Going self employed 2 weeks before end of tax year?

rezarf

My partner is currently a permanent employee at a hair salon. She works 24 hours a week at minimum wage and has a total gross pay of £8830.47.
On Saturday 2nd March, she was told the shop would be shutting on Saturday 23 March.

She has worked there since June 2000. She will get 16 weeks’ pay from redundancy and is due 12 weeks’ notice. Therefore, she has obviously not been given the full 12 weeks’ notice and will be expecting the other 9 weeks paid in lieu.

She has already found another salon to go and work from after she is made redundant. However, she will need to rent a chair and so self-employed.
She has a meeting on Wednesday 6th March with the salon owner to discuss the rental and costs.
My question is what she does next, as she will need to purchase a fair amount of new equipment and product for colouring client’s hair etc...

Once she get her 9 weeks in lieu, this will take her total up to around £10,500. Then there will be two more weeks until the end of the tax year. The HMRC person mention something regarding £1000 she could earn without having to declare it. However, that she might have a lot of expenses, and that is she was to make a loss of more than £1000 that she should register as she could carry this into the next tax year?

I hope that some of this makes sense.

Thanks

Frazer

Kayalana99

Errr yes basically if she earns under 10,500 this year, and over 10,500 next year self employed (well more then that really) it makes sense to not start the business until after the tax year as she will be able to claim more off in tax.

If she isn't going to earn over the tax theshold profit then it won't make a difference either way, this really is loose advice an accountant would be better suited as capital purchases are not always straight forward, but as a general rule if she isn't thinking she will earn over 11.5k? I think it is in her first year as self employment profit, it shouldn't really affect it.

00ec25

Kayalana99 wrote: »

Errr yes basically if she earns under 10,500 this year, and over 10,500 next year self employed (well more then that really) it makes sense to not start the business until after the tax year as she will be able to claim more off in tax. with respect, utter tosh, your understanding about "claiming more off tax" is non existent

If she isn't going to earn over the tax theshold profit then it won't make a difference either way, this really is loose advice an accountant would be better suited as capital purchases are not always straight forward, but as a general rule if she isn't thinking she will earn over 11.5k? I think it is in her first year as self employment profit, it shouldn't really affect it.

it is indeed "loose"

00ec25

rezarf wrote: »

Once she get her 9 weeks in lieu, this will take her total up to around £10,500. Then there will be two more weeks until the end of the tax year. The HMRC person mention something regarding £1000 she could earn without having to declare it. However, that she might have a lot of expenses, and that is she was to make a loss of more than £1000 that she should register as she could carry this into the next tax year?

- she needs to register with HMRC as self employed as soon as she starts trading
- her initial purchases may exceed her income thereby creating a financial loss.
- recording losses correctly is the work of an accountant, she needs to get one even if it looks like an extra cost she can't afford in year one, it really will pay her to do so given your lack of knowledge of basic accountancy, and her apparent reluctance to do her own research

the £1,000 trading allowance is an alternative to claiming actual costs. It is an either/or - read this: https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income

rezarf

00ec25 wrote: »

- she needs to register with HMRC as self employed as soon as she starts trading
- her initial purchases may exceed her income thereby creating a financial loss. That loss can be carried forward to offset against future profits
- recording losses correctly is the work of an accountant, she needs to get one even if it looks like an extra cost she can't afford in year one, it really will pay her to do so given your lack of knowledge of basic accountancy, and her apparent reluctance to do her own research

the £1,000 trading allowance is an alternative to claiming actual costs. It is an either/or - read this: https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income

....

Thanks for the advice and the link.

She has a meeting today to discuss costs at the salon and then an appointment will be made to see an accountant.