Self assessment, self employed - zero expenses

mrargh

Hi,

I'm in full time employment earning a very good salary, but used to be self employed (sole trader).

A business I used to provide software to still use it with their customers and pay a license fee for each new install, so I still pay the class 2 nics twice a year and fill in a tax return each January.

I don't advertise, I don't spend time updating the software (so can't claim I'm using a room of my house as a home office), I don't offer support (they have a copy of the source code and have developers who know the system well), I don't run a website either and all of the business happens over email. In short, my costs are zero, zlich, nada.

Is it OK to put that in my self assessment expenses box? Will I raise any eyebrows (of the digital variety as I know these things all go into a computer system that looks for anomalies/risks)? Or am I worrying over nothing.

Thanks!

somethingcorporate

I cannot see it being an issue - you've got a legitimate reason even if it does raise eyebrows!

The taxman is not there to catch you out and given your situation if anything it would result in you paying too much tax rather than too little so I really cannot see them caring.

Savvy_Sue

What's your earnings from this? If less than c. £6000 then you could ask for a Small Earnings Exemption Certificate: there is AFAIK no benefit in paying Class 2 NICs if you don't have to, as long as you are paying NICs through PAYE.

mrargh

Savvy_Sue wrote: »

What's your earnings from this? If less than c. £6000 then you could ask for a Small Earnings Exemption Certificate: there is AFAIK no benefit in paying Class 2 NICs if you don't have to, as long as you are paying NICs through PAYE.

Thanks Savvy_Sue - my earnings are indeed under £6000 these days (500 - 1500 p.a. only).

I'll have a look into that.

PlutoinCapricorn

There is a box where you can put useful notes for just this kind of situation. Just say it is residual income, similar to getting a royalty fee.

jimmo

As your self-employment has ceased, the licence fees you are currently receiving are identified as “Post cessation Receipts” They are chargeable to income tax as post cessation receipts.

http://www.hmrc.gov.uk/manuals/bimmanual/bim80501.htm

You will see that the link above refers to income not chargeable to tax under case I or II.

That may seem to be old fashioned language nowadays but, continuing the old fashioned language, post cessation receipts are taxable under case VI.

In modern day parlance, they are not trading income they are something else.

I am having trouble with the search facility in the National Insurance Manual but this may be close enough.

http://www.hmrc.gov.uk/manuals/nimmanual/NIM20100.htm

You ceased to be a self-employed earner when your self-employment finished and therefore have no liability to Class 2 NIC.

Claiming it back may be a different story however. I can’t help on that but maybe others can.