they are worth a great deal (pennies in the mile when I do roughly 4-5 twice a week isn't anything to shout about...).

PlutoinCapricorn

Why not have a cup of tea and something to eat, then reset your brain and go round again!

At least you now know about POAs.

As for expenses, the 'short' return just asks for totals not an itemised list. It is best to keep evidence to back up and justify the expense in case HMRC ever enquire into your figures. If you work from home a lot, you are entitled to claim a proportion of utility bills, council tax etc.

What I was trying to say is that if you are under the £70K, the SE figures should all go on the same page, not that the whole return is only 1 page.

nomunnofun

Just as a guide:

As you appear to have no real records regarding expenses it would be reasonable to claim £3 per week use of home expenses for electric, heating etc - that's £156.

Bring in the value of your computer, printer, chair etc and restrict for private use. Let's say £300. (Actually claimed as capital allowances but the end result is the same)

You are a web designer - claim a proportion of your internet provider costs. Let's say £60.

Any postage stationery, ink, paper - even £50?

I would consider these to be low but at least they are reasonable but, then again, you know your business. They, without much effort, have the effect of reducing your profit by £556 and your tax by £155 or so. Your payments on account would also be reduced by £77 each - that's £232 better off in January and £77 in July - gotta be worth it!