Claiming expenses

Beckster99

Can somebody help me, my husband registered as Self Employed back last May under CIS. I have today put his accounts in and was wondering how much of his expenses he will let back. Couldn't believe how much he has spent out this year, there is not a lot between what he earnt and what he's paid out

trailingspouse

I realise this is a little late - but shouldn't this have been worked out before you've been trading for nearly a year??
Did you prepare a business plan? Do you pay all income into a business bank account, and pay all costs out of that account? Or does he put his earnings into his back pocket and pay expenses out of that as he goes along?
There's no way anyone can tell you what expenses he will get back - the ones he's entitled to, I expect. And you should know what expenses you're entitled to - it's part of running a business.
Sorry to sound a bit brutal - but there are so many people who are self-employed and haven't done the basic legwork. And it can only end one way.

Beckster99

He didn't have a lot of choice but to go self employed as he was suddenly made redundant after 15 yrs with the company he was with, so rather than sponge of the state he started working for himself. He done it all correct and the accountant has all his receipts ect. I was purely asking how much of his expenses he would get back, is it 100% or just a percentage if that makes sense. As he is on CIS he had his tax stopped by the companies he sub-contracts for

zygurat789

He won't get any expenses back. That's not what its all about.
Your husband's sales/turnover has been fixed by the amount he received.
His allowable expenses will have been used by his accountant to reduce this gross income to the taxable income.
Now for the good news. Since tax has been deducted on the basis of gross income and is only payable on taxable income there is usually a refund.
His accountant will know how much and shouild tell your husband and it should be on the copy of the self assessment form which the accountant should give to your husband.

Beckster99

:undecided:undecidedThank you for that. He did have to purchase a van to which he was told it was 100% tax deductible as its purely for business. It's all new to me and very confusing

zygurat789

Beckster99 wrote: »

:undecided:undecidedThank you for that. He did have to purchase a van to which he was told it was 100% tax deductible as its purely for business. It's all new to me and very confusing

Your accountant SHOULD be pleased to explain it all to you.

Do you have a job, do you pay tax in it?

somethingcorporate

Beckster99 wrote: »

:undecided:undecidedThank you for that. He did have to purchase a van to which he was told it was 100% tax deductible as its purely for business. It's all new to me and very confusing

A van would be capital expenditure and not 100% tax deductible as an expense but the accountant should be able to give better guidance.

As the above you do not get anything back for expenses, it just reduces the taxable income and hence the tax due.

00ec25

for the sake of over egging the pudding, a slightly over simplified example to illustrate what everyone has said

say he invoices £100 for a job
under CIS he will have 20% tax withheld by the client so he gets £80 in his take home
now say he pays out £65 of expenses so he is left with £80 - £65 = £15 in his bank account to live on

then at the end of the tax year he submits a tax return showing earnings £100 less expenses £65 = taxable profit = £35 . So he should have paid tax @20% on £35 and thus he should have paid tax of £7, but he has already paid tax of £20
so he will "get back" £20 - £7 = £13 tax refund. He will not get back £65 of "expenses"

so overall out of the £100 invoiced his net take home will be £15 plus £13 refund = £28