Declaring Drawings

PseudoMama

Please can someone tell me how I declare my self-employed drawings to HMRC (which box on the self assessment)?
Been searching for ages but all I can find is where not to put it.

Jeremy535897

Those who complete form SA103F and fill in the balance sheet can put drawings in box 98 on page 5. Those who complete form SA103S (the vast majority of the self employed) do not need to declare their drawings. It does not matter how much, or how little, you draw out of your business, as self employed income is taxed on profits adjusted for tax purposes, not drawings. (If your drawings make your business bank overdrawn, there might be a restriction on your interest deduction, but this is not likely to apply in most cases.)

PseudoMama

Jeremy535897 said:

…Those who complete form SA103S (the vast majority of the self employed) do not need to declare their drawings. It does not matter how much, or how little, you draw out of your business, as self employed income is taxed on profits adjusted for tax purposes, not drawings…

Thanks so much for your quick reply Jeremy535897
Do I need to put this “personal income” somewhere on the SA100 then?

[Deleted User]

PseudoMama said:

Jeremy535897 said:

…Those who complete form SA103S (the vast majority of the self employed) do not need to declare their drawings. It does not matter how much, or how little, you draw out of your business, as self employed income is taxed on profits adjusted for tax purposes, not drawings…

Thanks so much for your quick reply Jeremy535897
Do I need to put this “personal income” somewhere on the SA100 then?

What type of personal income?

Jeremy535897

If you are self employed, you need to complete either SA103S, or SA103F, depending on circumstances, as part of your tax return. SA100 asks at the start whether you are self employed or not (amongst other things).

PseudoMama

I do the SA103S and have done the SA100 boxes to say I’m self-employed.
If I don’t have to include my drawings on the 103, surely HMRC will want to know I’ve received this “personal income” (my drawings) so that they can tax it if it takes me over my personal allowance….

Dazed_and_C0nfused

What did the SA103S show your taxable profit as?

PseudoMama

The taxable profit figure is the turnover figure less the allowable expenses, but these figures don’t include any drawings?

Dazed_and_C0nfused

It's the taxable profit that you pay tax on, not drawings.

As Jeremy advised in the first response 

[Deleted User]

If your business has a turnover of £50000 and expenses of £20000, your profit is £30000. After any tax adjustments you will be taxed on this £30000.

If you draw out £10000 you will still  be taxed on £30000 and you, in theory, have £20000 available upon which to draw.

If you draw out £100000, you will still be taxed on £30000 but your bank manager will not be happy.

Think logically. If your business makes a profit of £30000 and you decide not to draw any money at all, do you believe that you would pay no tax?

sheramber

PseudoMama said:

The taxable profit figure is the turnover figure less the allowable expenses, but these figures don’t include any drawings?

Why not? 

Turnover is the total income before any expenses or drawings.

Allowable business expenses are deducted to get the profit figure.

Personal income/ drawings are not an allowable expense  so they are part of your profit figure.

Your personal tax allowance is set against your profit figure to calculate any tax due.