Sole trader tax help with company van etc.

dpcsystems

hi all,

need some advice as i dont have an accountant at this stage.

I setup as a sole trader last August 2007. I am currently runnning an online satellite tv store & also have just started installing in my local area. I also currently hold a full time job, so im pretty much working 7 days a week at this stage until my new venture takes off.

I registered as self employed last August to the HMRC, i received NI info from them and paid the initial amounts they have asked for.

I have just purchased a van for installing and need to know what i really need to do next with reagrds to the tax thats related to this vechile.

I understand that there are 2 options for me to go via, i can register the van in the business name and put all expenses through my business, but this means i will be put in a higher tax bracket?

or i can just claim the mileage back (39p per mile?) if i use it as my own vechile.

Im planning on going VAT registered this year, im not near the threshold, but with the amount of VAT im paying with startup costs and on the Van, and with the suppliers i use for my stocks, i think it would be a pretty good idea to go this route as it would be beneficial to me.

So, im a little lost to what i have to do now? ideally i would want to put the van through the business, to put all my costs through the business and then at a later date i can claim back the VAT on fuel. I will be also using the van for personal use.

Can anyone tell me what do i do now reagrding this, do i have to inform HMRC, any forms to fill out etc ?

And the other question is reagrding income tax on my main full time job, i currenlty earn £22k with this, my new venture is only breaking even right now and i dont expect to make a profit until later this year, what tax bands/% am i looking at right now, and when say im earning over the £30k mark (right now i think my full time job tax is the 22%, what would my tax % be on any profits later this year with my self employed work)?

I just dont want to get a bigger tax bill down the line and want to make sure im covering all angles and all taxes that i will owe will be put aside.

I dont have an accountant at this stage so dont have any real advice apart from what im reading up.

thanks in advance and hope the above makes some sense! :rolleyes:

Debt_Free_Chick

dpcsystems wrote: »

I understand that there are 2 options for me to go via, i can register the van in the business name and put all expenses through my business, but this means i will be put in a higher tax bracket?

Buying a van through the business will not put you in a higher tax bracket. It's the profit from the business which determines the tax you pay.

The van would be a business expense. You would claim capital allowances which would be a deduction from your turnover - this would reduce your profit and potentially reduce your tax bill.

or i can just claim the mileage back (39p per mile?) if i use it as my own vechile.

For business mileage you could claim 40p per mile, for travel used wholly in connection with this business. You cannot claim anything for private use.

Can anyone tell me what do i do now reagrding this, do i have to inform HMRC, any forms to fill out etc ?

When did you buy the van? If after April 2007, then you don't need to fill in any forms until after April 2008 - so time to get some decent advice on these points.

And the other question is reagrding income tax on my main full time job, i currenlty earn £22k with this, my new venture is only breaking even right now and i dont expect to make a profit until later this year, what tax bands/% am i looking at right now, and when say im earning over the £30k mark (right now i think my full time job tax is the 22%, what would my tax % be on any profits later this year with my self employed work)?

Your profit from the business would be added to all other income - including PAYE and any bank interest etc. The total determines your overall tax liability.

If you file your tax return before 30 December, you can opt to have any tax owed deducted via PAYE. So even if you owe tax on your business, you can opt to pay it by deduction from your other employed job.

I just dont want to get a bigger tax bill down the line and want to make sure im covering all angles and all taxes that i will owe will be put aside.

If you make the profit, you have to pay the tax. Far better to put aside some money from the business to cover any future tax liability. Either do monthly accounts to estimate your profit and put, say, 25% of it away in a savings account. Or just save a certain amount anyway. You can't avoid paying the tax if your business is successful

dpcsystems

thanks for th info, ive only just purchased the van so i guess im ok for now what with forms and stuff. Someone advised me to keep track of all my mileage which i will do, and also i do plan on putting away approx 25% of any profits into a high intrest account until it needs to be paid. (but i dont expect profits until later in the year)

So, right now then, as long as i keep good book keeping of everything i do, then i need not do anythign else ie fill out any forms etc until after April 2008 ? then what will happen then, will the HMRC contact me ?

Richiec_3

Hi

So which is the best route to take I'm a similar situation and want to know whether to register the van as a business asset or just to draw millage. could somebody tell me advantages and disadvantages to both methods

Thanks

Rich