Tax payouts?

x-Cameron-x

I've been self-employed for about a year and recently filed my 1st tax return, and some friends were saying I could claim for expenses like fuel, advertising, and stationary etc (my less than helpful business advisor didn't bother to mention this). I've tried reading up on it and as far as I can tell it comes off the tax you need to pay.

I don't really know much about it, and would appreciate some help, but as far as I can tell you pay tax on any profits your business makes, and as my business is not making any profits, my tax assessment came back with nothing to pay.

So my question is, if I have no tax to pay, it sounds like I will not be able to claim expenses, or can I still get a pay out for expenses incurred?
Hope this makes sense and would be most grateful for any advice.

purdyoaten

x-Cameron-x wrote: »

I've been self-employed for about a year and recently filed my 1st tax return, and some friends were saying I could claim for expenses like fuel, advertising, and stationary etc (my less than helpful business advisor didn't bother to mention this). I've tried reading up on it and as far as I can tell it comes off the tax you need to pay.

I don't really know much about it, and would appreciate some help, but as far as I can tell you pay tax on any profits your business makes, and as my business is not making any profits, my tax assessment came back with nothing to pay.

So my question is, if I have no tax to pay, it sounds like I will not be able to claim expenses, or can I still get a pay out for expenses incurred?
Hope this makes sense and would be most grateful for any advice.

If you don not mind me saying, it is more than a little worrying that you have already filed your tax return and are not aware of the answers to your questions. HMRC do not make any allowances on incorrect returns for ignorance!

When you filed your return you were required to declare all of the income received and all of the expenditure incurred. Anything other than that consututes an incorrect return and you did have to confirm that it is correct and complete before submission. Whether or not you were able to claim relief on the expenditure is a secondary issue - you cannot decide what you are going to claim for and what you are going to exclude.

Business fuel, advertising and stationery costs are all allowable expenditure and must be claimed in your accounts.

x-Cameron-x

I did put in my income earned and expenditure incurred, I just didn't realise that you could claim the expenditure back. Can you help answer my question?

purdyoaten

x-Cameron-x wrote: »

I did put in my income earned and expenditure incurred, I just didn't realise that you could claim the expenditure back. Can you help answer my question?

If you have a profit which is insufficient to incur a liabity to tax, I am afraid that is the end of the matter.

Expenses will reduce your liabilty to tax but only if, by not claiming them, you had a liability to tax in the first place.

Sorry!

x-Cameron-x

My friend said I could buy a new computer to use in the business, and then claim back the money I paid for it as a expense, so your saying this will only work if I have enough of a profit to be being paying tax on?

purdyoaten

x-Cameron-x wrote: »

My friend said I could buy a new computer to use in the business, and then claim back the money I paid for it as a expense, so your saying this will only work if I have enough of a profit to be being paying tax on?

Yes. If you made, for example, £9000 profit without including the computer cost of, say, £1000 - you will pay no tax.

If you included the computer expense, your profit is £8000 - still no tax!

(Different method of claiming the computer cost - but the point remains)

supermonkey

It's worth mentioning that it's not really "claiming back expenses".

If you were to buy a £1000 computer, you wouldn't get £1000 back!

Buying the computer reduces your taxable profits by £1000 & you therefore pay less tax as a result. On a 15k profit, you'd save approx £300 in cash. (disclaimer - this is a very basic example).

If you have already entered your expenditure into the tax return, I don't really know what you are trying to achieve. That expenditure has already been used to reduce your profits & therefore your tax.