Newly self employed - help

claire101

I have just registered to become self employed. My business start date was 1st jan. will I have to fill in a self assessment form in this April and if so will I just be listing details from the 1st jan - 5th April. If this is correct will I still make a payment on account in jan and July and how will this be worked out if I have only submitted details of 3 months trading. Will my following self assessment form next year then run April - April. Thank you in advance for any advise.

Dazed_and_confused

claire101 wrote: »

I have just registered to become self employed. My business start date was 1st jan. will I have to fill in a self assessment form in this April
You will be sent a form in April and need to submit it by 31/01/2014
and if so will I just be listing details from the 1st jan - 5th April.
No, you need to include any taxable income for the whole tax year eg employment income, DWP benefits like JSA/ESA, bank interest but for your self employment you would normally include details for 1 Jan - 5 Apr
If this is correct will I still make a payment on account in jan and July
Not this year. Any tax due for 2012\13 will be payable on 31\01\2014 and if you need to make payments on account for 2013/14 these will be due 31/01/2014 and 31/07/2014 eg tax bill for 2012/13 is £2000 then you would pay £3000 in Jan 2014 (2000 for 12/13 and 1000 on account for 13/14) and another £1000 in July 2014 (all for 13/14)
and how will this be worked out if I have only submitted details of 3 months trading.
Payments on account for 2013\14 will be based on your 2012/13 return - the fact that the self employment only started part way through the year has no bearing on this
Will my following self assessment form next year then run April - April.
Self Assessment returns always relate to 06/04 of one year to 05/04 the following year - nothing would ever change this but you might enter different dates on individual sections of the return eg self employment pages this year may well be 01/01/2013 - 05/04/2013
Thank you in advance for any advise.

A pleasure

claire101

Thank you so much for your reply, you have been a great help. I have another question if you would be kind enough to answer.
I am also registering for partnership and on the form it asks me for my accounting date which I assumed would be the 31st December due to business start date been the 1st January but after speaking with revenues and customs I am a confused by this. Could you please clarify this one for me, thank you

Dazed_and_confused

claire101 wrote: »

Thank you so much for your reply, you have been a great help. I have another question if you would be kind enough to answer.
I am also registering for partnership and on the form it asks me for my accounting date which I assumed would be the 31st December due to business start date been the 1st January but after speaking with revenues and customs I am a confused by this. Could you please clarify this one for me, thank you

It is not clear what you mean, is the self employment you mentioned in your original post a partnership? Have you started a partnership as well as being self employed? Have you got an existing partnership that is continuing in addition to the self employment? Have you an existing partnership that ended when the self employment started? Has a partnership ended but you are continuing that trade as your (sole trader) self employment referred to in your first post?

As is often posted on MSE tax is all in the detail

claire101

Sorry for not stating the facts. I have started the business with my mother on the 1st January. We have both registered for self assessment and I am now registering us for partnership assessment. Many thanks

Dazed_and_confused

claire101 wrote: »

Sorry for not stating the facts. I have started the business with my mother on the 1st January. We have both registered for self assessment and I am now registering us for partnership assessment. Many thanks

Still confused - in your original post you say you registered as self employed - in 2012/13 how many businesses have you had in total? Are you actually self employed (sole trader) or do you just have the partnership with your mother?

claire101

I started the business with my mam but it was my understanding that we both had to register for self employed in our own right and then also complete the partnership form, is this not correct? Many thanks

Dazed_and_confused

claire101 wrote: »

I started the business with my mam but it was my understanding that we both had to register for self employed in our own right and then also complete the partnership form, is this not correct? Many thanks

Yes, it was the original reference to self employment that confused me. If you are only in a partnership in this tax year then you would have to fill in the partnership tax return and you would have a partnership page to complete as part of your own individual return but you wouldn't have to fill in the self employment page.

You choose your accounting end date not HMRC. If your business started on 1 January you may find it easiest to do your first accounts from 01/01/13 - 05/04/13 then 06/04 - 05/04 each year after that. You are perfectly entitled to do 01/01/13 - 31/12/13 but this might be more complicated when it comes to filling in your partnership return. There are some accountants who post on MSE who might be able to explain this better than I could

nomunnofun

OK - here we go.

We have established that the business is a partnership which commenced on 1st January 2013 and the partners wish accounts to be prepared to 31st December 2013. There is no problem with that but it does require a little knowledge.

The partnership return must be submitted by 31st January 2014. You are correct that this must include details of earnings between 1st January 2013 and 5th April 2013 which for you will be the first three months or so of your first full years trading accounts. It is unlikely that you will know the results for the year to 31st December 2013 by the deadline of 31st January 2014 and so you need to return AN ESTIMATE. There are 95 days from 1st January to 5th April, approximately 1/4 of the year. Declare 1/4 of your estimate of the profit for the whole year and detail how you arrived at the figure in the additional information box. Let's say that it is to be £30000 projected for the full year - £7500 should be declared. You will also have to allocate the profit between the partners - if 50:50, each partner will have £3750 profit. This figure will be entered on EACH PARTNER'S individual tax return under partnership income NOT SELF EMPLOYED INCOME.

All three of these returns (partnership and two self assessment) must be AMENDED when final figures are known by declaring the whole year's profit and adjusting for the 270 days which do not fall into 2012/13 tax year. For example, if the profits turn out to be £36500, reduce by 270/365 times £36500 equals £27000 and declare the balance which is £9500. Detail this again in the additional information box. You only have this complication in the first tax return.

The problem occurs in the second year - 2013/14. The partnership return will ask you to declare profits for an accounting year ending in 2013/14. This, for you, will also be the accounts for the year ended 31st December 2013. Obviously part of these will have been taxed twice - this is called overlap profit and there is a section to enter this EVERY year. Do not forget this as it will be required to REDUCE your final years profits. In my example the amount will be £9500 - the profit for the period from 1st January to 5th April 2013 that has been included twice.

The system is designed so that the choice of a 31st March or 5th April year end is simpler both for HMRC or the taxpayer. Please do not feel pressurised into changing from 31st December because you feel that it may be simpler - most of the problems occur in the first year.

However, should you make a loss in the first year, I could well be doubling the size of this post.

claire101

You have both been so helpful, I now know what I'm doing and how I'm going to do it. Thank you both so much