Explanation on self assessment ?

densol_2

I'm almost ready to submit my tax return ! Yep I'm keen

Luckily I had kept fab records and almost every expense has been paid out of my bank account or PayPal ( plus I've got the receipts )

The reason my turnover isn't as great as I had hoped as I've had periods of sick and was granted Industrial Injuries disability benefit in Feb backdated to Nov. Should I put on the comments section a brief note about this so HMRC know its a viable business venture or do they expect all first time start up business to have a loss in the first year anyway ?

Pennywise

densol wrote: »

Should I put on the comments section a brief note about this so HMRC know its a viable business venture or do they expect all first time start up business to have a loss in the first year anyway ?

No harm in explaining. HMRC don't routinely read the "additional information" box as it's all computer processed, but if it gets flagged up for review by a human, they may well choose to read it which may mean that they tick it off and move on to another victim rather than writing to you opening a formal enquiry.

They certainly don't assume business start ups will make a loss in the first year - the majority don't make a loss.

purdyoaten

densol wrote: »

I'm almost ready to submit my tax return ! Yep I'm keen

Luckily I had kept fab records and almost every expense has been paid out of my bank account or PayPal ( plus I've got the receipts )

I'm claiming a loss of around £24k against my other income for this same year ( redundancy payment taxed at 40%) I've spent a lot of the redundancy on a van, equipment and other eligible items for AIA and one off expenses and next year my turnover will definitely increase and I will be in profit as there will not be so many of these expenses.

The reason my turnover isn't as great as I had hoped as I've had periods of sick and was granted Industrial Injuries disability benefit in Feb backdated to Nov. Should I put on the comments section a brief note about this so HMRC know its a viable business venture or do they expect all first time start up business to have a loss in the first year anyway ?

As you are seeking the loss against PAYE income do not forget to carry the loss forward against future profits for Class IV NIC purposes. This will effectively gain an extra 9% relief on the loss.

Many accountants and taxpayers miss this.

You need do nothing now but, next year, you need to make the claim.

densol_2

Pennywise wrote: »

No harm in explaining. HMRC don't routinely read the "additional information" box as it's all computer processed, but if it gets flagged up for review by a human, they may well choose to read it which may mean that they tick it off and move on to another victim rather than writing to you opening a formal enquiry.

They certainly don't assume business start ups will make a loss in the first year - the majority don't make a loss.

That's great - I guessed that as I'm completing it online its auto but it's handy to know they may read if I get flagged - hopefully not but I've spent hours on my accounts on excel with a tab each matching the box number of the expenses on the SE page so it's all broken down according to the rules. I'll complete just a total of expenses however on box 20, plus the AIA box and the capital allowance box. Due to my illness - I forget so it's all there for any later enquiry if applicable.

densol_2

purdyoaten wrote: »

As you are seeking the loss against PAYE income do not forget to carry the loss forward against future profits for Class IV NIC purposes. This will effectively gain an extra 9% relief on the loss.

Many accountants and taxpayers miss this.

You need do nothing now but, next year, you need to make the claim.

Hi ya - yes thank you - I've read these boards back to back and saw you advise that before - very helpful This tax year 2015/2016 i am still recovering so currently working 16 hours a week plus claiming carers allowance - so I don't expect net profit of more than £100 odd a week ( as carers can't earn more than £110 pw ) The year after - I'm anticipating much higher profits so NI would kick in then.

So my question is - can the loss ( for NI purposes ) be carried forward successive years I wonder ?

purdyoaten

densol wrote: »

Hi ya - yes thank you - I've read these boards back to back and saw you advise that before - very helpful This tax year 2015/2016 i am still recovering so currently working 16 hours a week plus claiming carers allowance - so I don't expect net profit of more than £100 odd a week ( as carers can't earn more than £110 pw ) The year after - I'm anticipating much higher profits so NI would kick in then.

So my question is - can the loss ( for NI purposes ) be carried forward successive years I wonder ?

The short answer is 'yes' - see point 5 on the following checklist at the end:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/372270/income-tax-losses.pdf

Refreshing to see someone researching the forum before asking questions !

densol_2

purdyoaten wrote: »

The short answer is 'yes'

I like short answer yes ! Cheers