Need to pay tax for short contract of work?

faringdon

Do you have any other expenses?  If not why would you want to claim for those tickets over the trading allowance?  Or were they incredibly expensive train tickets

Thanks,  so there is a "trading allowance"? Is this that thing where the first £1000 of your sole trader income doesnt get taxed?

So when i declare my income should i only declare £1538  instead of the £2538 that i actually earned as a sole trader?

___ ___ -__

Hi,

Ive just listened to this , and it doesn't tell you how a sole trader can prove that the figure they submit as being received is actually correct...

https://www.youtube.com/watch?v=pprBWz0cI8A

Unfortunately I wont know what records the HMRC want until after April 6th 2026, because Tax returns are not permitted within the tax year in which they were received.

It says you have to keep records , and may be fined if the records are poor, but doesn't say what constitutes a poor record of a tax return?

Is the following OK for my tax return records?

https://ibb.co/21S886YY

Dazed_and_C0nfused

faringdon said:

Do you have any other expenses?  If not why would you want to claim for those tickets over the trading allowance?  Or were they incredibly expensive train tickets

Thanks,  so there is a "trading allowance"? Is this that thing where the first £1000 of your sole trader income doesnt get taxed?

So when i declare my income should i only declare £1538  instead of the £2538 that i actually earned as a sole trader?

No!

It's where you can claim a £1,000 allowance instead of claiming any actual expenses relating to your business.

So you would still declare turnover of £2,538 but your profit would only be £1,538.  Assuming no additional takings and the trading allowance is the best option for you.

Grumpy_chap

Dazed_and_C0nfused said:

No!

It's where you can claim a £1,000 allowance instead of claiming any actual expenses relating to your business.

So you would still declare turnover of £2,538 but your profit would only be £1,538.  Assuming no additional takings and the trading allowance is the best option for you.

Another example of where the OP needs to engage the professional (paid) services of an Accountant.

Unfortunately, their understanding of business record keeping and taxation are far too low for the OP to reach a secure position through advice / learning via an internet forum.  An Accountant will be able to advise the OP how to keep records to make things as simple as they can be and protect the OP against incorrect filing and the potential penalties that may follow from that.

For now, the OP needs to keep a list in date order of all business income and all business expenses (for their Sole-Trader works) plus all PAYE income plus all business income and all business expenses (for their Ltd Co. works).

faringdon said:

Ive just listened to this , and it doesn't tell you how a sole trader can prove that the figure they submit as being received is actually correct...

Unfortunately I wont know what records the HMRC want until after April 6th 2026, because Tax returns are not permitted within the tax year in which they were received.

I assume for your Sole-Trader work, you will use the cash basis, in which case your bank account showing the income received is proof of the figure being correct.  You will, presumably, also have copies of the invoices submitted which will match the actual sums received at the bank account.

The records you need to keep for operating a business are well established and not changing in a dynamic manner.

Grumpy_chap

I just realised that the OP might not be able to use the Trading Allowance based on their other thread in which they indicated they are starting their own Ltd Co.

https://forums.moneysavingexpert.com/discussion/6638717/how-to-set-up-a-ltd-company/p1

faringdon

Thanks, i am not sure about setting up a ltd company yet...i think i will work as a sole trader and see how the tax return goes before i step up to the ltd company thing.
I think an accountant is for a fully fledged business with multiple staff, not for a single joe_bloggs like myself....i doubt i can afford an accountant.  Anyway, i search on the internet and i dont know who is a bona fide accountant and who is a scammer.

I still dont know how one can proove that one earned x pounds in a contract?.....i mean, people could lie.......how do i proove that i really did earn £2538?.....i mean , i have a bank statement in my personal bank account (its not a "business account")....but is that enough?...maybe its not adequate and the HMRC will  raise a fine?

Dazed_and_C0nfused

faringdon said:

Thanks, i am not sure about setting up a ltd company yet...i think i will work as a sole trader and see how the tax return goes before i step up to the ltd company thing.
I think an accountant is for a fully fledged business with multiple staff, not for a single joe_bloggs like myself....i doubt i can afford an accountant.  Anyway, i search on the internet and i dont know who is a bona fide accountant and who is a scammer.

I still dont know how one can proove that one earned x pounds in a contract?.....i mean, people could lie.......how do i proove that i really did earn £2538?.....i mean , i have a bank statement in my personal bank account (its not a "business account")....but is that enough?...maybe its not adequate and the HMRC will  raise a fine?

It's called Self Assessment for a reason.  

You need to retain proper records in case HMRC investigate your return.  But yo using send anything with the return when you submit if.

Grumpy_chap

faringdon said:

Thanks, i am not sure about setting up a ltd company yet...i think i will work as a sole trader and see how the tax return goes before i step up to the ltd company thing.

In your other thread ( https://forums.moneysavingexpert.com/discussion/6638717/how-to-set-up-a-ltd-company/p1 ) you said that the next 6-month contract required you to have a Ltd Co. 

faringdon said:

Hi,
Just today been offered a 6 month contract for electronics engineering. They want to know the name of my Ltd Company. 

Will that Client still engage your services if you propose to work for them as Sole-Trader?  
Would that Client accept the Ltd Co. as being an Umbrella Company?  That might be easier for you as then the Client can engage a Ltd Co., but you are still PAYE with tax and NI taken care of.

faringdon said:

I think an accountant is for a fully fledged business with multiple staff, not for a single joe_bloggs like myself.

That is simply incorrect.

faringdon said:

i doubt i can afford an accountant.

Turn that around.
I doubt you can afford not to have an Accountant.
You clearly need advice on how to keep the correct records and manage the tax affairs.  Without professional advice it seems as though you will not have the knowledge to make the correct declarations and payments at the correct times.  That could result in errors that turn out very expensive after the fact.

faringdon said:

I still dont know how one can proove that one earned x pounds in a contract?.....i mean, people could lie.......how do i proove that i really did earn £2538?.....i mean , i have a bank statement in my personal bank account (its not a "business account")....but is that enough?...maybe its not adequate and the HMRC will  raise a fine?

You don't seem to have taken on board the simple advise about records keeping given by others in this and other threads.

Can you keep the records that are listed in this site?
https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income 

Records to keep

If you use the trading or property income allowances you must keep a record of your income.

Examples of the records you may need to keep are:

• copies of your invoices, paper or electronic
• a spreadsheet of your income receipts
• emails confirming income received
• statements from the company who paid you which show the amount you received
• bank statements
• bank deposit pay-in records
• a diary or appointments book showing your income from each customer

HMRC can charge you a penalty if the records you keep are not accurate, complete and readable or if you do not retain them for the required period of time.

SiliconChip

Grumpy_chap said:

I doubt you can afford not to have an Accountant.

That's what I was going to say, but as you've also pointed out the OP seems incapable of comprehending or acting on any of the things they've been told mutiple time in a plethora of threads. I think you, and anyone else who attempts to offer comprehensive answers, is just wasting their time. The OP's business is doomed to failure, and the sooner it happens the less expensive a disaster it will be.

Dazed_and_C0nfused

May not be the op but someone is asking remarkably similar questions here 🙄

https://www.taxationweb.co.uk/forum/viewtopic.php?f=9&t=61275&sid=f2ac5a63fc2d428827aaaf001b76a136

SiliconChip

Dazed_and_C0nfused said:

May not be the op but someone is asking remarkably similar questions here 🙄

https://www.taxationweb.co.uk/forum/viewtopic.php?f=9&t=61275&sid=f2ac5a63fc2d428827aaaf001b76a136

If it's not then there are two people out there who are having an equally difficult time!