Self employed - what do I need to do?

mosforr

Hi!!

I have just registered as a sole trader after being employed by a consultancy firm, and I just feel a little lost as I have never done anything like this before, I have always been an employee!

I claim carer allowance for the care I provide for my son. I also receive tax credits.

I am aware of the eligibility criteria for carers allowance and net earnings above £110 a week will mean I am not eligible.

I believe I will earn £112 (gross) - £14 petrol/parking, so this will actually be a net of £98 and will be within the entitlement still. I have contacted the carers allowance department and I am awaiting a form when I received my first income.

I will be contacting tax credits office (when I am able to actually get through on their crazy busy phone lines!) to inform them too.

I have no idea how to begin the book keeping/invoicing/what I can include as 'wholly and exclusive' expenses to deduct from my earnings? I presume I need to keep all petrol receipts and car parking tickets but wondered if anyone had some recommendations of sites to use? Do I need to set up a business account for the invoices to be paid into so easier to keep a record of, rather than my normal account? Feels a little bit of a minefield to get my head around and I start on Monday?!

Thank you for taking time to read!

HappyMJ

You should keep a mileage diary. You can't claim for petrol but you can claim 45p for every mile associated soley with the business. No major diverting to the shops for a personal trip but you can stop off at the corner store for a few incidental things if it's on the way.

So if you travel 100 miles a week you can claim £45 per week as an expense but none of the petrol, insurance or maintenance costs of the vehicle.

You can claim for parking and tolls in addition to the mileage allowance.

mosforr

Thank you, HappyMJ, would you just keep a paper record of a diary? I have done a Google search and is 4.5 miles to/from the place of work so assume can do 9 x 45p each time I work, plus additional parking charges.

Darksparkle

mosforr wrote: »

Thank you, HappyMJ, would you just keep a paper record of a diary? I have done a Google search and is 4.5 miles to/from the place of work so assume can do 9 x 45p each time I work, plus additional parking charges.

You cannot claim mileage to and from your place of work, that is private travel and not business travel. Just the same as anyone else getting to work.

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim75005

If you have to travel from your place of work to see clients that's business travel.

WillowCat

As above, travel to your normal place of work cannot be claimed either if you are employed or self employed. Are you actually self employed? See http://tools.hmrc.gov.uk/esi/screen/ESI/en-GB/summary?user=guest for more information.

There are other ways of getting under the threshold however, for example 50% of a pension contribution will be deducted, so a £20 per month payment to a pension scheme would qualify you.

Or, if you are concerned about keeping your books, see if you can find a book-keeper to take on the work for a small sum. This would also be deductible (pound for pound).

HappyMJ

mosforr wrote: »

Thank you, HappyMJ, would you just keep a paper record of a diary? I have done a Google search and is 4.5 miles to/from the place of work so assume can do 9 x 45p each time I work, plus additional parking charges.

Your place of work is your home. You are travelling from your place of work...your home...to the client's site therefore you can deduct the expense.

Your home is the place of work as that is where you base your consultancy from. It's where the business records are kept and it's where you make business calls from. You might spend more time at the client but your business is a home based business.

At least that's how I've always done it and the HMRC, local council, tax advisor or whoever has seen my books has never questioned it.

You need to keep a proper diary writing in the odometer reading at the start of the journey and at the end. At the end of the period you get the diary out and add up all the miles. Using Google Maps to estimate the mileage is not good enough.

densol_2

You can also complete your mileage by actual use ( petrol/ insurance/tax etc ) as a % against business use v personal use. This can work out sometimes better or worse than a flat 45p - depending on how many miles you do. Once you choose a way - it has to remain that way for that vehicle. For HMRC accounts you can also claim capital allowances as depreciation on the vehicle, but you cant for carers allowance as they are more strict as to what is allowed to be deducted.

I recommend a book from the " Tax cafe " that is for small business expenses. It gives guidance as to what you can and cannot claim.

Also remember the overriding principles of being self employed and WTC and CTC that it must be run on a commercial basis with a view to making a profit ( at NLW) etc

Darksparkle

HappyMJ wrote: »

Your place of work is your home. You are travelling from your place of work...your home...to the client's site therefore you can deduct the expense.

Your home is the place of work as that is where you base your consultancy from. It's where the business records are kept and it's where you make business calls from. You might spend more time at the client but your business is a home based business.

At least that's how I've always done it and the HMRC, local council, tax advisor or whoever has seen my books has never questioned it.

You need to keep a proper diary writing in the odometer reading at the start of the journey and at the end. At the end of the period you get the diary out and add up all the miles. Using Google Maps to estimate the mileage is not good enough.

There are plenty of consultancy people who's place of work is not home. It depends on the specifics of the job.

mosforr

Thank you for all your help!