First year as self employed

sorethumbs

Hi all
My partner has registered in May 2015 as self employed for the first time. She is doing dog sitting/cleaning/home help earning between £350-£500 a month.


As she isn't going to earn enough to pay tax we hadn't really considered the things she could claim for such as petrol and mobile use - we thought as she would be well under £10600 what would be the point in claiming.


That is until we started to think about tax credits. We will have to tell them our combined income. The less we earn combined as a couple the better our tax credit award will be.


As she has worked 8 months of the tax year already what expenses can I work out retrospectively. She basically drives a few miles, uses her mobile a bit for work and bought a laptop.

agrinnall

If she also started the work in May 2015 then her first return is not due until January 2017.

sorethumbs

Yes I understood that working Apr 2015-2016 would mean do return in Jan 2017.
So I also found that claiming petrol/mileage is worked out at 45p a mile.
So assuming she keeps receipts from now on for the remainder of the tax year when it comes to the Tax credits do I take off 45p for every mile she has travelled in the course of her job and take that figure off of her 'profit' as self employed? Its only short journeys but would add up I guess


Can anything be taken off for car running costs? And if she uses her mobile (£28 a month contract) can any of that also be taken into consideration?

patanne

Just a quick comment to note that the return needs to be done BY 31st Jan 17. It can be done any time after 6th April 16 but the payment (if any) is due by 31/1/17. I would have thought in tax credit terms that the sooner you got a written response from HMRC the better. Also trying to get through on the system to file in Jan can be a nightmare.

sheramber

sorethumbs wrote: »

Yes I understood that working Apr 2015-2016 would mean do return in Jan 2017.
So I also found that claiming petrol/mileage is worked out at 45p a mile.
So assuming she keeps receipts from now on for the remainder of the tax year when it comes to the Tax credits do I take off 45p for every mile she has travelled in the course of her job and take that figure off of her 'profit' as self employed? Its only short journeys but would add up I guess


Can anything be taken off for car running costs? And if she uses her mobile (£28 a month contract) can any of that also be taken into consideration?

The 45 p per mile is a flat rate to cover fuel and running costs.
She should keep a diary of her calls and the mileage for each. Remember only business mileage can be claimed.

You add up her business mileage and multiply 45p by that figure and claim that amount as a business expense off her total income.

She needs to calculate how much of her mobile phone use is for business use'

The net profit ( total income less business expenses) from her self assessment tax return will be the figure used for tax credits.

You should also advise tax credits that your wife has started self employment if you have not already done so.

Double_V

So net profit minus business expenses = amount you are liable to pay tax on ?
And if that amount is less than the threshold then you don't pay the tax ? is that right ?

booksurr

Double_V wrote: »

So net profit minus business expenses = amount you are liable to pay tax on ?
And if that amount is less than the threshold then you don't pay the tax ? is that right ?

slightly better wording would be

gross income - business expenses = net profit/loss of the business

if the profit is < personal allowance then yes no income tax is payable as the net taxable income would be below the threshold.

The personal allowance cannot be used to increase the business loss, all the allowance can do is reduced the net taxable amount to zero. So if you start with a business loss then by definition the personal allowance is not required/used

swanny_1

sheramber wrote: »

The 45 p per mile is a flat rate to cover fuel and running costs.
She should keep a diary of her calls and the mileage for each. Remember only business mileage can be claimed.

You add up her business mileage and multiply 45p by that figure and claim that amount as a business expense off her total income.

She needs to calculate how much of her mobile phone use is for business use'

The net profit ( total income less business expenses) from her self assessment tax return will be the figure used for tax credits.

You should also advise tax credits that your wife has started self employment if you have not already done so.

Sorry to butt in on a thread....Can you claim time travelled to self employed work as part of your total number of hours worked for WTC purposes?

booksurr

swanny_1 wrote: »

Sorry to butt in on a thread....Can you claim time travelled to self employed work as part of your total number of hours worked for WTC purposes?

google it! 3 result on the search: working tax credits working hours definition

http://revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/self-employed/

"travelling for the purposes of the business, but not from home to their business premises"

tebthereb

sorethumbs wrote: »

Yes I understood that working Apr 2015-2016 would mean do return in Jan 2017.
So I also found that claiming petrol/mileage is worked out at 45p a mile.
So assuming she keeps receipts from now on for the remainder of the tax year when it comes to the Tax credits do I take off 45p for every mile she has travelled in the course of her job and take that figure off of her 'profit' as self employed? Its only short journeys but would add up I guess


Can anything be taken off for car running costs? And if she uses her mobile (£28 a month contract) can any of that also be taken into consideration?

The use of AMAP - the rate you refer to - is not mandatory but it is generally quite generous.

The alternative is to claim a proportion of actual costs which would include the cost/value of the vehicle itself when brought into the business. The proportion would be a percentage; which you would normally have to justify with a mileage log showing business vs private use.

I believe that in addition to AMAP you can also claim a proportion of financing costs; e.g. any loan interest incurred on the vehicle - HMRC used to accept that was the case but I think their guidance is now silent on this point.

She can also deduct any subsistence costs incurred on business related travel, if there was any.

If she works from home at all - and I expect most self-employed people do a little bit - then she can also claim for use of home. If significant time is spent, there are publicised flat rates. If there is minor use of home then £4 per week would normally be accepted by HMRC without evidence and use of phone and broadband may be claimable in addition to that too.

The cost of the laptop you mentioned may also qualify for a deduction. If there is private use then you need to think about restricting the cost that you claim.

Accountants' fees, and I would recommend using one as they should be able to help with all of this in a lot more detail and based on your specific circumstances, are also allowable!

swanny_1 wrote: »

Sorry to butt in on a thread....Can you claim time travelled to self employed work as part of your total number of hours worked for WTC purposes?

Travel to a client's location? Yes, I believe so. Travel to a fixed place of work? I doubt it. Unfortunately I have little experience on WTC. You may be better off creating your own thread.