Self employed april.

jridd

Hi MSE people. 
Just a quick one if anyone can help out. I currently work as a builder and have been on the books for years and years. But now I'm experienced I'm coming off the books and going self employed. I currently have a company van that I'm giving back. Anyway.....

We have decided due to tax reasons I'm starting self employment in April. I understand doing all the self assessment part etc. 

What I'm struggling with is..  I'm going to need a van if I was to purchase one in March, can I claim that back as an expense in the tax year april 20/21? If I was to keep receipt of purchase?  

Thanks 

oldbikebloke

yes, it is called a "pre-trading expense" and for the purposes of your self employed accounts you record it in the accounts on the first day that you actually start trading which appears to be sometime in April irrespective of an actual purchase date in March.

a van will be a capital expense  and can be claimed as an allowable cost (the rule is different subtly if it was a car and be careful with car "derived" vans and some Kombi/double cabs, as not all are vans for tax purposes) ,
Alternatively you could choose to use the "simplified method" under which you can only claim a pence per mile rate 

by the sounds of it you will need to use an accountant as claiming capital allowances is easy to get wrong in the first year and therefore can cost you in later years if you make a mess of what is carried over to subsequent periods 

have you registered for CIS?

jridd

Thanks for the reply. 
So as long as I've got a paper chase of purchase i.e a bank transaction then I'll be ok purchase in march? Also I will be using an account for filing tax return at the end of the tax year.

Yes I've got my UTR number ready to do that. 

Pennywise

jridd said:

So as long as I've got a paper chase of purchase i.e a bank transaction then I'll be ok purchase in march? Also I will be using an account for filing tax return at the end of the tax year.

You more need an invoice from the garage selling you the van than a bank statement showing it.  Why not get the accountant on board now as they can help you with setting up book-keeping and telling you what you can and can't claim for.  Re the van, there's potential for officially starting the business earlier (pre 5 April) as you may be able to claim the van cost against your wages for this year, meaning you could get a big tax refund as early as May or June.  There are usually lots of tax planning opportunities around a business start.

BoGoF

You do realise your employer is taking advantage of you here as it seems like you will be working for the same company (btw you cannot 'choose' to be self-employed). Unless you are getting a massive increase to make up for the loss of holiday/sick pay you are being stitched up.