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Self Assessment question (new sole trader)

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I have a few questions about Self Assessment and was hoping people could help? I am new to this and not very savvy when it comes to bookkeeping (probably going to hire an accountant soon), so any help would be appreciated! :)

  1. First of all, I lost my full-time job in August 2021. Shortly after that I registered for my UTR code, and I have been recording my income and expenses since then. However, shortly before I lost my job I did about 4 small art commissions for people for a total of €380 (paid in my personal Starling Euro account). As I was not yet self-employed when I did this work, I was going to put it towards my ‘trading allowance’ of £1000.

    But as I am self-employed now, am I supposed to include these on my Self Assessment for the tax year 2021/2022, even though they happened before I requested my UTR? One was done in May, one in July, and two in the first half of August (at which point I had lost my job but had not yet requested the UTR I think, I am unsure of the correct date). 

  2. A big portion of my current self-employed income is paid in Euros, as I have clients based outside of the UK. I am unsure of how I should be declaring this.
    When I started, I did not yet have a business account so I simply received everything in either my Starling Euro account and converted it to GBP, or I received GBP payments in my personal bank account. For this tax year I set up a business account, but still use the Starling Euro account for Euro income, then convert it to GBP in my Business account. 
    I have no idea how I should be recording these transactions on my bookkeeping spreadsheet? 

  3. Some part of my income has been through freelance websites where you send proposals on jobs different clients post. Once you finish the job, the client pays you. The platform/website takes a 20% cut from this. Once you've reached a certain treshold, you can request a payout. 
    Do I simply use the payout into my bank account as my income (so after the platform fees have been taken off)? Rather than each individual client job (where the money they pay is not actually the money I receive)?

These are some of the questions I have right now. I am sorry if some of these are really obvious!
I am very new to this and just want to make sure I get things right. Thank you!  :)


Comments

  • DullGreyGuy
    DullGreyGuy Posts: 18,544 Forumite
    10,000 Posts Second Anniversary Name Dropper
    1) You become self employed as soon as you start generating revenue, when you register as self employed is a separate matter. The early commissions should be included as revenue. 

    2) Record them in the original currency and apply the appropriate exchange rate at that point to get it to GBP

    3) You need to understand the relationships correctly... in most of the ones I've seen you get paid 100% but then you have to pay the site the 20% and so your revenue reflects the full value and you expense the site fees. In practical terms money flows through the website and so you get it passed net but that isnt the contractual relationship.
  • Savvy_Sue
    Savvy_Sue Posts: 47,303 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Also one thing you need to be clear about is what period you are paying tax for. On your self assessment you'll need to include ALL your taxable income for the period April 2021 - March 2022. Some of that will be your PAYE income, from your P45, and the rest will be those early commissions and everything since. 
    Signature removed for peace of mind
  • ClaraSolis
    ClaraSolis Posts: 71 Forumite
    Fourth Anniversary 10 Posts Name Dropper
    edited 14 December 2022 at 9:30PM
    1) You become self employed as soon as you start generating revenue, when you register as self employed is a separate matter. The early commissions should be included as revenue. 

    2) Record them in the original currency and apply the appropriate exchange rate at that point to get it to GBP

    3) You need to understand the relationships correctly... in most of the ones I've seen you get paid 100% but then you have to pay the site the 20% and so your revenue reflects the full value and you expense the site fees. In practical terms money flows through the website and so you get it passed net but that isnt the contractual relationship.
    1) Ok, so everything I've done from April 2021 onwards should be counted basically, thanks! Does it matter that I did not request a UTR until August? 

    2) I've contacted an accountancy firm to help submit my self assessment, and the bookkeeping spreadsheet they've sent has no way to record the Euro value. So I'll just put in the GBP value from when I exchanged it then? I might leave a note in the details to mention the original Euro value.

    3) I've checked the two websites I did some work on, and they substract their fees and VAT when they pay the client's money to me. And then once I've earned enough, I can request a payout to my bank account or Paypal. So I should record the money that I actually get paid into my bank account by the service provider? Rather than recording all these small payments from separate clients? Sorry, I might not be explaining myself that well! 

    Here's a sample below. The amount for the Withdrawal Requests on March 9 is what I actually received in my bank account, so I just record the amount of £52.44 as my income? The other website is more complicated as they pay in USD, which is then converted to GBP when it's paid into my bank account.



    Savvy_Sue said:
    Also one thing you need to be clear about is what period you are paying tax for. On your self assessment you'll need to include ALL your taxable income for the period April 2021 - March 2022. Some of that will be your PAYE income, from your P45, and the rest will be those early commissions and everything since. 
    Thank you. I've requested help from an accountancy firm to submit my Self Assessment and I've provided them with my P45, so hopefully that'll be fine. :) 
    But as I am only paying them for the SA and not bookkeeping, I still have to figure out some of the above myself haha. 
  • Jeremy535897
    Jeremy535897 Posts: 10,732 Forumite
    10,000 Posts Fifth Anniversary Photogenic Name Dropper
    You use the spot rate when you were paid as the exchange rate, but if the timing of the currency conversion is outside your control, just use the sterling value you receive. When you record the revenue depends on whether you intend to use the cash basis or the accruals basis.

    As good practice, you should be reconciling what the provider pays you with what you expect to receive, so you will be recording all the individual sales anyway. When MTD for ITSA comes into force (April 2024), you will be required to keep such records digitally.

    When you applied for a UTR is irrelevant. You have to register as self employed if you know your turnover (before deduction of fees) will exceed £1,000 in the tax year. You should have done that by 5 October 2022. Ensure a CWF1 is completed in order to register to pay class 2 NIC. 
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