Self Assessment Sole Trader Advice

pappadruid

Hi All,
I am just completing my self assessment for 19/20 and need a little advice.
I am in full time employment, but last year I qualified as a sports massage therapist which I also do now in my spare time (income from this in 20/21 tax year).  I paid about £5k in costs to get qualified, equipment etc.  How can I reflect this in my tax return for 19/20, (if at all) as it was not immediately obvious to me.  Is there anything I need to do to be registered as a sole trader, even though I am in full time employment, other than be registered for self assessment?
Thanks in advance!!

Jeremy535897

Some very useful guidance here:
https://www.litrg.org.uk/tax-guides/self-employment/working-out-profits-losses-and-capital-allowances/can-i-claim-pre-trade

Putting yourself in a position of being able to trade (for example obtaining qualifications) does not qualify as an allowable expense.

Tonyw193

You will be able to claim tax relief for any professional fees such as a yearly fee to a professional body if you now registered with one. Not sure about the registration aspect. 

[Deleted User]

On the ‘anything I need to do’ question, you must notify HMRC of your self-employed status by 5th October 2022. The equipment would be an expense upon which you could claim capital allowances (first year allowance). Out of interest, were you required to complete a return for 2019/20?

oldbikebloke

Tonyw193 said:

You will be able to claim tax relief for any professional fees such as a yearly fee to a professional body if you now registered with one. Not sure about the registration aspect. 

professional bodies subscriptions ("registration"  if that is what you thinking?) can be claimed if they appear on HMRC's List 3 and relate to the membership dues once you are qualified. 
https://www.gov.uk/government/publications/professional-bodies-approved-for-tax-relief-list-3

what cannot be claimed is pre qualification costs, eg: student registration fees, exam fees, training costs etc  
There is a ban on any costs associated with acquiring a new qualification. Basically the taxpayer does not fund you retraining for a new career or for starting one from scratch. 

Ray_Coman

The general rules is that:
Training costs to acquire a new skill are not tax deductible.  Training cost to maintain an existing skill are tax deductible.  Usually, university fees are not tax deductible (as pre-trading expenses) Continued professional development is tax deductible.

pappadruid

Thanks all.
To clarify things, I qualified in March this year.  I continue to work full time in the NHS and do this in my spare time so not completely self employed.  My question is, can I claim tax back on expenses that I incurred in the FY 19/20 on getting set up (spent a lot of money on a summerhouse in the garden to use as a clinic), and if so where do I record it on the self assessment form?

To answer a previous question, I completed a self assessment for FY 18/19 as I had a capital gain on a property sale that I needed to declare.

Thanks so much for your help!

Grumpy_chap

There are permitted rules to account for pre-trading / pre-start-up costs as business expenses.

Whether the summer-house can be claimed is a complex question in itself, but if it can be claimed, then the fact it was pre-trading is probably not significant (think of it like a shop doing fit-out before opening).  The issue is, if the summer house is claimed it opens up issues around part of the property being potentially liable for CGT and / or business rates.  

I recommend a professional Accountant is engaged to ensure that this is processed to get the most you can, but ensure it is all done correctly and not claim something invalid.  It will save you time and money elsewhere and the time saved in not doing the accounts yourself can be used to treat additional patients and, hence, the Accountant could be self-funding.

Jeremy535897

Presumably you also considered whether you needed planning permission, whether or not there are covenants on the land affecting business use, and of course rates as Grumpy mentions?

Ray_Coman

You can get tax relief on the equipment as a pre-trading expense.